Almost 25,000 wage and hour complaints are filed each year to the Department of Labor. The number of Fair Labor Standards Act cases filed in the federal court has increased more than five times over the past 20 years. The DOL has hired 600 more wage and hour investigators to enforce wage and hour laws since 2008. These numbers show that wage and hour issues need to be taken seriously. These types of lawsuits can be incredibly expensive for businesses because they often include repayment of previously unpaid minimum and overtime wages for up to three years, not to mention attorney fees. Here are some ways to keep your business out of hot water with wage and hour lawsuits.
In order to avoid running into issues with wage and hour laws, it’s best to get familiarized with the most common violations. About 40 percent of wage and hour class action lawsuits are about overtime claims, making this one of the most common mistakes made by businesses. Other common wage and hour violation claims include misclassifying employees as being exempt from overtime, not paying overtime, not paying overtime or employee benefits to workers who are considered to be independent contractors, incorrectly calculating overtime pay, issues with meal and break pay, and not accounting for compensable time that occurs before and after a shift. A new issue that is on the rise includes using email and mobile devices such as smartphones and tablets for business purposes outside of work hours.
One important way to ensure that your employees are being fairly compensated and to keep you out of the courtroom is to utilize proper timekeeping measures. A common complaint found in wage and hour lawsuits is that the hours paid weren’t recorded accurately. To avoid this, make sure that your workplace employs effective timekeeping practices. Record all employees’ time in and time out, either electronically or with a physical punch clock. Review and sign off on each employee’s time sheet at the end of every pay period to ensure that all the information is correct and require that supervisors and managers review all timesheets for accuracy.
Conducting a wage and hour audit is another great way to stay ahead of the game. Bring in an auditor with expertise in the intricacies of wage and hour laws and an outside perspective to your business. They can point out any areas that you need to work on as well as teach you how to prevent violations. An auditor will be able to review employee classifications, payroll practices, timekeeping methods, employment policies, and overtime calculations. If any violations are found, they can help you correct them and guide you through back-pay situations. Having an audit done may seem costly but it will pale in comparison to the cost of defending and potentially losing a lawsuit.
It can be difficult to keep up with the hundreds of workplace laws that affect your business every day. Staying informed and taking action toward accurate records of employee activity will help keep you out of reach of nasty wage and hour lawsuits.
