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Outside Insights | By Charlie DeWitt

The Key Is In Compliance
Compliance automation is a win-win scenario for employers and employees, and can help operators as they climb out of the recession.

Consumers went through the recession cooking more often at home and searching for the best deals when dining out, while restaurant owners looked for creative ways to drive business and reduce costs. Staffing cuts, coupon offers, menu changes, adjusted store hours—you name it. The quick-service industry tried it all. But wise restaurant owners weren’t stuck in belt-tightening recession mode. They were looking to the future and taking action to prevent high-risk noncompliance behavior that can generate negative publicity and invite stiff penalties and costly government fines.

According to a 2009 AMR Research study, the average fine for noncompliance lawsuits was $250,000 in 12 months. The risks of noncompliance lawsuits are compounded by the fact that employers must track and comply on multiple levels to meet federal, state, and local regulations. And let’s face it: Doing so manually for each employee is pretty much impossible.

Restaurants can speed up their recovery plan by automating critical workforce management processes that help them track and comply with mandated regulations. An automated system should keep their data accurate, up to date, and in compliance, as well as allow them to monitor personnel actions, execute internal audits, and stay consistent in record-keeping. This creates a win-win scenario for employers and employees.

In general, there are four key workforce management processes that employers should focus on when automating to minimize compliance risk.

Hiring management—The first rule in compliance automation? Minimize risk. The second rule? Maximize compliance. And both of those rules start where the relationship between employee and employer begins: the hiring process. AMR Research reported that 42 percent of restaurant/hospitality industry respondents take over two days to actualize new hires into their workforce management systems. Of that group, 42 percent allow new hires to commence working before being set up in their systems. That gap leaves substantial time for compliance risk to turn into compliance litigation. Automate your hiring process and you reduce compliance risk to protect yourself and your prospective employees.

For employers, an automated process should provide visibility and control to standardize your hiring methodology. Whether your team is hiring for one restaurant or multiple locations, nationally or worldwide, your hiring process should minimize subjectivity and set clear standards that all hiring managers can follow.

In addition, an application process should automate the notification and consent to pre-employment disclosures required by law or company policy. All information should be automatically collected and stored consistently and reliably across all hiring locations.

For potential employees, automation provides a uniform and consistent application and selection process that promotes fair and equitable treatment. For employers, it’s the one sure way to avoid costly compliance errors.

Scheduling—The quick-service restaurant world is full of employees aged 17 and under who may have age restrictions that determine when and where they can work and what jobs they can perform. One scheduling conflict can create a compliance nightmare—and invite a lengthy and costly lawsuit for violating Fair Labor Standards Act (FLSA) guidelines.

Most automated scheduling solutions regulate meal/break and overtime scheduling to help managers adhere to compliance rules. And when it comes to employee breaks, noncompliance can be costly. In the past four years alone, one global retail giant has paid over $250 million for litigation involving missed breaks. A best-of-breed scheduling solution can help employers avoid such risks. The employer’s historical data can be used to forecast coverage, consider individual employee restrictions, schedule breaks, and then automatically align appropriate talent with approved tasks—all while adhering to compliance regulations.

Employers benefit by automating processes that help them appropriately schedule employee coverage to provide excellent service, while minimizing compliance risk. Employees benefit by aligning themselves with a reputable employer who provides a safe, fair, and enjoyable work environment.

Time and attendance—AMR Research estimates that 82 percent of time and attendance data corrections are made by someone other than the employee. Further, AMR estimates that 47 percent of retailers admitted to receiving complaints from employees regarding time and attendance.

A national pizza restaurant chain recently agreed to pay $12.5 million dollar settlement for intentionally misclassifying employees to avoid paying overtime wages. And a major international retailer was recently ordered to pay $640 million to settle overtime cases.

An automated system should keep restaurants’ data accurate, up to date, and in compliance, as well as allow them to monitor personnel actions, execute internal audits, and stay consistent in record-keeping

The risk of such lawsuits can be avoided by automating processes that provide employers with greater visibility into time and attendance activity. Automated alerts notify managers when employees are approaching overtime. And timecard approval rules require employees to approve or reject changes to their timecards to prevent unchecked changes by managers. Automating checks and balances processes helps employers reduce compliance risk, and reassures employees they are being treated fairly—and paid correctly.

Absence management—Employee absence can take many forms—from family or medical leave to vacation and extended breaks. Laws can vary from state to state, so unless they are automating processes to manage all forms of employee absence, businesses risk failing to comply with government regulations.

In March 2009, Nucleus Research reported that employees take off an extra 1.25 unapproved days per year. Automating absence management processes provides employers with the necessary tools to not only track unapproved time off, but to ensure eligible employees receive their company-approved and government-mandated leave benefits. The best absence management solutions also auto-generate leave-related documents such as medical certification forms and disciplinary action letters—an essential part of compliance record-keeping and enforcement of related policies.

For employees, the benefit of automating absence management processes is clear. It provides assurance that all employees are being treated fairly and equitably—and that managers aren’t playing favorites.

Automating essential business tasks such as hiring, scheduling, time and attendance, and absence management creates a win-win scenario for employers and employees. Restaurant owners should be looking to the future and consider automating their workforce management processes as a strategic way to minimize compliance risk and to speed up recovery plans—a strategy the competition may not even consider. So as the economy stabilizes and business rebounds, they’ll be a step ahead of the competition and ready to serve their customers—without the fear of being served in return with fines for noncompliance.

Charlie DeWitt is the vice president of vertical marketing for Kronos Incorporated, a workforce management solution provider, where he oversees vertical marketing and drives strategic initiatives in the enterprise.