There has been a 77% rise in Fair Labor Standards Act (FLSA) lawsuits tied to wage and hour disputes since 2004, according to the National Employment Lawyers’ Association. Also, during this same time period, there has been an 11% increase in wage and hour enforcement actions brought by the Wage and Hour Division of the United States Department of Labor.
FLSA cases appeal to plaintiffs’ attorneys for two primary reasons. First, the FLSA is a complicated statute with lots of exceptions and exemptions and is therefore tricky for employers to apply. Second, mistakes can be costly as payouts for plaintiffs (and their attorneys) can be big. For example, in 2009, the top 10 private wage and hour settlements totaled approximately $364 million, which is 44% increase from the top 10 biggest settlements in 2008.
Generally, the FLSA requires that covered employees be paid at least the federal minimum wage, currently $7.25, for all hours worked, plus time and one-half at their regular rate of pay for hours worked over 40 in a seven-day work week. The biggest problem areas for employers to watch for include:
- Misclassifying employees as exempt when they are actually non-exempt and subject to overtime pay;
- Allowing employees to work off-the-clock;
- Calculating overtime pay based on hourly wages only;
- Refusing to pay for overtime that has not been approved in advance;
- Docking hours of exempt employees; and
- Failing to maintain complete and accurate time records.
Small and mid-level employers are as much at risk as large employers. Even minor violations may amount to thousands of dollars for each employee in back pay, compounded in class action cases. Employees are also entitled to liquidated (or double) damages, unless an employer can affirmatively prove the employer had a “good faith” and “reasonable” belief that the employer was in compliance with the statute–such as the formal advice of counsel. Employees can also obtain three (3) years of back pay by establishing a willful violation of the statute. Finally, prevailing plaintiffs are entitled to automatic attorney’s fees in FLSA lawsuits.
Understanding the basics of the FLSA is more important now than ever. The unwary employer who fails to comply should be concerned about becoming the next FLSA statistic. If you are unsure about whether your business is in compliance with the FLSA, please do not hesitate to contact any member of the Underwood Law Firm Employment Section at any of our offices located inAmarillo,Lubbock,Pampa, andHereford.
This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.
 The Fair Labor Standards Act of 1938 (FLSA, 29 U.S.C. §§ 201-219) is the basic federal statute dealing with minimum wages, overtime pay, child labor, and related issues.