More Wage and Hour Cases
by Douglas H. Duerr
There is no denying that there is a significant increase in the number of wage and hour actions filed each year, notwithstanding an overall decline in civil filings in federal courts. This increase is not new, as the United States Department of Labor amended the overtime regulations in 2005, at least in part, in an effort to stop, or at least slow down the then dramatic increase in claims under the Fair Labor Standards Act. Nonetheless, more claims were filed in 2006 in federal court, than in 2003 and 2004 combined. Through April 2008, almost 1,900 wage and hour cases had been filed in federal courts nationwide. At that pace, the number of FLSA filings in federal courts will exceed 2007 levels. Moreover, these figures do not include state court filings.
This phenomenal increase in filings notwithstanding, members of the American Association for Justice, formerly known as the Association of Trial Lawyers of America, have commenced a six-month advertising campaign targeting wage and hour claims. This advertising, which will be predominantly on national cable televisions and supported by internet marketing, is based on the results of a six-week campaign conducted in the fall, which generated a number of leads.
In light of this increase in advertising for wage and hour claims and the ever-increasing number of claims actually brought, it is reasonable to conclude that such claims have yet to peak, the DOL’s efforts to curb litigation notwithstanding. Furthermore, because most insurance policies do not cover either the damages or costs of defending such claims, general counsel must be proactive in reducing potential liability. Proactive steps include:
1. Auditing all positions classified as exempt from overtime, taking steps to have the audit covered by a privilege. Even if a review was done in 2005, a follow-up review of lower level managers and supervisors should be done to ensure there have been no changes in duties.
2. Making sure your company has adopted a “safe harbor” policy on deductions from salaried employees.
3. Reviewing timekeeping policies to determine whether steps can be taken to eliminate or substantially reduce the possibility that an employee can claim to have been working, including reviewing such things as “automatic deductions for lunch,” rounding, and similar practices.
4. If your business can take advantage of the tip credit, complying with the notice and other requirements? Are only permitted employees in the pool?
5. Analyzing policies and procedures to review deductions from wages and salaries to ensure that they comply with the minimum wage and overtime requirements of state and federal law. These are the first steps toward minimizing liability.
Please contact your Elarbee Thompson attorney for further assistance in minimizing other areas of potential exposure to wage and hour claims.
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