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October 7, 2010 | HR Compliance | Posted by Howard Lennie

Compliance and the Real Truth Behind Those Scary Statistics

Lately, the following statement has been showing up in various articles, blogs and web searches: “the Department of Labor (DOL) estimates that 80 percent of employers are not in compliance with applicable wage-and-hour laws.” The statement is attributed to an Advisen Ltd. report titled “The Threat of Wage-and-Hour Lawsuits.” Since the quote is attributed to the DOL, I thought it would be easy enough to find such a definitive quote on the DOL web site. It was not.

After making an inquiry to the DOL, I was directed to the statistics page of the Wage and Hour Division (WHD) where I found a 2008 fiscal year report with the following statement: “The percentage of WHD complaint investigations that found no violation of WHD laws remained low at 20 percent.” Additional statements in the report indicate that the investigations were in response to registered, screened complaints received by the WHD.

If Advisen drew its 80% estimate from this report, there is the potential for a huge statistical bias that distorts the statement’s accuracy. Not that the DOL, plaintiff’s bar or employer counsel are complaining about the fear factor. But, the increased enforcement and litigation is real enough without citing potentially distorted facts and figures, as is happening in other blog posts we’ve read.

A more accurate statement might be: “Of the cases investigated by the WHD for FLSA violations during the 2008 fiscal year, nearly 80% of employers were not in compliance.” It more accurately states the facts from the report without diminishing the seriousness of the risk of a wage and hour compliance audit.

So yes, Wage and Hour statistics from 2008 DO show that many companies are still out of compliance, and that when investigated, that number is hovering at about 80%. But no, the Advisen report is not nearly as accurate as they would have you believe.  It's important to remember that every company should take the necessary steps to make sure that they are in compliance with Wage and Hour Law but, at the same time companies should have the right to make those decisions based on accurate data.

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