HR Management & Compliance

70% or More Not in FLSA Compliance

The feds
estimate that 70 percent of employers are not in compliance with the federal Fair
Labor Standards Act (FLSA). “That’s a gross understatement,” says William J.
Anthony, Esq. He suspects that it’s more like 95 percent that are not in
compliance with either federal or state laws on wage and hour matters.

“There are a lot of wage and hour laws, and most employers violate one or
more on a regular basis,” Anthony says. “The bad news is that we are just in
the infancy of a long-term trend of increasing wage-and-hour litigation. The
good news is that these claims can be avoided.”

Anthony made his remarks at a recent seminar sponsored by national law firm
Jackson Lewis, LLP, where he is a partner in the Hartford, Connecticut
office. He was joined in the presentation by senior associate David R. Golder,
Esq.

Get into
Compliance Now

“Get into compliance,” says Anthony, because “the suits will come your way.”
Anthony offers the following factors to help employers understand the need for
immediate attention:

  • The Department of Labor (DOL)
    has added new investigators for wage and hour.
  • DOL can be expected to be “very
    active” during the Obama administration.
  • DOL collections of back wages
    are up dramatically over the last decade.
  • FLSA collective actions
    (class action cases) have increased four-fold since 1997, overtaking EEO
    claims in 2001 as the most common class employment cases in federal court.

Anthony notes that his firm, Jackson Lewis, is now dealing with 250 class
actions, compared with 195 last year. Some are major, trying to certify a
national class; some are regional, and some are local. “That’s a lot of suits,”
he says.

Suits often go in waves on the basis of industry, Anthony notes. For
example, hospitals are now being hit. The hospitals that are sued are trying to
defend themselves by saying, “Every hospital violates the law,” but that is no
defense, Anthony notes. Many compensation systems are driven by industry
practices, but that just means that when one employer gets hit, the entire
industry gets hit.


Check
out ERI’s new wage/hour HR Management & Compliance Report, exclusively for California employers,
and find out how to avoid getting burned in a complicated—and costly—wage/hour
suit. Read more.


Pharmaceutical companies are another group that has been hit, all with the
identical claim—that their sales reps are not “outside sales” people. These
reps, who visit doctors’ offices to tout the company’s drugs, have
traditionally been considered outside sales reps, and thus exempt.

The argument being used now is that these reps don’t actually “sell.” They
encourage doctors to prescribe their product, but the sale happens at the
pharmacy. “It’s form over substance,” Anthony says, but it’s happening.

When Is an
Employee Working?

“There is a tremendous amount of litigation on off-the-clock claims,”
Anthony adds. Retail stores around the country are being hit, he notes. What
happens is that corporate says, based on sales volume, “Here are how many labor
hours you can have.” That’s a built-in incentive for the manager to allow or
even encourage unpaid work. “Clock out, finish up, and go home.” That’s a claim
in the making, Anthony says.

If employees are working off the clock, they must be paid. Many want to
pitch in for no pay, but it doesn’t matter, says Golder. Employers must
compensate employees for unauthorized work when the employer “suffers or
permits” the employee to work.

An employer suffers or permits an employee to work in cases in which the
employer knew or had reason to believe the employee was performing work. “Actual
knowledge is not required,” Golder says. “If the supervisor knows, the company
knows.”

Some examples of cases of unauthorized work include:

  • Oiling machines before or
    after work
  • Wiping down tables after
    clocking out
  • Putting change in the cash
    register before work
  • Counting cash after the shift

The overriding point, says Anthony, is to take a look at your practices and
policies. Ferret out any statements that might drive managers to encourage
off-the-clock work. These are typically what drive class action claims.

In tomorrow’s Advisor, we’ll get more of Anthony’s and Golder’s
tips, and we’ll take a look at a unique in-depth wage/hour resource
specifically for California
employers.

 

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