There’s a new breed of plaintiff lawyer out there, says attorney Phillip Russell, and they are not looking for the companies with 1,000 employees—they’re happy to find 10 or 15 employees working off the clock or due unpaid overtime.

Russell is a member of the Tampa, Florida, office of national employment law firm Constangy, Brooks & Smith, LLP. He made his remarks at BLR’s Second Annual National Employment Law Update, held last week in Las Vegas, Nevada. (Next year’s Employment Law Update will be held October 21–23, 2009, in Las Vegas.)

Russell explains the new interest in small wage and hour cases as follows: If you take 10 employees, each owed 5 hours of overtime a week for 2 years (or 3 years if the violation is “willful”), then double the back pay for liquidated damages, that makes it worthwhile for the employee to bring a charge.

And then the attorney gets his or her hourly fee for time expended on the case—not a percentage as with most contingency arrangements.  So the employee might get $10,000, but the attorney’s take could easily amount to as much as $100,000, and that makes it worthwhile for them.

Another factor, says Russell, is that for a Title VII claim, you must have 15 employees, but for wage and hour Fair Labor Standards Act violations, just 1 employee is enough. What it means is that companies of nearly any size (with a minimum of $500,000 in revenue) are vulnerable to these lawsuits.

Russell continued his presentation with tips for staying out of trouble in wage and hour.

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What’s Wrong with Wage and Hour

The challenge in the wage and hour arena, Russell says, is that we are dealing with a law that was passed to cope with an economic depression in an industrial and agricultural economy. In those days, it was fairly clear who was nonexempt and who was exempt. In today’s workplace, those lines are blurred, and HR managers are stuck with sorting out the rules.

Russell says there are two main ways to get into trouble in wage and hour: failing to pay hours worked and overtime, and guessing wrong on exemptions. First, Russell tackled hours of work.

'OTC' Work

Russell warns that it’s easy for employees to end up working "off the clock" (OTC). For example:

  • Manager "requests" the hourly employee to work without recording the time and the employee "agrees."
  • Hourly employee #2 asks hourly employee #1 to "help me out by working a few minutes after you clock out."
  • Hourly employee works OTC to "get the job done" without reporting the extra work to a manger.
  • Hourly employee eats at his or her desk during an unpaid lunch period working on a project and answering phones.

These are hours of work, and it's your job to police this. Get people away from their workstations during breaks and meals, Russell suggests. If people won't stop working extra hours or OTC hours, discipline them.

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'This is all the hours I worked this week'

Russell suggests that employers include notes and affirmations with time sheets and paycheck stubs. For example, on the time card, where employee signs, put, "This is all the hours I worked this week."

On the pay stub, you might write, "If there are any questions or concerns about the amount of pay or hours worked, contact _________."

Anything you can do of this nature will help to prevent employees from later claiming OTC hours, Russell says.

In tomorrow's Advisor: "Is the CEO Owed overtime?" (more of Russell's tips) and an introduction to an HR audit program that helps you catch wage and hour problems before the feds do.