The Rise of Wage & Hour Lawsuits: What to Know and How to Avoid Becoming a Statistic

Wage and hour litigation are one of the biggest employment liability risks for employers today. “Even the U.S. Department of Labor, which enforces the wage and hour laws, is not immune,” remarks Thomas Wassel, Partner of New York Law firm Cullen and Dykman. “This week, it settled a claim made by its own employees for $7 million in unpaid overtime. If the DOL can’t follow the law it enforces, good luck to the average business owner.”

So what’s responsible for the recent boom? 

Attorney Michael A. Semanie of Killgore Pearlman Stamp Ornstein & Squires cites time and attendance disputes as a major contributing factor. “Time and attendance disputes between employers and employees frequently occur where employees claim that they have performed uncompensated, “off-the-clock” work.

Some typical scenarios where these disputes arise are where employees work through their lunch breaks, employees perform after-hours work on their mobile devices or home computers, and employees travel for work purposes or have to change into and out of certain work clothing or gear.”

Under the Fair Labor Standards Act (FLSA), not only are employers responsible for tracking hours, they must pay employees for hours worked, regardless of whether the work has been authorized. “If an employer knows or should have known that an employee is performing work for the employer, that employer is obligated to compensate the employee accordingly,” says Semanie. 

In addition to the employer’s duty to keep time records, additional burdens such as the new overtime rule are expected to add additional stress. “The dramatic increase coming December 1 in the minimum salary needed to exempt employees from overtime, coupled with increasingly stern enforcement tactics by Federal and State Departments of Labor and increasingly aggressive litigation practices by attorneys for plaintiffs, virtually guarantees that the unwary employer is risking the success of its business if it does not make serious efforts to comply with wage and hour law,” says Wassel. “Those who do not will become statistics.”

How can you safeguard your business against wage and hour lawsuits?

“The pace at which both wage and hour law and technology are currently developing is arguably more rapid than it has ever been at any time in the past,” says Michael Semanie. 

“Now more than ever, employers should review and update how their employees are classified under the FLSA minimum wage and overtime exemptions, review their employee handbooks to update their time and attendance policies and the disciplinary procedures for failing to report all hours worked, and develop procedures to ensure that employees are paid for all time that the employer knew or should have known that the employee worked.”