Unforgettable Lessons Learned from Wage & Hour Lawsuits

2015 was another historic year for federal wage and hour lawsuits, and it’s predicted that 2016 will be no different. According to law firm Seyfarth Shaw LLP “New federal labor regulations, the fight for a minimum wage hike and an intense focus on independent contractor classification and joint-employer status create a perfect storm for new lawsuits.” 

Since wage and hour litigation is booming, we were compelled to turn the magnifying glass on some of the most recent and prolific wage and hour lawsuits to learn from their lessons. Here are three court cases that impart practices to avoid: 

Misclassifying employees as contractors

In June 2014, FedEx agreed to pay $228 million to resolve claims that it mislabeled over 2,000 FedEx Ground and FedEx Home Delivery pickup and delivery drivers as independent contractors. Courts ruled that FedEx controlled and supervised the drivers – a key factor in the determination of worker status – and that the workers were “independent contractors” in name only. 

Unlike employees, contractors are not under direction, can be available for other jobs, and exercise the right to control their own work. By labeling workers as contractors, companies avoid paying federal and state tax withholding, providing benefits and healthcare, pension, workers’ compensation, and unemployment insurance obligations. 

Despite the level of control, FedEx held over these workers, they pushed costs including fuel, truck maintenance, and auto-insurance onto the drivers, who were also not provided pay for missed meals, rest periods, or overtime compensation.

It’s safe to say that the suing workers were well compensated from the settlement. 

Time theft

Be wary of the time you have your employees on-site when off the clock.

In January of 2016, Amazon settled a state law claim for $3.7 million dollars alleging time theft filed by a group of warehouse workers in California. The workers alleged that the internet-based retailer’s policy of searching workers before permitting them to leave cut into their breaks and personal time after work. They were reportedly kept on-site for 20-30 extra minutes per day unpaid.

Additionally, the lawsuit also alleges that Amazon and SMX did not provide employees with accurate itemized wage statements that took into account the time required to complete the security checks. Despite Amazon’s admission that there was no wrongdoing on their part, they agreed to settle the suit for $3.7 million to avoid the publicity and expense of continuing the legal battle in court. 

Falsifying time records

Labor & Employment Law Attorney Micah Longo of The Longo Firm, emphasizes that it is the employer’s duty to keep accurate records of employees’ hours. If employees can prove that he or she performed work for which he or she was improperly compensated, the burden then shifts to the employer to bring forth evidence of their own.

If the employer fails to produce such evidence, then the court may then award damages to the employee. Take, for instance, the landmark case of Allen v. Board of Public Educ. for Bibby County. 

“The plaintiffs, in this case, were bus drivers,” says Longo. “One of the main issues, in this case, dealt with the accuracy and trustworthiness of the employer’s wage and hour records. Basically, some of the bus drivers were told not to record their overtime hours because the employer would not pay them overtime. Some drivers recorded their overtime hours but were made to take back their accurate timesheets and submit new timesheets that reflect their scheduled, not actual hours. At least one driver said that timesheets were torn up if they reflected overtime work. Another said the timesheets would be altered or “whited out.”  

According to Longo, “If an employer knows (or has reason to believe) that an employee continues to work, the additional hours must be counted. Interestingly enough it’s not relevant that the employer did not ask the employee to do the work. The reason that the employee performed the work is also not relevant. What matters is that the employee did the work.” 

As you can see, trying to skirt around the rules just doesn’t pay. To ensure time doesn’t slip through the cracks, Attorney Micah Longo suggests asking your employees to “sign-off” on their hours, so they can’t later come back and claim unpaid time.  Stay tuned for our “Lessons Learned from Wage and Hour Lawsuits” Part 2!