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Controlling FLSA Risk with Best Practices and Automation

March 26, 2015

Don Pagel KronosToday’s guest blogger is Don Pagel, Vice President of Public Sector Services for Kronos, Incorporated.

Don joined Kronos after 5 years with the City of Houston where he was most recently the Deputy Director in the Office of the Mayor responsible for visionary economic development projects. His past City responsibilities have been as a change agent for City Payroll and Parking Management where he helped restructure and redefine both organizations and streamline processes through automation.

Don is a seasoned business executive with experience in business turnarounds and technology implementations. Don has over 25 years of executive experience in the government, distribution, manufacturing, IT and ERP consulting industries.

By Don Pagel
Many years ago, my seven year-old son and I were driving to someplace when we pulled up to an intersection with a green light. Right before we entered the intersection, a car ran a red light in front of us and we had to slam on the brakes to miss colliding with them. We were both a bit shaken by this. After catching our breaths, we traveled on through the intersection. A moment later, my son said, “Dad, I want to be king.” “Why,” I said. “Because, if I were king I would force people to do the right thing.” To a seven year-old who regularly had to do things simply because I told him to, this seemed perfectly legitimate. Reality, of course is somewhat different.

We struggle with this same principle every day in business. We have rules, policies and laws that are routinely not followed for a host of reasons… many of which may be valid, but some are not. Additionally, each of these rules, policies or laws has varying degrees of consequences that senior management must take into account. Let me give you one example from my personal experience.

In a previous position as a payroll executive in a major city, we used pay cards as one of the methods to pay our employees. This method had been in place for a number of years and no one thought much about the security around them. Because a policy was not followed concerning updating current mailing addresses with HR, we sent W-2’s to the departments and they would pass them out or find a good address for them. Three enterprising administrative assistants figured out that if they didn’t mail out the W-2’s AND didn’t notify HR when pay card users terminated, they could pocket the money. They were finally caught when one of the W-2’s got mailed to a previous pay card employee. The three then spent some quality time in one of our fine penal institutions.

Just like we couldn’t completely plan for the person that ran the red light in front of us, often we can’t calculate the risk of not effectively planning. Industry standard security policies around payroll operations could have stopped my problem from happening in payroll. The cost of hiring a consultant would have been much less than the lost money…

DOL AuditSimilarly, lack of adherence to the Fair Labor Standards Act can have some very serious consequences. When control in the field is too flexible, supervisors may naturally take advantage of overtime or leave policies and laws. Over years, these practices (when seen by others) can balloon into a full-fledged Department of Labor audit and can lead to large fines and even class action law suits. Using technology to ensure compliance in the field can both reduce risk and increase employee morale. Using this automation in time collection is like having a safety railroad booms drop in front of traffic during a red light.

So you don’t have to be king. You just have to be smart and use the tools available. Oh…and today, my son isn’t a king…just a great guy!

One Comment leave one →
  1. March 27, 2015 11:33 am

    The King approves 🙂 Great article!

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