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Wage & Hour Laws

How to Prevent Costly Wage & Hour Lawsuits


Mar 17, 2016

wage hour lawsuitsIn our previous blog, we covered the FLSA rules for properly classifying exempt employees. And we hinted at how not classifying employees correctly can lead to trouble.

This time we are going to give you more information on why it’s important to follow all FLSA rules and tell you how you can help prevent wage and hour lawsuits.

Wage and Hour Lawsuits Are Extremely Costly

NERA Economic Consulting compiled wage and hour lawsuit data from the Department of Labor’s (DOL) and found that of the 150,000 investigations since 2007:

  • Over 115,000 resulted in findings of violations
  • Over 60 percent were found to have an FLSA violation, and nearly half resulted in an FLSA violation that included back wage payments
  • 90 percent of back wage payments included an overtime violation
  • Texas, California, Florida, and New York accounted for 35% of all the investigations and violations
  • In the aggregate, back wages paid for cases with DOL wage and hour enforcement violations was $1.55 billion over the six years, with an additional $75 million assessed as civil money penalties

With all these rules and exceptions, what can your business do to maintain compliance and prevent costly wage and hour lawsuits?

1. Wage and Hour Law Training

FLSA rules and wage laws are complex and can be hard to understand—even for the experts. Every state has a variety of specific policies concerning the labor act law, and even certain industries have different standards to follow. That’s why human resources, managers and supervisors need wage and hour law training.

A good training program should cover:

  • How federal and state laws interact
  • Properly posting signage and keeping records
  • How to classify employees and calculate overtime
  • What to do about off the clock work
  • How to handle complaints and avoid retaliation

After completing the training, it will be easier to recognize a possible violation and correct the problem before it becomes a potential lawsuit.

2. Audit Your Job Descriptions

Just because an employee has the title of assistant manager, it doesn’t necessarily mean they meet the qualifications for exempt status. For example, if they don’t have any say over the hiring of employees and spend the majority of their time on manual work, they should probably be hourly.

By reviewing and writing accurate job descriptions of the expected duties performed in each position, you’ll have a more accurate picture of how to classify employees. And if you find an exempt employee is misclassified, you can take action right away to re-classify them and provide back wages.

Also, make sure that you have a plan in place for continually reviewing and updating job descriptions. This should be an ongoing process—not a one-time thing.

3. Put a Stop to Off the Clock Work

A record of the exact hours employees work—especially non-exempt employees—is important to have in case of a claim. That’s why it’s extremely important to put a stop to off the clock work.

Don’t allow hourly employees to have access to technology like smart phones where they can check their email because if they are doing this off the clock, it’s a possible violation of the laws.

Also, make sure you have clear policies on what constitutes working off the clock so that employees are clear about the rules. In fact, you can read more about putting a stop to off the clock work in one of our previous blog posts.

Conclusion

Protecting your business from wage and hour lawsuits starts with correctly classifying employees. After you’ve decided which employees should be exempt, it’s important to train on wage and hour laws and frequently conduct job description audits. Finally, don’t forget to ensure non-exempt employees are not working off the clock.

If you want to learn more about our wage and hour law training, schedule a demo today.

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