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  • The U.S. House of Representatives has approved a federal bill that would decriminalize cannabis use. However, this bill’s fate in the Senate is unclear right now. If this bill is signed into law, the act would resolve any conflict between federal and state law that causes any confusion for employers. State laws associated with the use of medical and recreational marijuana still vary from state to state.

    The Marijuana Opportunity Reinvestment and Expungement (MORE) Act, H.R. 3617, passed the House in a 220-204 vote on April 1. All but two Democrats voted for the measure and all but three Republicans voted against it.

    The Senate is currently split 50-50 between Democrats and Republicans. When the Senate is divided, Vice President Kamala Harris serves as the tie-breaking vote. With that said, the bill would need a total of 60 Senate votes to break a filibuster.

    States Still Regulate Cannabis

    Since marijuana is still listed as a Schedule I drug under the federal Controlled Substances Act, marijuana is still considered high for abuse and serves no medical value. The MORE Act would remove marijuana and criminal sanctions, and provide some relief for previous convictions.

    For the workplace, states would continue to regulate cannabis and would not be required to legalize its use. Thirty-seven states have currently approved medical marijuana use with 18 of those states also approving recreational use. Employers are still able to create policies that prohibit any cannabis use by their employees.  

    How To Adapt To Changing Attitudes

    Cannabis laws will continue to expand at the state level regardless of whether the federal government approves this bill. About 68% of Americans believe that marijuana should be legalized. 31% of Americans feel that marijuana should be legal only for medical use with 8% saying it should not be legal at all. 

    There’s an increasing number of people in the workplace who have failed drug tests. In 2021, positive drug tests reached the highest level in two decades. In light of COVID-19, many employers are struggling with staffing shortages, so testing for marijuana is no longer a main priority for companies. Despite these unprecedented times, employers need to focus on training managers and supervisors on proper ways to approach employees when they might be working under the influence. With that being said, any employee that goes through the drug screening process must be thoroughly documented.  

    Take A Proactive Approach To These Ongoing Changes

    As the cannabis industry continues to evolve, partnering with GMS will benefit your business. The experts at GMS work with you to make your company simpler, safer, and stronger. GMS will keep you up-to-date on any changes whether industry-specific or government-related. Contact us today to learn how GMS can help make your job easier. 

  • In March of 2019, Governor Phil Murphy signed the New Jersey Secure Choice Savings Program Act to close the retirement savings gap. This Act created the Secure Choice Savings Program which was designed to provide a private path for employees to save for retirement. This means that certain employers are required to establish a payroll deposit retirement savings plan that permits eligible employees to take part in the program.

    Although the implementation of the program remains in the works, the new website is now operational as of April 2022. More information is expected soon which will include the next steps concerning how to implement this program in your business. To keep up to date on this Act, visit their website today.

    Employers Subject To The Act:

    The Secure Choice Savings Program applies to any person and entities that are engaged in a business, industry, profession, trade, or other enterprise within the state of New Jersey that:

    • Have not employed fewer than 25 employees in the state the previous calendar year
    • Have been in business for at least two years
    • Have not offered a qualified retirement plan in the past

    Qualified Retirement Plans:

    There is a common misconception that plans must be offered as a 401(k). However, there are a variety of qualified retirement plans offered to an employer, to avoid complying with the Act. These include Sections: 401(a) and (k), 403(a) and (b), 408(k) and (p), 457(b), or a plan sponsored by a PEO.

    How Employers Will Comply:

    To comply, covered employers must follow the steps below: 

    • Establish a payroll deposit retirement savings arrangement no more than nine months after the Board opens this program for enrollment. Each employee that will enroll in the program will be able to choose their individual contribution level.
    • Each employee who has not opted out will be automatically enrolled in the program.
    • Deposit deductions from employees’ payroll into the program.

    As this new Act rules out, employers are permitted to contract with a third party. A third party means partnering with a Professional Employer Organization like GMS, who will perform the tasks listed above on behalf of the employer.

    What This Act Means for Employees:

    Employees that were hired more than six months after the Board opens the program for enrollment and have not opted out, will be automatically enrolled. New employees who are eligible to enroll, will be automatically enrolled. New employees will be eligible to enroll annually. Employers are required to have an annual open enrollment period where eligible employees are able to change their elections under the Program. That also means that any employee who opted out in the previous year will be able to opt in during the new enrollment period.

    Penalties for Employers:

    Any employer who fails to enroll any employee without a reasonable cause in a timely manner is subject to the penalties listed below:

    • A written warning for the first calendar year in which a violation occurs.
    • For the second calendar year, there will be a $100 fine when a violation occurs.
    • For the third and fourth calendar year, there is a $250 fine for each employee who was not enrolled in nor opted out of participation in the program.
    • For the fifth calendar year and the years to follow, there will be a fine of $500 for each employee who wasn’t enrolled in nor opted out of participation in the program.
    • There will be a first offense penalty of $2,500, and a $5,000 fine for the second offense and each offense following when the employer collects employee contributions but fails to remit any portion of the contributions to the fund.

    Be Proactive And Partner With A PEO Today!

    As the board is still working on the implementation of this program, employers have time to figure out a game plan for their business. When partnering with a PEO like GMS, our experts will keep you up to date on these changes and assist in the process of enrolling your employees into this program. Offering a retirement plan is more important than ever to retain quality employees. However, at GMS, we know how challenging it can be to decide which plan is best for you and your employees. Are you looking for proactive ways to ensure your business’ success? Contact us today to learn more! 

  • The U.S. Department of Homeland Security (DHS) is ending its temporary COVID-19 related policy which allowed employers to use expired List B identity documents when it came to I-9 forms. As a result, expired identity documents will no longer be accepted to verify an employee’s eligibility to work beginning May 1, 2022.

    Authorities were unable to renew List B identity documents in a timely manner after COVID-19 became active in 2020, which allowed employees to temporarily present expired identity documents. Any employee who has provided employers with expired documents from May 1, 2020- April 30, 2022, will now be required to update their I-9s by July 31st, 2022.

    According to DHS: 

    • Any employee who previously presented an expired List B document and is currently still an employee, must provide an updated document establishing their identity.
    • No action is required if the employee is no longer employed by the company.

    There is separate COVID-19-related guidance that allows employers to review Form I-9 documents virtually, which is different than this DHS announcement. Reviewing Form I-9 documents virtually is in effect until at least April 30th, 2022. Dawn Lurie, Senior Counsel in the immigration practice group stated, “The announcement signals to us that we are nearing the end of the COVID-19 relaxation of the in-person review policy, which means that companies should start to address the population of folks that were virtually completed.”

    A violation in this regard could cost anywhere from $234 to thousands of dollars. Stacey Larotonda, GMS’ Vice President of Client Services, shares, “While some business owners think they are being cost savvy by keeping their HR functions in-house, they’re actually gambling on how expensive an overlooked error could be. All too often we see business owners being slapped with large fines, simply because they didn’t know better or weren’t keeping up with these legislative changes.”

    Regulatory compliance is complex and ever-changing. For our 2,000+ clients across the country, GMS handles these responsibilities so the business owners don’t have to. Get in touch today.

  • Following a series of high-profile digital intelligence campaigns and disruptive ransomware attacks, any company that is critical to U.S. national interests (finance, transportation, and energy sectors) must report when they are hacked or pay ransomware. Reporting these incidents will provide the federal government with more visibility into hackers who target private companies. Any substantial cyber incident will need to report to the government within three days and any ransomware payment to be reported within 24 hours. This reporting requirement legislation has been approved by the House and Senate on March 10th, 2022, and will be signed into law by President Joe Biden.

    A ransomware attack is an act in which criminals hack targets and hold their data hostage through encryption until ransoms have been paid. According to reports last year, hackers disrupted the world’s largest meat-packing company and the largest U.S. pipeline, putting lives and livelihoods at risk.

    As the war in Ukraine continues, government officials are concerned about the threat of Russian cyber and ransomware attacks against the U.S.  Many ransomware operators reside and work in Russia. The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency is designated by the legislation as the main agency to receive any notification of hacks and ransomware payments. 

    As an employer, it’s vital you communicate these concerns with your staff to best safeguard your organization against any attacks. We recommend utilizing a cybersecurity refresher course within your learning management system as a quick and efficient way to convey this information.  

    Contact us today for any questions or concerns you may have.  

  • As a result of the expected publication of a proposed overtime rule, the U.S. Department of Labor will recommend higher salary thresholds for white-collar exemptions as soon as next month. “Employers should expect a proposed salary amount that at least, approximates the amount proposed in 2016,” stated Alfred Robinson Jr., – an attorney with Ogletree Deakins in Greenville, South Carolina. The proposed salary level for the Fair Labor Standards Act’s executive, administrative, and professional exemptions could be a minimum of $913 per week or $47,476 per year. By comparison, the Trump administration in 2019 implemented a salary level of $686, which represents a considerable increase. 

    Jason Barsanti explained that the 2016 regulations were ruled to “put too much emphasis on the salary requirement, thereby effectively making the duties test[s] irrelevant.” The duties test determines which employees are exempt from overtime pay, and it depends on a variety of factors:

    • Executive exemption – Managing the enterprise, a department or a subdivision of the enterprise must be the employee’s primary duty.
    • Administrative exemption – The primary duty of the employee must be office or non-manual work that is directly related to the management of general business operations of the employer or the employer’s clients.
    • Professional exemption – Employee’s primary responsibility is to perform work that required advances knowledge in a field of science or learning that is acquired through specialized, intellectual training and study.

    A primary duty can occupy less than 50 percent of an employee’s time under these tests. Additionally, it is possible to count time spent performing both exempt and nonexempt duties concurrently.

    With the help of a PEO company like GMS, you no longer have to worry about following the latest legislative changes. Rules and regulations are constantly changing. Do what you do best. Outsource the rest.

  • When employees are set up for success, companies often enjoy the benefits. Happy, motivated employees are more likely to be more productive. Unfortunately, there are several factors outside of the workplace that have a direct impact on the overall wellbeing of your employees.

    An Employee assistance program (EAP) is one tool employers can use to help stressed-out employees and improve both morale and work performance. Let’s break down what an EAP does, how it benefits both employers and employees, and how your company can get the most out of its program.

    What Is An Employee Assistance Program?

    The Society for Human Resource Management (SHRM) defines an EAP as “a work-based intervention program designed to assist employees in resolving personal problems that may be adversely affecting the employee’s performance.” These intervention programs are designed to give employees support for private matters until they can find a more permanent solution. An ideal EAP should meet the criteria listed below:

    • Confidential – Given the personal nature of employees’ issues, EAPs should allow employees to privately and anonymously seek support.
    • Accessible – Services provided by an EAP should be accessible online and easy for employees to contact during and outside of work hours.
    • Available – Services should be readily available to any employees and immediate family members who are eligible for the program.
    • Short-term – EAPs aren’t meant to be permanent sources of aid. The services an EAP provides are designed to give employees access to key services and short-term help until they can find a good, long-term solution for them.

    The exact form of support can differ greatly from program to program, but an average EAP is typically designed to assist employees in a variety of ways. While the services may differ, the goal is the same – to give employees the support they need to address factors that impact their mental and emotional health.

    Examples Of Employee Assistance Programs

    EAPs vary greatly depending on which services they include. The average EAP provides a wide range of services aimed to provide critical support for your workforce, but the exact selection can vary from program to program. However, it’s common for EAPs to address a number of personal issues, including the following concerns:

    • Relationship challenges
    • Grief over loss of a loved one
    • Financial or legal problems
    • Stress management
    • Mental health issues, such as anxiety, depression, or PTSD
    • Substance abuse
    • Workplace or domestic violence
    • Crisis management

    While EAPs were traditionally developed to support these personal issues, modern programs have expanded to include further services. Employers have found that there are a number of additional stressors that impact work-life balance and future plans. EAPs can also include the following forms of support:

    • Child care
    • Elder care
    • Adoption specialists
    • Retirement planning
    • Living wills
    • Pet care
    • Academic and tutor resources
    • Personal and professional development

    Benefits Of Employee Assistance Programs

    More stress means more problems for both employees and employers. According to Gallup’s State of the Global Workforce Report, a whopping 57% of U.S. employees reported feeling stress on a daily basis. By alleviating that stress, EAPs can help businesses enjoy the following benefits:

    • Reduced absenteeism
    • Increased productivity
    • Better morale
    • Improved retention

    Reduced absenteeism

    Outside stressors can often lead to employees taking additional sick days or simply calling off to attend to personal issues. EAPs give employees the means to alleviate those stresses. A study by Federal Occupational Health (FOH) found that companies that offer EAPs saw a 69.2% decrease in absenteeism by giving employees access to various means of personal support.

    Increased productivity

    Just because employees are at work doesn’t mean that they’re productive. Behavioral health concerns like stress, anxiety, or depression directly impact how engaged employees are at work. That same FOH study found that employees with access to assistance programs were 22.8% less checked out while on the job and more invested in their work.

    Better morale

    Another benefit the FOH found was that EAPs can improve employees’ sense of overall wellbeing. Studies found that EAPs increased users’ life satisfaction by 24.2% by addressing stressors that caused personal distress. In turn, employee morale is substantially better when employees take advantage of EAP services.

    Improved retention

    Simply put, stress makes good employees leave. EAPs show employees that your business cares about their wellbeing, making them less likely to suffer burnout or look for a fresh start somewhere else.

    Assistance programs can also entice talent to join your business. According to SHRM, 76% of employees “consider mental health benefits to be a critical factor when evaluating new jobs.” An EAP is a clear sign that your business takes employees’ mental health seriously.

    How To Maximize The Value Of Your Employee Assistance Program

    Offering an EAP is one step. Getting employees to use it is another. National studies find that EAP utilization averages just under 10%, but not because the programs are ineffective. SHRM reports that there are a couple of key reasons for the low usage rate:

    • Privacy concerns – Employees either feel uncomfortable sharing personal issue or are afraid that employers will gain access to this personal health information.
    • Lack of promotion – Companies either don’t promote these programs enough or employees aren’t aware of how they can access these services.

    Even with low participation numbers, employers who offered an EAP typically enjoyed an ROI of at least $3 for every $1 spent according to the 2020 Workplace Outcome Suite. Still, there are ways that businesses can encourage better EAP participation and receive even more value from their programs.

    Regularly promote EAP awareness

    It’s not uncommon for employees to only hear about their EAP once during the onboarding process or when the program was added as a benefit. It’s best to give employees regular reminders about your EAP and how to access these services. These reminders can come in multiple forms – during annual meetings, email updates, etc. Regardless of how you send the message, multiple reminders will only increase the odds employees will utilize these services.

    Stress privacy

    It’s not always easy for individuals to admit they need help. With that being said, it’s essential to communicate that employees can privately access services online or on the phone around the clock.

    In addition, employees should understand that their interactions with these services are completely private and are not shared with others within the company, including the employer. By stressing the private nature of an EAP, employees are more likely to explore these services on their own terms.

    Work with HR advocates

    It’s not always easy to manage the various aspects of benefits administration by yourself. Fortunately, you don’t have to promote and manage your EAP alone. The right EAP provider can help you maximize the effectiveness of your program.

    For example, GMS partners with businesses to offer critical assistance and educate employees about how to best utilize these services. We work with employers to help them offer a quality benefits package without having to spend the time to administer these benefits by themselves, including group health insurance, assistance programs, and more.

    Ready to enhance your employee benefits package? Contact us now about how GMS can help you save time and money through expert benefits administration.

  • Learning is essential in the modern workplace. New technology and growing internal needs are forcing employees and employers to learn new skills over time. As a result, businesses that invest in education and improvement have an edge these days.

    Research shows that business owners who invest in learning innovation enjoy more than 9% improvement in organizational growth, productivity, profit, and transformation. This development is why more organizations have embraced the benefits of using a learning management system to support employee learning – and help their business grow along with them.

    Of course, it’s important to understand the intricacies of a learning management system before your business implements and offers one. Let’s break down the basics, benefits, and key features of learning management systems and how they impact your business.

    What Is A Learning Management System?

    A learning management system (LMS) is a web-based platform or software application used to implement and monitor a learning process. This type of system is instrumental in e-learning and mainly consists of the two following components:

    • A server responsible for maintaining the base functionality of the system
    • A user interface that students, administrators, and instructors use

    In a business setting, an LMS is used to deploy learning strategies across the workplace, facilitate experiential and formal learning, manage compliance training, and enhance sales enablement. These processes are streamlined through online learning functionality like user access, notifications, attendance, calendars, content sharing, and communication.

    Previously, LMS technology was limited in its functionality. Today, new technology allows employers to incorporate different activities such as gamification and mobile learning. These features allow an LMS to promote learning, establish a learning culture in the organization, boost productivity, and improve employee engagement.

    What Are The Benefits Of Using A Learning Management System?

    Learning management technology is beneficial for both the employees and their employer. Here are some of the main benefits of using an LMS for your business.

    Reduced learning and development costs

    The use of learning technology allows businesses to eliminate a variety of costs. By embracing online learning, organizations can cut out expenses associated with in-person learning.

    There are several hidden costs associated with in-person training. For example, businesses may need to account for travel, accommodation, and meals for some employees. Even if workers are nearby, there are costs associated with printing learning materials and either renting or maintaining physical meeting spaces.

    Those costs aren’t as necessary if most or all of your employees’ training can be done from anywhere with an internet connection. Learning technology allows your business to limit in-person training and shed costs through online functionality.

    Shorter, more streamlined onboarding process

    A good LMS is also designed to shorten the onboarding process for your employees and save both you and your workers time. There are a few ways an LMS can streamline employee onboarding.

    • Starter Pack – You can create a starter pack for the employees, including a virtual tour of the company and an introductory presentation. When employees have a good onboarding experience, 69% of them are more likely to stay at a company for a long time.
    • Content Management – Organizations can also make content easily available for employees. When the employees have educational content at their fingertips, they can learn quicker and better.
    • Microlearning – Businesses can create microlearning assets for their new recruits on the LMS. This ability enables employees to learn through bite-sized lessons, streamlining their onboarding process while keeping their attention.

    Fewer compliance issues

    Regardless of the industry, all organizations need to stay compliant with certain regulations. Businesses can add new compliance standards to their LMS allowing the system to update employees with any change in compliance laws. With just a few minutes of education, businesses can reduce issues and avoid both monetary penalties and reputational damage.

    Improved employee performance

    Another benefits of an LMS is that it can improve employee performance through multiple means. For instance, businesses can gamify training and create a reward-based learning model where employees can make regular progress.

    Certain systems can also enhance employee collaboration, which is paramount in making your team-building efforts a success. Employees can share resources, discuss projects, and benefit from social learning immensely. These efforts help employees personally invest in learning.

    Performance tracking

    Churning out training material or curating learning resources isn’t enough. Businesses also need to track the progress of their employees to determine the effectiveness of their learning initiatives. The majority of LMS options have analytical and reporting tools where employers can monitor learner progress and identify any shortcomings that need to be covered.

    Help employees upskill or reskill

    Nearly two-thirds of companies commit to reskilling or upskilling employees to address internal changes and new technologies. Besides hard skills, businesses can also teach their employees soft skills through an LMS.

    Online technology helps employers deliver, monitor, and track training courses to build essential knowledge and skills in your workforce. The right LMS gives employees unlimited access to learning resources and material so that they can learn at their own pace on whichever device or platform they prefer.

    What Are Key Business Requirements For A Learning Management System?

    Nowadays, there are several LMS vendors with different systems. As you may expect, some may be better for your organizational needs than others. There are multiple LMS features that your business should consider when selecting a system.

    Ease of use and customization

    One of the highlighting benefits of these systems is that they simplify both learning and tracking progress. An essential business requirement for an LMS is that it’s equally accessible and easy to use for employers and employees. Here are some features to look for:

    • Device Compatibility – The LMS should be compatible with different devices and provide the same user experience across platforms.
    • Appearance – The LMS should not have overly bright colors or distracting visuals that make navigation difficult.
    • Layout – The layout of the LMS should make it easy for users to find the resources and tools they need on desktop and mobile devices.
    • Additional Tools – If you have people with visual disabilities in your workforce, make sure the LMS also adds options for users to listen to content rather than read it. Make sure content is available in different formats so that it’s accessible to as many people as possible.

    System customization is another key feature. The right system should make it easy to create courses and offer plenty of room for customization so that you can personalize it for your organization’s use. If an LMS is not flexible or scalable, it will only hinder the learning experience and cause headaches when making adjustments to existing learning resources.

    Integration capabilities

    Like other systems, life is much easier when your LMS integrates easily with other business systems. The ability to connect with customer relationship management (CRM) tools, content management systems (CMS), and other forms of software will help streamline the management process, enable more data-driven decisions, and enhance the overall learning experience. Another valuable integration is single sign on, which automatically signs employees in the the LMS when they are signed on to other integrations such as email or SharePoint.

    Tracking and reporting capabilities

    LMS reporting refers to a system of data analysis and collection in the learning management system. This information lets you monitor the training process and measure its success. Moreover, you can use the LMS reports to identify components of your training process that can be improved.

    It’s important for the LMS to have tracking capabilities so that you can assess the progress of your employees and collect feedback to measure their level of satisfaction. Over time, you can use meaningful data to improve training programs, update course materials, and make other changes to course content and other processes to help enable your organization’s learning goals.

    Automation capabilities

    Automation has become a must-have for almost every business process these days, and for good reason. LMS automation allows employees and instructors to save time on menial tasks and streamline the learning process. These are some ways automation helps your education endeavors:

    • Portal Invites – Invites are automatically sent to new recruits as soon as you enter their information in the LMS.
    • Enrollment Reminders – The LMS automatically sends reminders to employees, encouraging them to finish the enrollment process on time.
    • Calendars – Employees can set reminders for certain tasks or learning sessions.
    • Auto-Assign – Instructors can set auto-assign rules based on predetermined criteria, such as an employee’s department or enrolled learning session. For instance, an instructor can set the criteria that certain learning resources must be sent to all employees in the sales team who are enrolled in the summer learning session.

    Artificial intelligence (AI)

    Automation and AI go hand in hand. Modern AI-based learning platforms can create solutions, such as speed recognition, decision-making, translating learning resources to different languages, and more.

    AI also helps instructors by giving them recommendations on how to curate and present information in the best way possible for specific users. This feature allows employers to modify training content and make online courses more effective.

    Embrace Learning To Help Your Employees Grow

    Employee education is a tremendous opportunity for businesses trying to onboard new hires, tap into their workers’ potential, and support your team. An LMS allows employers to streamline and optimize the education process.

    Of course, it takes more than just software to maximize your business’ education efforts. GMS is a professional employer organization (PEO) that gives businesses access to cutting-edge technology and expert support so that your employees are set up to succeed.

    Ready to save time and grow your business through expert HR management and technology? Contact us now about how we can simplify your business through comprehensive HR solutions and our industry-leading HRIS.

  • With the COVID-19 outbreak in 2020, the work force has changed significantly. Most employers opted to provide the option for employees to work from home, which is now a very sought-after advantage when looking for new jobs. With that being said, it is vital that employers ensure their new hires still feel connected to the company when onboarding in a remote work environment.

    While in a remote setting, displaying how certain procedures are performed and how the company functions can be challenging for new hires to fully understand. How are these new hires supposed to go into meetings with their colleagues, catch up for a chat, and learn functions that are easier to learn in person?

    There are six key factors that will help in the onboarding process in a remote work environment:

    • Be relatable
    • Encourage boldness
    • Proper introductions
    • Team bonding
    • Reviewing performance
    • Engaging in company culture

    Working in a remote environment has led employees to feel disconnected from their teams and the company. Find a way to relate to your new hires and make sure they know they’re not alone. Be sure to schedule phone calls and zoom meetings – which are more interactive than chat or email; let them know you are here for them. It is also important to provide them with motivation and confidence to reach out for any help or clarification within their teams. Team bonding and proper introductions go hand and hand with each other. Introduce your new hires to other employees, especially within their specific teams. Engage the new hires in company culture meaning, take all the new hires out to lunch or do something creative to show the company culture. Encourage your company to host events, or a virtual game night so new hires can find different ways to stand out and have fun. Finally, congratulate your new hires when they do an impressive job within their new role. Ask them for feedback or correct them if they need further guidance.

    These six factors listed above will help guide you during the onboarding process to help your new hires. Here at GMS, our electronic onboarding provides you with everything your employees need for an engaging and organized onboarding experience – whether in-person or remote. Contact us today to learn more.

  • Running a business is complicated enough. Having to deal with wage and hour violations only makes your ability to grow your business even more difficult.

    The majority of businesses in the U.S. are subject to the rules and regulations set by the Fair Labor Standards Act (FLSA). These rules establish standards for minimum wage, overtime pay, recordkeeping, and youth employment compliance.

    While these rules are designed to protect employees, it’s not always easy for employers to keep track of and apply these rules. It’s very easy for a simple, honest mistake to lead to an FLSA violation, which is why businesses should take the time and effort to conduct internal audits to identify any potential issues.

    Why Should Businesses Conduct Internal Wage And Hour Audits?

    The biggest reason to complete internal wage and hour reviews is quite simple – FLSA noncompliance is expensive. Violations can range from $1,000 to $10,000 each. In addition, FLSA violations could end up costing businesses in a couple of other ways. 

    According to the U.S. Department of Labor (DOL), the Wage and Hour Division took more than 24,700 compliance actions against businesses in 2021. Those actions led to more than 190,000 workers earning more than $230 million in back wages. This results in non-compliant companies owing an average of $1,211.70 in back wages for affected employees.

    In addition to back wages, financial penalties make FLSA violations even more costly for a business. The DOL will fine any company that willfully or repeatedly violates minimum wage or overtime pay requirements. These penalties include civil fines up to $1,000 for each violation.

    Repeated violations can also make a business a common target for future audits. The DOL chooses targets for wage and hour audits as part of an overall initiative or because individuals have filed complaints against a specific business. By failing an audit, the DOL has reason to check in on your business in the future for additional violations.

    An FLSA Audit Checklist

    A thorough FLSA audit includes multiple steps. Each of these steps is designed to provide a comprehensive overview of who is covered by the FLSA as well as, the different factors that can lead to violations.

    1. Review employee classifications
    2. Review regular and overtime pay calculations
    3. Review records and policies

    Employee classifications

    The first step of auditing your wage and hour practices is to examine the exemption status for all your employees. It’s essential to properly classify each employee to determine their exact employment status and whether or not they’re eligible for overtime.

    Employers conducting an audit should create a list that includes every employee. The safest way to start is to assume that every employee is eligible for overtime until proven otherwise. This employee list should include the following information to help employers determine overtime exemption status:

    • Job titles
    • Job descriptions
    • Salary information

    Once armed with this information, employers can perform a trio of tests to determine whether employees qualify as exempt or not. If an employee passes all three tests, employers can assume that they are exempt from overtime pay.

    • The salary basis test – Exempt employees must be paid a predetermined, fixed salary that cannot be reduced.
    • The salary level test – Exempt employees must meet the minimum salary threshold of $35,568, which equates to $684 per week.
    • The duties test – Employees must primarily perform a list of set duties established by the DOL.

    The easiest way to determine exemption status is whether an employee is a blue-collar worker or not. Blue collar workers are eligible for overtime, regardless of their salary. Non-salary employees are also eligible for overtime.

    When it comes to “white-collar exemptions,” employers will need to review each employee’s title, job description, and current duties. The DOL lists five separate groups as exempt from overtime pay, which are explained in-depth in our post on navigating white-collar exemptions. If a white collar employee’s duties align with any of the following groups and pass the salary tests, they are exempt.

    • Executive
    • Administrative
    • Professional
    • Computer
    • Outside sales

    Pay calculations

    Once you’ve successfully separated exempt and non-exempt employees, it’s time to review your pay practices to ensure that everyone is being compensated properly. This phase involves confirming the use of proper pay practices and calculations.

    • Ensure all hourly workers are being paid at least $7.25 per hour (or more, depending on your city/state).
    • Confirm that all employees who earned overtime were paid at least one and one-half times their regular pay rate after 40 hours of work in a workweek.
    • Double check to see if there are any employees who work in two different positions at differing rates that require special pay calculations and timekeeping practices.

    Records and policies

    An internal audit is a good time to review your company’s timekeeping policies. The FLSA requires employers to maintain a variety of records pertaining to their employees’ wages and hours. As such, your audit should confirm that your business records the following information and that all recorded information is accurate:

    • Employees’ personal information which includes, name, home address, occupation, sex, and birth date if under 19 years of age.
    • Hour and day when workweek begins.
    • Total hours worked each workday and each workweek.
    • Total daily or weekly straight-time earnings.
    • Regular hourly pay rate for any week when overtime is worked.
    • Total overtime pay for the workweek.
    • Deductions from or additions to wages.
    • Total wages paid each pay period.
    • Date of payment and pay period covered.

    How Often Should I Conduct FLSA Audits?

    In general, it’s best to perform wage and hour audits at least once a year. For example, some organizations plan a regular internal audit timed with either the beginning or end of their fiscal or calendar year.

    Another option is to conduct ongoing reviews throughout the year. This process involves more regular check-ins for compliance concerns, such as employee classifications or overtime calculations for new employees. Employers can also combine a comprehensive yearly audit with quarterly inspections to be as proactive as possible about FLSA violations.

    Stacey Larotonda, Vice President of Client Services at GMS, emphasizes, “FLSA self-audits should be done by every business on a consistent basis. It’s an easy way to make sure you aren’t hit with a significant fine should the Department of Labor want to audit you. Spending a little time on the front end can save you lots of money in the long run.”

    Protect Your Business From FLSA Violations

    A simple timekeeping mistake is all it takes to land your company in trouble with the DOL. Internal FLSA audits are one tool that employers can use to protect their business from misclassification, timekeeping errors, and other challenges. However, sometimes business owners can use some additional support.

    Simply put, most business owners don’t have the time to handle every tedious administrative task. GMS partners with businesses to help them simplify their core business functions. GMS provides your business with experts and a comprehensive web-based payroll solution to help you save time and protect your business against FLSA violations, wage and hour laws, and other costly issues. Our experts help business owners with:

    • Contractor vs. employee status
    • Recordkeeping
    • Overtime exemptions
    • Child labor

    Ready to streamline your payroll process and other HR tasks? Contact us now about how GMS can make your business a safer place.

  • The U.S. Department of Labor recently announced that their Wage and Hour Division (WHD) plans to add over 100 investigators to their team throughout 2022. As a result of the pandemic and great resignation, the division has reached the lowest staffing levels in decades. Acting Wage and Hour Administrator Jessica Looman stated, “While appropriations will determine our course of action, we are optimistic we will be able to bring new talented professionals on board to expand our diverse team.”

    According to the U.S. Department of Labor, some of the responsibilities that investigators include:

    • Conducting investigations to determine if employers are paying workers and affording them their rights as the law requires.
    • Helping ensure that law-abiding employers are not undercut by employers who violate the law.
    • Promoting compliance through outreach and public education initiatives.
    • Supporting efforts to combat worker retaliation and worker misclassification as independent contractors.

    What Is the Wage and Hour Division?

    The Wage and Hour Division’s mission is to promote and achieve compliance with labor standards to protect and enhance the welfare of the nation’s workforce. The Division is one of the country’s most crucial labor law enforcement agencies, enforcing comprehensive labor laws for over 148 million employees.

    The WHD enforces Federal minimum wage, overtime page, recordkeeping, and child labor requirements of the Fair Labor Standards Act. Additionally, the Division enforces a variety of legislative acts, including the Migrant and Seasonal Agricultural Worker Protection Act, the Employee Polygraph Protection Act, the Family and Medical Act, wage garnishment provisions of the Consumer Credit Protection Act, and a variety of employee standards and worker protections.

    What Does This Mean for Business Owners?

    When partnering with a PEO like GMS, you can rely on support from our HR experts. Our team can help safeguard your company by performing our own FLSA audits to ensure you remain compliant. During the audit, we’ll cover an extensive checklist, covering items such as proper employee classification and proper payroll coding. Upon completing the audit, we’ll dive into any possible areas of concern and provide our recommendations to rectify said issues.

    Reach out to GMS today to ensure that your business will be properly prepared and protected if it is audited.