The term wage theft is gaining popularity among plaintiffs’ attorneys who are filing wage and hour claims. These are attractive cases because the employer bears the burden of proof and it’s relatively easy to get class-action certified. Wage and hour class actions are filed more often than all other types of employment class actions combined.


The Department of Labor (DOL) estimates 70% of employers are not in compliance with wage and hour regulations. Secretary of Labor, Hilda Solis is committed to protecting workers’ rights; planning to hire an additional 250 new field investigators; a one-third increase in its staffing.


Employers need to broaden their view of risk management to include wage and hour compliance. Being ethical does not ensure compliance. Wage and hour laws are some of the oldest employment laws and frequently challenge common sense.


Wage and hour errors can cost millions of dollars. Off-the-clock work and employee misclassifications are the two most frequent errors that result in claims.


Off-the-clock work activities may occur more often today with reduced staffing and managers pressured to do more with less. Managers need to know the laws. Willful violations extend the statute of limitation from two to three years; increasing liquidated damages or back pay.


It is management’s duty to assure proper payment of work and exercise control to assure work is not performed if it does not want it to be performed. Having a rule is not sufficient; it’s management’s responsibility to enforce the rule.


Other off-the-clock issues include donning and doffing. Until recently the focus was on special equipment or uniforms. Today, claims exist for the cumulative time it takes to log on to a computer to access the time keeping system. This is similar to before and after hour activities such as, security check-ins, making deliveries and shift-change meetings.


Employers also need to be mindful of misclassifying employees as independent contractors and misclassifying non-exempt employees as exempt.


Independent contractor misclassification is more common in certain industries. In general, independent contractors should have other customers and the ability to subcontract the work; not perform core work, or do the same work as employees in the company or the industry.


Employers need to be prudent when identifying positions as exempt, as they bear the burden to prove the exemption is clearly and unequivocally valid. The Administrative exemption is most often misapplied, use it sparingly. The IT exemption may not be used for technical support or maintenance. The Executive must supervise at least two full time equivalents, or 80 hours of work per week. Determining whether a position is exempt is a challenge. If the challenge doesn’t kill you, it will make you and your business acumen stronger.

Training Can Establish An Affirmative Defense

• Training can show good faith compliance efforts and possibly avoid liquidated damages and/or reduce the statute of limitations.
• Encourage managers to learn about Wage and Hour Compliance, as well as other employment liability issues.
• Explain workweek and overtime; and clearly prohibit off-the-clock work in your handbook and provide periodic handbook training.
• Include understanding and compliance of employment laws in management’s performance appraisals.

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