A Five-Step Guide for Developing a Wage and Hour Compliance Plan

The Department of Labor (DOL) has shown its willingness to “get tough” on noncompliant healthcare employers in the expansion of audit coverage and push for increased back pay awards. Since 2009 the DOL has enforced a “Plan/Prevent/Protect” compliance program that encourages employers to “find and fix” their wage and hour violations before being targeted by DOL compliance audit.

In promoting wage and hour compliance initiatives in their own facilities, healthcare employers need to have a plan for compliance. Here’s some information to get you started.

Step 1 – Policy Review

Every DOL audit starts with a policy review, and that’s where you should start too. The words on paper matter. And with the Wage and Hour Division’s (WHD) increased focus on system-wide practices, both facility-specific and system-wide policies will be subject to review. It’s also important to make sure department policies are lawful and consistent with facility- and system-wide policies.

Healthcare employers also are encouraged to conduct an audit of the day-to-day practices of HR/Payroll/Frontline Managers to ensure informal policies/practices comport with written policies.

Step 2 – Manager and Employee Training

Train HR and Benefit staff and frontline managers/directors regarding state and federal wage and hour laws. In addition, provide employees with initial and annual training regarding policies and procedures. Consider putting a special emphasis on meal period rules, tracking of off-the-clock work and appropriate standards/approvals for making necessary exceptions/edits to employee time record reports.

Step 3 – Periodic Audits and Annual Reviews

Conduct an annual review of payroll practices, policies and time recordation standards as well as periodic internal audits. Areas to review include:

  • Payroll exception and discrepancy reports
  • Edit certification
  • Spot-checks and random runs
  • Support documentation comparisons for meal periods and clock-ins
  • Annual payroll review checklist
  • Legal review of payroll practices, policies, and time recordation standards
  • Administrative review of timekeeping recordation and error systems


Step 4 – Risk Management and Compliance Reporting

Develop a compliance reporting program and designate an administrator or task force over wage and hour compliance that can develop the following risk management strategies:

  • Provide chain of command for handling of payroll issues / discrepancies
  • Create investigation/response protocol
  • Employee compliance hotline
  • Developing appropriate investigation, review and report procedures


Step 5 – Accountability and Enforcement

Once everyone is trained on wage and hour compliance, it’s important to hold supervisors and employees accountable for errors and policy violation.

Enforcement also should include a FLSA compliance checklist, action plan and an annual “state of the union” analysis and trending report to track progress on compliance initiatives.

Wage and hour lawsuits in healthcare are an unpleasant fact of life that many organizations would like to ignore, but it’s an issue that needs to be addressed head on. For more information, check out the white paper, “The DOL’s 6 Most Targeted Compliance Areas for Healthcare Employers.”


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