The Government Accountability Office (GAO), the audit, evaluation, and investigative arm of Congress, issued a report on December 18, 2013, that calls on the U.S. Department of Labor to improve its programs for providing guidance to businesses on compliance with the Fair Labor Standards Act (FSLA). The report highlights a growing challenge that many businesses face in maintaining appropriate records for compliance with federal wage and hour laws.
GAO found substantial increases over the last decade in the number of civil lawsuits filed in federal district court alleging violations of the Fair Labor Standards Act of 1938, which is the primary federal law that sets minimum wage and overtime pay standards applicable to most U.S. workers. The GAO report found that 45 percent of the lawsuits filed in 2012 contained allegations that the employer failed to keep proper records of hours worked by the employees.
“As the number of FLSA lawsuits has increased,” GAO noted, “questions have been raised about the effect of the FLSA on employers and workers and about [the Wage and Hour Division’s] enforcement and compliance assistance efforts.”
GAO was asked to examine how the Labor Department’s Wage and Hour Division (WHD) plans its FLSA enforcement and compliance assistance efforts following a November 2011 House Subcommittee hearing that examined regulatory and enforcement actions under the FLSA.
According to employment law experts, misclassifying an employee as exempt or non-exempt is one of the most common errors committed by employers, and the Department of Labor has estimated that more than one-half of employers have incorrectly classified employees under the FLSA.
WHD’s Fact Sheet #21, entitled “Recordkeeping Requirements under the Fair Labor Standards Act,” describes how employers are required to keep certain records for each non-exempt worker, which must include certain identifying information about the employee and data about the hours worked and the wages earned.
In its report, GAO stated that improved guidance from WHD might not affect the number of FLSA lawsuits filed, but it could increase the efficiency and effectiveness of WHD’s efforts to help employers voluntarily comply with the law. The report recommended that WHD be directed to “develop a systematic approach for identifying areas of confusion about the requirements of the FLSA that contribute to possible violations and improving the guidance it provides to employers and workers in those areas. This approach could include compiling and analyzing data on requests for guidance on issues related to the FLSA, and gathering and using input from FLSA stakeholders or other users of existing guidance through an advisory panel or other means.”