A federal investigator for the US Department of Labor’s Wage and Hour Division can show up at your construction business at any time. The agent will ask to speak to your employees and see all of your payroll records over the last two years. If this happens, and it very well may, would you be able to get through an audit with flying colors?
Compliance in Construction and Field Services
One of the biggest issues for construction and field services industries is staying wage and hour compliant. And if your business employs hundreds of workers who are scattered across multiple job sites and/or states, it is even harder to follow federal standards.
The Department of Labor (DOL) oversees and enforces 180 federal labor laws that affect the workplace. In addition, some states have their own labor laws which must be adhered to. Government regulations like the Fair Labor Standards Act (FLSA) require precise record-keeping to track hours to prove compliance. Labor law and employment regulations can change every year at the state and federal level, and the onus is on business owners like youto be aware of these changes.
5 Common Wage and Hour Compliance Risks
The following compliance risks are applicable to construction and field services companies of all sizes.
Know the laws pertaining to exempt and non-exempt employee classifications, which are complicated and subject to change. The Wage and Hour Division determines classifications. Non-exempt employees are typically hourly employees and are covered under the FLSA. Salaried employees are exempt from the FLSA. Then there are independent contractors, or those workers who aren’t employed by the company. Employers must classify employees correctly, like not labeling an employee as an independent contractor, to remain compliant.
Time rounding is a common practice for companies with hourly employees. It’s much easier to add up hours worked when minutes are rounded up or down to the quarter hour. Rounding is legal but it must benefit the employee, not the employer. Review your time rounding procedure to be sure it follows state and federal regulations. It’s important to note that each state could be different. For example, California state law says you should not round down a meal break for a non-exempt employee, as 30-minute meal breaks are required. You may need to treat employees working in different states differently.
Non-exempt employees must be paid time and a half their regular pay for any time worked over 40 hours per week. Failure to pay overtime can lead to hefty fines by the DOL. Stay updated on new and ever-changing federal or state overtime rules. Determining which rules to follow should be based on the amount of protection you need or the greater benefits for your employees. Tracking overtime hours is essential to making sure you’re correctly paying non-exempt employees.
Compensable and Non-Compensable Hours
Construction and field services workers can spend a large chunk of their workweek traveling to and from job sites. That time is typically part of the regular workday. Keep up to date on state and federal guidelines regarding which hours spent on transportation and travel are to be considered working hours. There are some stipulations, travel must be within the normal commuting area of your business and be in a work vehicle.
A huge part of maintaining compliance under the FLSA is recordkeeping. Compliance includes maintaining accurate records that contain certain specific information like wage information, meals and rest breaks for non-exempt employees. Records must be kept for a certain number of years, two is the usual rule, but can vary depending on your state’s laws.
The best defense for an audit is a great offense. Staying on top of FLSA rules and regulations is easier when you use the right tools. ExakTime can help with time and attendance solutions specifically designed for the construction industry. ExakTime’s digital time tracking system helps you track hours accurately, set up rules, and keep overtime and double-time hours siloed within your system so that you are automatically calculating them according to regulations every time.
Want to learn more? Read our checklist for an overview of common wage and hour compliance risks.