I confess that up until the huge LinkedIn case last month, I had no idea what wage and hour training even is, or why anyone needed to take it. After all, it’s pretty simple, right? Pay nonexempt workers their regular wage for the first 40 hours, time and a half for any time worked beyond that – seems simple enough.
Turns out it’s not quite that simple. We’ve probably all worked in environments that weren’t very understanding of work-life balance, or a culture that strongly encouraged 40+ hours per week, even if you were nonexempt and only being compensated for 40 of those hours. Some may think that it benefits the employer to encourage employees to work as much as they can, but the guidance regarding wage and hour compliance involves so many gray areas that, “even the most conscientious employer can get into trouble.”
Wage and Hour Lawsuits On The Rise – And They’re Expensive
- From 2001 to 2012, there was a more than 500 percent increase in the number of multiple-plaintiff wage-hour lawsuits filed in U.S. federal court (Littler Mendelson, 2012)
- Employers paid out a total of $2.7 billion in wage-hour settlements between 2007 and 2012, with settlements totaling $467 million in 2012 alone (NERA Economic Consulting)
- In 2014, LinkedIn paid $3.4 million in back wages and $2.5 million in liquidated damages for violating the overtime and record-keeping provisions of the Fair Labor Standards Act (FLSA)
It’s pretty clear that even a single instance of violation can get expensive, so why aren’t employers getting on board?
Part of it, says Michael Rubin, a lawyer working on a wage theft lawsuit against trucking giant Schneider, is that “employers think there is little chance of getting caught.” Some federal and state officials agree, stating that “more companies are violating wage laws than ever before,” showing the record number of enforcement actions for both wage-hour violations and retaliation claims as evidence.
More big name cases are in the works. According to this New York Times article, McDonald’s, FedEx, Schneider, Wal-Mart and many more will be looking down the barrel at cases hurtling their way – and soon.
Learning from LinkedIn
The neat thing about the LinkedIn settlement is that LinkedIn actually received kudos from the Department of Labor – something you can imagine doesn’t happen often. The Department of Labor made a point of publicizing LinkedIn’s exceptional response to the case: the company cooperated quickly, agreed to pay all the overtime back wages, and taking proactive steps, such as providing wage and hour compliance training to all managers and redistributing the policy that prevents off-the-clock work to all nonexempt employees and their supervisors, to prevent future violations.
Be Proactive: 3 Steps You Can Take Today
- Provide wage and hour compliance training to all managers. Like mentioned above, wage and hour compliance, exempt vs. nonexempt status, and other employment law topics often dive deep into gray areas that are difficult for managers to navigate. Wage and hour training frames these topics in the real-life scenarios that are relatable to employees and managers, to help them navigate these situations more confidently.
- Launch a mini awareness campaign around your wage and hour policy. As we’ve said before, a policy does nobody any good if no one is aware that it exists. (If a policy falls in an office, but no one sees it fall, does it still make a sound? Who cares – it makes zero impact. #lamejoke) I don’t use the term “campaign” lightly – simply redistributing a hard copy of the policy likely won’t be enough. A campaign requires strategic thinking, reminders, and a visual element. Perhaps you can send an email to all employees reminding them of where they can access policies online, followed by a colorful desk drop with the URL. Find out if there’s a way to add a revolving visual to your company’s intranet that promotes timely topics, such as wage and hour training reminders at the appropriate time, or gift-giving policy reminders around the holidays.
- Make sure your exempt employees are still exempt – and that you have all the documentation to support their status. The regulatory environment changes so quickly that the US Labor Department estimated in 2008 that fully 70% of employers were not compliant with wage-hour law. According to Laura Ho, a partner at law firm Goldstein, Borgen, Dardarian & Ho, a large contributor to noncompliance is that “employers often just do what they have always done.” Another problem is reclassifying employees without keeping adequate records of what led to the reclassification decision. According to attorneys from law firm Parker, Hudson, Rainer & Dobbs, documentation to support exemption decisions is critical when faced with legal action or an audit by the Labor Department.
While there will likely be many more employment law settlements in 2014, your company doesn’t need to be at risk. Taking these steps today can help protect your company. Worst comes to worst, if your company were to be involved in an investigation, you’ll be able to show the Department of Labor all the preventative steps that you’ve taken. Any other advice you’d give to companies regarding wage and hour training? I’d love to hear it, in the comments.
For More Information About Wage and Hour Compliance Training, Check Out These Resources:
- Blog: LinkedIn Compliance Settlement Highlights Why Wage and Hour Training Is So Critical
- Blog: How Proper Employment Law Training Courses Could Save Employers 248M in Wage and Hour Settlements
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