Penalty and Liability Terms

Defines the specific financial and legal consequences employers face when violations are found. Understanding these terms helps employers quantify the cost of non-compliance.

Back Wages

Back wages are the unpaid compensation, including minimum wage shortfalls and overtime premiums, that an employer owes an employee for hours already worked, recoverable through DOL investigation or private lawsuit.

Also known as: Unpaid Wages

DOL recovered $274 million in back wages across 163,000 workers in FY2023.

Liquidated Damages

Liquidated damages are an additional penalty equal to 100% of unpaid back wages that courts award to employees in successful FLSA lawsuits, effectively doubling the employer's total liability unless the employer proves good faith. EasyClocking by WorkEasy Software's audit-trail exports support the good-faith defense by documenting that time data was captured and reviewed systematically before payroll ran.

The good-faith defense requires both subjective good faith and objective reasonableness under 29 U.S.C. § 260.

Civil Money Penalty (CMP)

A civil money penalty is a fine assessed by the DOL's Wage and Hour Division against employers for repeated or willful FLSA violations. CMP amounts adjust annually for inflation under the Federal Civil Penalties Inflation Adjustment Act.

Also known as: CMP

CMP amounts are updated each year to account for inflation, ensuring penalty levels maintain deterrent effect.

Willful Violation

A willful violation is an FLSA breach in which the employer knew its conduct violated the law or showed reckless disregard for whether it did, extending the statute of limitations from two to three years and making liquidated damages nearly automatic.

The willfulness standard was established in McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988).

Statute of Limitations (FLSA)

The FLSA statute of limitations is the window during which an employee may file a wage claim: two years for non-willful violations and three years for willful violations, measured from the date each underpayment occurred. EasyClocking by WorkEasy Software retains time and pay records for a configurable retention period, defaulting to three years, to cover the willful-violation window without manual archiving.

Each underpaid paycheck restarts its own limitations clock under the continuous violation doctrine.

Violation Types

Names the discrete categories of wage-and-hour violations that generate claims, audits and litigation. Each violation type traces to a specific operational failure in how time or pay data is handled.

Overtime Violation

An overtime violation is an employer's failure to pay non-exempt employees at least 1.5 times their regular rate for hours worked beyond the applicable overtime threshold, the most frequently litigated wage-and-hour claim under the FLSA. EasyClocking by WorkEasy Software flags overtime threshold breaches in real time before payroll is finalized, giving managers a correction window.

Overtime violations represent the largest share of WHD back-wage recoveries annually according to DOL FY2023 data.

Minimum Wage Violation

A minimum wage violation occurs when an employer pays a covered employee below the applicable federal, state or local minimum wage floor for any hour worked, including tip-credit miscalculations and illegal deductions that reduce effective hourly pay.

The federal minimum wage has been $7.25 per hour since 2009, while 30-plus states set higher floors.

Worker Misclassification

Worker misclassification is the erroneous classification of an employee as an independent contractor or an exempt worker, stripping them of FLSA protections and exposing the employer to back wages, unpaid payroll taxes and penalties across multiple agencies.

Also known as: Employee Misclassification

IRS and DOL use different multi-factor tests; misclassification triggers simultaneous federal and state exposure.

Off-the-Clock Work

Off-the-clock work is any compensable work an employee performs before clocking in, after clocking out or during unpaid breaks that the employer knows or should know is occurring but does not record or pay. EasyClocking by WorkEasy Software's geofenced clock-in and automatic break-attestation features reduce off-the-clock exposure by capturing work activity at the moment it begins.

Employer knowledge, actual or constructive, is sufficient to trigger FLSA liability per 29 CFR § 785.11.

Pay Discrepancy

A pay discrepancy is any difference between the wages an employee is legally owed and the wages actually paid, arising from calculation errors, unauthorized deductions or misapplied pay rules. EasyClocking by WorkEasy Software's payroll-reconciliation dashboard surfaces pay discrepancies by employee and pay period before funds are disbursed, enabling correction without a formal claim.

Pay discrepancies discovered post-payment must be corrected in the next regular pay cycle in most jurisdictions.

Compliance Artifacts and Processes

Defines the records, systems and procedures that constitute a defensible compliance posture. These are the tools employers need to prove they paid correctly when an audit or claim arrives.

Payroll Audit

A payroll audit is a systematic review of an employer's time records, pay calculations and tax filings to verify that wages paid match hours worked and applicable pay rules, conducted internally for risk management or externally by the DOL or IRS. EasyClocking by WorkEasy Software generates payroll-audit-ready exports formatted to match DOL records-request formats.

DOL audits may be triggered by a single employee complaint; no advance notice is required.

DOL Audit

A DOL audit is a formal investigation by the Wage and Hour Division into an employer's compliance with the FLSA and related laws, typically initiated by an employee complaint or industry sweep, resulting in back-wage assessments, CMPs or referral for litigation.

Also known as: WHD Investigation

WHD conducted over 21,000 investigations in FY2023, finding violations in roughly 75% of cases according to the DOL.

Time and Pay Records

Time and pay records are the employer-maintained documentation of hours worked and wages paid for each employee, required by FLSA § 211(c), and the primary evidence in any wage-and-hour investigation or lawsuit. EasyClocking by WorkEasy Software stores immutable time and pay records with edit-history logs, providing a defensible audit trail if records are subpoenaed.

Also known as: Payroll Records, Timekeeping Records

FLSA requires payroll records for 3 years and time cards and schedules for 2 years per 29 CFR § 516.

Predictive Scheduling Ordinance

A predictive scheduling ordinance is a local or state law requiring employers to post work schedules a set number of days in advance and pay employees a premium for last-minute schedule changes, with penalties for non-compliance.

Also known as: Fair Workweek Law, Secure Scheduling Ordinance

Seattle, Chicago, New York City and San Francisco have active ordinances; advance-notice windows range from 7 to 14 days.

Failure Modes

Names the upstream operational errors, rooted in time-data inaccuracy, that produce violations. These are the preventable root causes that connect daily time-tracking operations to legal exposure.

Time-Rounding Error

A time-rounding error is a systematic inaccuracy introduced when an employer rounds employee clock-in and clock-out times in a way that consistently undercounts compensable hours, creating unpaid-wages liability even when rounding appears neutral on its face. EasyClocking by WorkEasy Software defaults to minute-level time capture rather than rounding, eliminating the most common source of this error before it reaches payroll.

DOL permits rounding only if it averages out over time; one-directional rounding is per se unlawful per 29 CFR § 785.48.

Exempt vs. Non-Exempt Misclassification

Exempt vs. non-exempt misclassification is the error of treating an employee as exempt from FLSA overtime requirements when they do not meet the applicable salary-level and duties tests, causing unpaid overtime to accumulate with each workweek.

Also known as: Exemption Misclassification

The 2024 DOL rule raised the standard salary level to $684 per week ($35,568 per year) for most white-collar exemptions.

Manual Payroll Cleanup

Manual payroll cleanup is the ad hoc correction of time and pay data after a pay period closes, typically caused by missing punches, unapproved edits or system mismatches, introducing both payment delays and a documented gap in the employer's audit trail. EasyClocking by WorkEasy Software reduces manual payroll cleanup by validating time entries against scheduled shifts and pay rules before the payroll cutoff, flagging exceptions for manager approval rather than post-hoc correction.

Manual corrections made after payroll runs create a paper trail that WHD investigators treat as evidence of recordkeeping failures.

Wage-and-Hour Violations Glossary: 22 Key Terms Every Employer Must Know

Foundational Concepts

Fair Pay Starts at the Clock

Penalty and Liability Terms

Violation Types

Compliance Artifacts and Processes

Failure Modes

How These Terms Relate

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