Avoid singing the blues: how employers can mitigate wage/hour liability

In the last few years, there have been multiple headlines noting that celebrities are being sued for their (or their businesses’) failure to pay wages in accordance with applicable state and/or federal law. Two such recent lawsuits involved famous singers.

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First, Lady Gaga had a lawsuit brought against her by her former personal assistant, Jennifer O’Neill. The assistant sued Gaga for $400,000 under New York state law and the federal Fair Labor Standards Act, alleging that the singer failed to pay her for numerous hours of overtime (including being made to sleep in her bed with her!). O’Neill claims that, instead, the singer only compensated her at a flat rate of $75,000 annually, and that the failure to pay her overtime hours was unlawful. Lady Gaga and O’Neill settled out of court weeks before the trial was scheduled to begin.

Rapper T.I. also recently became the object of wage and hour violation allegations. He was an owner of a now-defunct Atlanta restaurant, Scales 925. A number of past employees of his restaurant filed suit against him and others, alleging that they were forced to work overtime without being compensated for the hours at the required overtime rate. The lawsuit claimed more than $50,000 in unpaid wages.

T.I. claimed that he did not exercise any control over the management of the restaurant or its operations and should not be held personally liable (as most Human Resources professionals know, wage violations can have personal liability attached to them, unlike most EEO claims). T.I. claimed, instead, that he served as a silent financial investor and had no knowledge of the alleged wrongful pay practices.

Of course, if famous musicians who have teams of attorneys swarming around them all day can find themselves saddled with unpleasant wage-hour litigation, the average company certainly can! Here are tips on how to mitigate risks with respect to wage and hour complaints:

  • Require all employees to record their time daily.
  • Audit job descriptions for exempt positions to determine if they match the actual duties performed.
  • Have employees sign off on pay and time records, noting that they are accurate.
  • Require employees and their supervisors to sign off on any changes or alterations made to time records.
  • Train managers on lawful pay practices and company policies and procedures with respect to same, especially those related to “off the clock” work.
  • Put pay practices in writing and have them signed by the employee, stating that he or she has reviewed them and understands them and agrees to report immediately any failure (or perceived failure) by the company to pay them properly.
  • If you are a franchisor, be sure that you are not influencing the franchisees’ pay practices so you can avoid joint-employer claims.
  • Obtain written authorizations for any deductions made from paychecks. Keep in mind that many states have specific laws or regulations as to how such authorizations must be worded and handled.
  • Pay employees for breaks or meal periods that last less than 20 minutes.

By following these practices, you can avoid (or at least decrease the risk of) costly lawsuits by employees who claim that the company failed to pay them owed wages. Unlike Lady Gaga and T.I. who had to sing the blues, you want your company to hum a happy tune.