You Must Protect Your Business

Mark Lotstein, President, ROG Consulting

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Nearly every government—local, state or federal—needs more revenue. One of the primary ways they are going about this is through the enforcement of new and existing laws.

From CSP Daily News of Nov. 28: “The U.S. Department of Labor is conducting a multi-year enforcement initiative focusing on the gas station industry in New Jersey, where it has found consistent and widespread noncompliance with the minimum wage, overtime, and record keeping provisions. During the fiscal year 2011, the division conducted 74 investigations of gas station facilities throughout the state, recovering more than $1 million in back wages for 295 workers who were denied fair compensation.

“… The Wage and Hour Division is conducting thorough inspections of payroll records and employee practices, as well as employee interviews. Other strategies include unannounced facility investigations, morning, evening and weekend surveillance of employers that might be committing violations, and involving the Labor Department’s attorneys early in developing cases to pursue possible litigation.”

These types of investigations are going on across the country. The sad fact is that far more business operators are doing things incorrectly than not and will end up paying for it.

Comply with the Basics

Two big questions: Do you know what state and federal labor laws apply to you? And are you in compliance with them?

An example of a basic HR law: Do you have the 2012 state and federal labor compliance poster up in a common area where all employees have access to it? I’d bet that at least 65% of the stores out there have no poster or one that is out of date. This can result in a fine of up to $1,500 per site; it will usually lead to a full investigation of your business’ employee practices. The increased work is not much more for the investigator, but you will end up spending many hours finding documents, copying, mailing or attending audit interviews. In the end, you may be dealing with a much bigger fine and/or legal issues. Another question: When was the last time you had a qualified expert review your labor compliance and overall employee practices? While there are many cases when I would advocate doing some research and addressing things on your own, this is not one of them. State and federal labor laws are so complex and change so often that you need expert outside help.

Where to Begin

Don’t be overwhelmed. Here are some starting points offered by Ted Wojcik, a certified human-resources consultant who has worked with small and midsized companies for nearly 20 years:

  • Have your business compliance practices reviewed by an HR expert. Failure to comply with labor laws can result in hefty government fines, court fees and a tarnished reputation. Ignorance is not an excuse. Have your business practices audited to identify potential risks and bring policies and procedures up to date. Everything from the job application you use, the questions you ask or do not in an interview, how employee records are stored and how you handle employee discipline and termination need to be reviewed.
  • Review and update policies. A company handbook is meant to guide employee behavior and protect your business by showing you comply with labor laws. But policies that are outdated or inappropriate can cause more harm than good. The handbook must be the correct one for the size of your business and the state you operate in.
  • Conduct performance reviews. They have been proven to improve employee productivity, minimize turnover and save money by having existing employees work to their fullest potential.
  • Celebrate success. Don’t forget to acknowledge and celebrate each of your company’s achievements with your employees. The best part of creating an employee management strategy is the satisfaction that comes from reaching your goal. Be sure you recognize employee achievements. And it doesn’t have to be a monetary acknowledgement—a sincere thank-you goes a long way.

I know this sounds like a lot of work, but like so many things in business, the hardest part is getting started, and it beats the alternative of the government fining you and employees suing you. As for the cost, look at what you are paying today in unemployment insurance and think about what a 1% reduction would put back in your pocket. That will probably more than pay for the cost of getting this work done.

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