Wage and hour just shouldn't be that hard, but the lawsuits keep coming, and the dollar amounts are staggering—especially when class actions amplify fees, fines, and judgments.

What's the problem? A number of factors make wage and hour a challenge:

  • Many of the decisions about overtime, break time, meal time, and hours of work are made by low-level supervisors who don't know the rules and act on instinct.
  • Misconceptions about wage and hour abound. Just as one example, many supervisors in the private sector think they can use comp time instead of paying overtime.
  • Lawyers are attracted to wage and hours suits because they are relatively simple to bring and easy to understand, and the multiplying effect of a class action makes them lucrative.
  • In court, you are always fighting the picture of the big uncaring employer against the pitiful little employee who's just trying to make ends meet.
Confident that all your exempt employees are really exempt? We thought not. Attend one or more of BLR's four in-depth audio conferences, each addressing one type of exemption--administrative, professional, executive, and outside sales. Find out more

The Big Three

As an HR manager, it's your job to head off these lawsuits. What's the best approach? Start with "The Big Three"—the three types of mistakes that bring most of the big-dollar lawsuits—off-the-clock work, overtime, and misclassification.

1. Off the Clock

If you allow your employees to work extra hours ("suffer" them to work, as DOL says) without pay, you are setting yourself up for an expensive fall.

Just saying "no" isn't enough. Your policy may say "no working through lunch, no clocking in early, no working late without written permission." Good. But if employees do that work anyway, you owe them for those hours.

You can discipline employees for working when you have told them not to, but you still have to pay them. In fact, if you allow work without pay, you are "knowingly" condoning the practice, and that ups the ante.

Don't be tempted by “I don't mind putting in a few extra minutes” or “I don't mind getting the phones during my lunch break.”

Even if your most loyal workers offer to work without pay, you still owe them for the time.

Don't forget that state laws often mandate rest and meal breaks. It might seem as though 15 minutes more or less shouldn't matter, but some big outfits—notably, Wal-Mart this year—are finding out the hard way that the amounts owed can quickly amount to millions.

The simplest mistakes in exemptions make for the biggest fines and settlements. Make sure your exemptions are solid—attend BLR's audio conferences (you can go to one or all four) for in-depth know-how on administrative, professional, executive, and outside sales exemptions. Get more information.

2. Overtime

First of all, you have to pay overtime, even if people say they don't care. And once again, state laws may require overtime beyond what is required by the federal Fair Labor Standards Act (FLSA).

One of the things employers often forget to do is to go back and recalculate overtime after bonuses are awarded. If you pay an employee a nondiscretionary bonus (generally, one that is paid routinely and/or based on objective criteria), you have to go back and recalculate the overtime payment made during the period the bonus covered, after including the bonus in the "regular rate of pay."

In tomorrow's Advisor, we’ll tackle the third of the big three—misclassification—and get an introduction to a new in-depth audio conference series covering the four major exemptions.