Wage and hour compliance
Sept. 27, 2013
Over the past six years or so, wage and hour lawsuits have become, if not common-place, extremely prevalent. This trend, fueled by a large number of workers displaced following the financial crisis and stoked by successful settlements and court rulings over the past several years, is unlikely to end anytime soon.
Overtime claims are the most prevalent wage and hour allegations, followed by missed meals and breaks, misclassification and off-the-clock work allegations. Many wage and hour lawsuits combine different violations. A common combination being both overtime and misclassification suits. In order to avoid unnecessary wage and hour liability, employers need to be sure they are complying with all relevant federal minimum wage, overtime and other wage- and benefit-related regulations.
Wage and hour law is regulated by both the federal Fair Labor Standards Act (FLSA) as well as a variety of divergent state laws.
Classify workers properly
– Determining who is eligible for overtime is not always straightforward. Many wage and hour lawsuits allege that the employer has misclassified employees, thereby ultimately underpaying those employees for overtime. If willfulness can be shown, the liability period can be extended to those years instead of the normal two-year period.
Ensure donning and doffing compliance
– Donning and doffing allegations, although not as prevalent as overtime or misclassification claims, continue to be brought with regularity. Generally, donning and doffing protective gear, otherwise referred to as PPE, is work time under the FLSA and must be compensated.
– In addition, many employers commit tool allowance mistakes. The Occupational Safety and Health Act requires employers to provide certain safety equipment, and many states have associated laws. Other equipment can be deducted from an employee’s wages, but some states require a written paycheck deduction authorization from the employee. However, under no circumstances should a wage deduction drive an employee’s wages below the minimum wage (whether federally or state-mandated).
Review payroll practices and job classifications
– Employers should periodically review how employees track their hours. Under the FLSA, the onus of keeping track of employees’ time falls on the employer, regardless of whether the employee is required to clock in and out. Employers should ensure that they have effective overtime and timekeeping practices in place.
– In conjunction with being proactive, employers should also routinely conduct audits. A spot check of one site or department may reveal that employees are not tracking hours properly or that supervisors are not following established procedures.
Consideration for union employees
– At union shops, the number of hours that employees work is not just reflected in their paychecks, but in many cases is used to calculate contributions to pension and benefit funds. In these situations, employers can get into even more trouble when they shortchange such funds. If you have union employees, pay extra attention to how those employees’ hours are tracked to be sure that you are complying with your collective bargaining agreement.
Know state and local laws
– State and local laws can be more protective and stringent than federal law. Employers should consult with legal counsel to ensure that their company is in compliance with all applicable laws and ordinances to best avoid wage and hour liability.
Wage and hour lawsuits have become a staple of the plaintiffs’ bar. Such lawsuits are not going away anytime soon. Employers need to be aware of the liability such lawsuits can pose and take action to ensure compliance now, before the Dept. of Labor begins an investigation or an employee brings a class-action lawsuit.
Richard Alaniz is senior partner at Alaniz and Schraeder, a national labor and employment firm based in Houston.