Do you pay a fair wage? You might be surprised by the answer (and the resulting lawsuit).
In the fight to stay competitive, retailers are continuously squeezed on margins—and maintaining the employee minimum wage adds additional cost to the bottom line while simultaneously impacting the actual cost of sales. Facing the added pressure of self-inflicted damages that PR scandals create is the last thing retailers need on their plates, especially when it comes to the way they treat their employees.
Underpaying employees against the living wage is a major offense, and as you may have recently read in the press, many high-profile companies are being exposed for short-changing their staffs—and the retail industry is one of the worst offenders. While some underpayment claims are due to gross negligence and unfair business practices, many organizations don’t even realize they are actually paying their employees less than the minimum wage.
Hours worked x wage = gross pay. Seems simple, right?
Not so much. Compliance under the US Fair Labor Standards Act is not as simple as many employers might think. While it’s common practice to average employee hours out over a given period of time, labor and fair wage laws are much more nuanced than that—and many organizations don’t even realize that by employing this formula, they’re actually paying their employees less than the minimum wage.
For example, if a business does not account for “grey areas” like these, the calculation of each employee’s earned wage per hour may vary greatly:
- Travel and waiting time
- Show-up time
- Training and meeting time
- On-call time
- Rest periods
- Meal periods
- Sleeping time
- Time suffered or permitted to work
The real cost of underpaying your staff
The non-compliance penalties, back pay, and PR damages associated with underpayment are extremely costly in both the short and long term, and can even threaten a retailer’s existence.
In 2015, Foot Locker was forced to pay more than $7 million to its employees for unpaid overtime. Apple employees filed a class-action suit when they were forced to spend 10-15 minutes every day waiting in line for security checks after clocking out. And more recently, Apple was penalized to the tune of $2 million due to a complaint over 30-minute lunch breaks that originated in one California store.
Protect your enterprise and your investors with modern Workforce Management
With a best-in-class WFM solution in place, retailers have the power to see across the entire workforce to avoid these kinds of costly mistakes—and the data insights to make fact-based decisions that could save millions of dollars, their brand’s reputation, and potentially, their business.
Tagged: HR, labor laws, payroll, WFM, workforce management