Rewarding Non-Compliant Behavior in Organizations: The Role of Appraisal and Reward Systems on Employee Compliance with FLSA Regulations

Abstract

Most I/O psychologists consider the realm of organizational legal issues to be almost entirely comprised of discrimination-related issues. However, the wave of recent wage and hour lawsuits (governed by the FLSA) has inspired some practitioners to begin applying I/O techniques, such as job analysis, to help employers avoid lawsuits or to provide evidence for existing lawsuits. Despite recognition of the high costs of misclassifying employees as managerial (i.e., salaried), organizations continue to face this allegation with increasing frequency. In this study, I investigated a potential cause of employee non-compliance with FLSA regulations. Using a VIE motivational framework, I hypothesized that company performance appraisal and reward systems may unintentionally motivate employees to perform tasks that jeopardize the organization’s compliance with FLSA regulations. Overall results did not support my hypotheses. Time spent on certain non-exempt tasks was not related to performance scores. Possible explanations for these results are discussed.