Review Your Compliance On Wage & Hour Issues With Your Attorney

This recent article from Advisen warns of the dangerous trend in employee Wage and Hour lawsuits:

The Threat of Wage-and-Hour Lawsuits

Wage-and-hour lawsuits have been an escalating threat to companies of all sizes over the past decade. Now outranking discrimination lawsuits, measured by both number of filings and size of settlements, these employment practices lawsuits have become an unforeseen calamity for companies across all industry sectors and a new challenge for risk managers. Alterations made to the Federal Labor Standards Act (FLSA) by the US Department of Labor (DOL) in 2004, originally intended to clarify definitions to make it easier for companies to comply, woke this sleeping giant as they sparked awareness among the plaintiff's bar. The DOL and certain state labor departments have stepped up enforcement efforts in recent years, and the DOL has ramped up its Wage-and-Hour Division under the Obama Administration. These elevated regulatory efforts not only result in more fines, but precipitate class action civil lawsuits by employees allowed under the FLSA and equivalent state labor laws.

FLSA rules, the basic federal rules governing minimum wage and overtime pay, appear straightforward on the surface. Digging in deeper, it becomes apparent that many of the rules draw blurry lines in the real world. Defining on-the-clock versus off-the-clock hours can be a challenge, and distinguishing exempt from nonexempt employees is much more complex than most realize. The FLSA was initially devised in a time when most of the American workforce was blue-collar, but much of the Act applies to the largely white-collar salaried workforce of today, and its application to these jobs is still being worked out in the courts.

Wal-Mart has been the target of over 80 wage-and-hour class action civil suits, and has agreed to settlements in the hundreds of millions of dollars. Observers might not be surprised that most of Wal-Mart's employees are covered by the FLSA, and its 1.4 million US employees provide plenty of opportunities for lawsuits. Companies primarily employing salaried professionals, however, have been subject to large class action suits as well, and there have been eye-popping settlements, such as IBM, Siebel Systems, UBS Financial Services, Morgan Stanley and Merrill Lynch.

Insurers have regarded wage-and-hour liability as largely an uninsurable risk because the incidences are perceived as resulting from deliberate and illegal acts, as opposed to negligence. Despite recent evidence of negligence being the primary driver in many cases, most insurers have shied away from covering this liability in their employment practices liability insurance (EPLI) policies. Companies are advised to develop compliance procedures regarding the FLSA, review the exempt status of each employee, and stress the importance of strictly following work-and-hour procedures in management training.

All The Best,
TPE3