Ensuring Enterprise-Wide Compliance

Corporate awareness of labor law breaches is on the rise, yet compliance with these regulations remains elusive. In 2004, one of the world's largest retailers discovered over 1,000 contraventions of child labor laws during an internal audit. Since 2001, back-wages collected by the Department of Labor (DOL) for violations of labor laws increased 33 percent. A quick-service company was fined $13M, a financial services provider was fined $22M, and an insurance firm was dealt a $90M judgment. Corporate awareness is not a sufficient compliance strategy.

Complying with the Fair Labor Standards Act (FLSA), the Family Medical Leave Act (FMLA), and other labor laws and regulations represents major challenges for employers. At the same time, noncompliance with these government regulations is becoming increasingly costly.

In 2003, the DOL reported that back wages collected on FLSA cases alone reached approximately $212M, a 21% increase from a 2002 record. Inadequate workforce management processes are largely to blame for non-compliance with government workforce regulations. The list of shortcomings is long and the issue widespread: labor forecasting and scheduling that does not account for minor work rules; time collection methods that cannot prevent overtime violations; manual payroll calculation practices that result in compensation errors; entitlement tracking approaches that cannot keep up with changing labor regulations. The challenges are particularly acute in industries with large hourly workforces such as retail, manufacturing, healthcare, and transportation.

A key element of any labor compliance program is improving the accuracy, auditability, and consistency of workforce management processes–employee forecasting and scheduling, time and attendance, and workforce reporting. These processes have historically had little automation and few controls. For market-leading organizations, this focus is more than a legal matter. FMLA and FLSA violations not only impact the bottom line, but erode goodwill between employers and employees.