Wage and hour lawsuits continue to be one of the biggest areas for legal risk for employers. In fact, recent reports indicate that wage/hour class action claims are growing faster than all other types of workplace class actions.
Prudent employers know that the best approach to avoiding wage/hour claims--whether by individuals or class claims--is to conduct regular audits of wage/hour practices and to train managers so that they understand wage/hour basics and recognize risk factors (e.g., off-the clock work, early punching).
But even if a full-scale wage/hour audit is still just on the “to do” list (and it should be near the top), there are steps that an employer can take to get its wage/hour compliance practices in place.
Let’s start with some basics tips gleaned from recent wage/hour settlements.
- In December 2013, Bank of America NA agreed to a whooping $73 million settlement to end a wage/hour class action claim alleging that it violated the Fair Labor Standards Act by requiring more than 180,000 hourly employees to work off the clock.
- Wage/hour tip: Non-exempt employees must track all hours worked for the benefit of the employer. The FLSA regulations put the burden on the employer to ensure that employees are properly tracking hours worked. An employer should ensure that it has an effective system in place to capture all hours worked by non-exempt employees and should also ensure that managers are not condoning off-the-clock work.
- Two New York restaurants and their president recently agreed to pay $261,887 in back pay to workers to settle a FLSA claim brought by the U.S. Department of Labor. The DOL claimed that the restaurants paid employees, who regularly worked from 42 to 50 hours per week, a flat monthly salary with no overtime pay.
- Wage/hour tip: Non-exempt employees must be paid the applicable minimum wage rate for each hour that they work. And, unless the employee is subject to a specific FLSA exemption, a non-exempt employee must receive overtime pay at 1 ½ time the regular rate of pay for all hours worked over 40 worked in a week. Even if a non-exempt employee is paid a weekly salary, an hourly rate must be calculated and time and a half must be paid for hours worked over 40 in a single week.
Now, take these two basic tips, review your payroll and timekeeping practices, and start down the path to wage/hour compliance in 2014.