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Your Employee Matters


By February 1, 2011No Comments

According to the Department of Labor, more than four in five employers don’t comply with wage and hour requirements. Furthermore, wage and hour class actions (referred to as “collective actions”), outnumber all other employment class action lawsuits combined. Yet for employers, wage and hour compliance too often fails to receive the same priority as concerns about workplace harassment and discrimination. Employers know that problem prevention and management training reduce the risk of employment claims and help achieve a favorable outcome if claims arise. Let’s discuss such an approach concerning wage and hour requirements.

If there’s a single issue that every employee has in common and one question that most employees raise at least once a year, it has something to do with pay. Yet, many employers state that pay should not be discussed, which usually intends to cover confidential salary information. However, a by-product of this culture might be that employees don’t raise concerns about pay within the organization but instead, go directly to a plaintiff’s attorney or the Department of Labor. Note that unlike other employment claims, there is no legal requirement that an employee file a complaint with the Department of Labor; he or she may proceed directly to court.

Wage and hour claims often involve multiple individuals and can quickly add up to a lot of money. For example, if an employer is inappropriately docking an employee for a break, chances are this employer is doing the same thing with several other employees. Multiply that by the three-year “look-back” period for wage and hour violations, by the number of hours of the violation, and the number of employees involved. Then double this total and add interest and attorneys’ fees, and it won’t take long before the employer faces a six-figure risk.

So what to do about this? As a threshold recommendation, we suggest that you elevate pay issues to the same level of culture, compliance, and concern as workplace harassment and discrimination. Provide employees with what the DOL refers to as a “safe harbor” policy, employer pay practices, which practices are prohibited, and directs employees to whom within the organization to ask about pay. The objective should be that no employee ever needs to take a question about pay to anyone outside of the organization. For a copy of our Model Safe Harbor Policy, please click here.

Employers should also audit their wage and hour practices thoroughly on an annual basis. Are exempt employees classified properly? Are independent contractors bona fide independent contractors (in business to make a profit), or are they misclassified? Do you provide breaks, for how long, and with or without pay? If your organization pays an incentive, do you calculate this incentive in determining an employee’s overtime compensation? If an employee’s pay may be docked, is this in writing and applied consistently?

Article courtesy of Worklaw® Network firm Lehr Middlebrooks Vreeland.