Thomas Stilp JD, MBA/MM, LLM, MSC
Have you ever given the go-ahead to hourly employees to work through lunch so they could leave work an hour early for a special occasion? Sure you have. Who hasn’t?
But know this: Every time you do it, you’re breaking the law. Most states have laws requiring specific meal and rest breaks. They require you to record every hour of overtime your hourly employees work. They also require you to document all hours your employees spend on the job.
The U.S. Labor Department reports that 70% of employers don’t follow those rules to the letter, which means they are violating wage-and-hour laws.
If your organization is part of that 70%, it could land in big legal trouble before long. The number of wage-and-hour claims under the Fair Labor Standards Act (FLSA) has increased by 86% over the past 2½ years, and the number of FLSA class actions in that area has increased by 70%. In fact, every year federal class-action wage-and-hour claims outnumber all discrimination and workplace-action claims combined.
Lawyers love these cases. Why? These cases mean big paydays for plaintiffs’ attorneys, so they’re filing more of them. A recent BusinessWeek article quoted an attorney who said he could walk into any company and find a wage-and-hour violation. Any company. How about yours?
Count on it. Wage-and-hour liability is a numbers game. It’s about your data. And despite the nuances, it’s also fairly black and white. You either violated wage-and-hour laws or you didn’t. When a plaintiff’s lawyer comes in, it’s all about the documentation you have: “Did you properly pay people for overtime? Yes or no? Were meal and rest breaks being taken properly? Yes or no? Show me the documentation.”
Don’t have the documentation? Now the benefit of the doubt goes to the employee.
Your best bet: Put a compliance program in place right now. Much like harassment laws, consistently training managers about the law and enforcing it can arm you with an affirmative defense should an employee sue your business.
Your executive team will expect you to understand what the Department of Labor rules say. Experienced legal counsel can help your business comply.
4 Steps: How to comply with pay laws
1. AUDIT your time-keeping and documentation systems so you know they’re accurate and in compliance with federal and state wage-and-hour laws. Don’t under-invest in proper time-keeping and audit policies.
2. UPDATE your HR policies so they reflect federal and state laws. Note: The U.S. Labor Department provides a state-by-state breakdown of minimum rest and meal requirements at dol.gov/whd/state/state.htm.
3. EDUCATE managers and employees with the same fervor you use for harassment training. Explain what you mean by “overtime,” “hours worked” and “off-the-clock work.” Tell them what to do if they discover an error in their paychecks.
4. TARGET managers of hourly employees. Because these managers probably are exempt from overtime, the rules are different for them. As a result, they probably don’t know as much as they should about what’s legal and what’s not when dealing with hourly employees.
Your Lawyer Must Know the Overtime Rules, How to Comply, How to Prepare. Experienced Counsel will know the nuts and bolts of the rules, which can be complex and confusing.