How Human Resources Can Take Action to Mitigate Wage Theft

“Wage Theft” is the illegal practice – both intentional and unintentional – of not paying employees for their legally or contractually promised wages. Common forms of wage theft include violating minimum wage laws, not paying overtime, misclassifying employees, forcing workers to work off the clock, and much more. Wage theft takes place on all levels of the income ladder, but statistics indicate that lower-income immigrants, women, and Latin Americans get hit the hardest. According to the 2017 Wage Theft Report, nearly $50 billion dollars in wages are stolen annually nationwide by U.S. employers. That number is enough to provide 1.2 million people with employment and pay them $20 per hour. Undeniably, wage theft is a major issue nationwide. But there are steps that can be taken by human resource professionals to help mitigate the problem.

The following suggestions can help an HR professional prevent wage theft within his/her company:

Increase Awareness: HR can educate management on the company’s wage and hour policies. They ought to be able to clarify the differences between a living wage and the legal minimum wage. More often than not, an employee receiving a living wage, the amount required to meet the basic costs of living, rather than the legally required minimum wage will have a higher morale and achieve a higher level of productivity. Additionally, federal, state, and local laws affecting your wage and hour policies are constantly changing. As a result, you’ll regularly want to review and update your policies and practices too. To be certain that changes and updates are effectively implemented, you want to regularly communicate this information with your employees, which brings us to the next suggestion.

Increase Communication: HR can and should encourage open communication. Articulated expectations are a sign of effective leadership. Provide employees with an opportunity to discuss concerns regarding wage and hour compliance. By addressing issues and discussing time records for example, employees are less tempted to cheat, because they will take fewer risks once they see that records are properly evaluated. Prove you care. Listen to the feedback of workers and work through any issues as they arise. One form of communication can include employee opinion surveys.

Audits: Provide audits to ensure all employees have proper employee position classification and are paid in accordance with the Fair Labor Standards Act (FLSA) classification. It’s important to know if a worker is a contractor, a regular employee, jointly employed, or an employee exempt from overtime. Document, document, document! Without proof of proper employee position classification analysis, you’ll place yourself at risk – as a small violation can lead to serious problems and huge financial exposure. The best defense is fully detailed documentation of total and full compliance.

Reinforce Training: After a discussion or presentation on specific wage and hour policies and practices, print or email the presentation slides or notes in case anyone wants to look over the information again. Don’t present all the information in one training session, instead opt for regular meetings. Emphasize messaging through printed articles, company policies, or other accurate and relevant sources.

Monitor frequent requests for interns: If a particular department or division is requesting too many interns, make sure the individuals are not being misclassified and are being offered a fair pay for the job they are performing.   

Speak Up: HR should encourage ethical employers to speak up about wage and hour issues and report any violations non-compliant with wage and hour laws. Wage theft and payroll fraud undercut those who treat and pay workers fairly.

Human Resource professionals have an enormous impact on your business. They can help establish employee performance, happiness, productivity, and retention. They also help protect your business from unnecessary risk by encouraging communication, defining pay structure, performing audits, reinforcing training, staying alert, and providing employers with the appropriate legal liability exposures. Creating and implementing some basic HR advice can help protect your business from unnecessary wage theft risk.


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Author: Editor

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