Avoiding Wage and Hour Litigation

Avoiding Wage and Hour Litigation 2560 1707 Balance Point Team

Wage and hour compliance has always challenged employers. With overlapping and often contradictory federal and local regulations, it presents the most significant risk for error. It is also one of the costliest areas.

If wage and hour compliance was the powder keg, the COVID-19 pandemic was the match.

According to Seyfarth’s 17 Annual Workplace Class Action Report, there were a record number of class-action rulings in 2020—1,548 of them totaling $1.58 billion, up from $1.34 billion in 2019 before COVID erupted.

A total of 231 of the 1,548 rulings were wage and hour-related with settlements accounting for nearly 19% of the $1.58 billion.

An Explosion of Court Cases

A class action suit was filed against Santa Fe Mercados, a small California-based supermarket chain alleging non-exempt employees were required to wait in line for mandatory COVID screenings prior to being able to clock in for the day. The plaintiffs claim since their time was not recorded properly, they did not receive required minimum wage and overtime pay.

An employee of North Pacific Seafood was sent to work in another location where she and other employees were forced to quarantine while awaiting COVID test results. She alleges that the employees should have been paid for their time in mandatory quarantine.

Three former employees of Pure Enterprises, a retailer, filed a complaint alleging violation of state wage and hour laws when they were required to work during the state-ordered shutdown and that each of them was required to work off-the-clock while being denied meal and rest breaks.

The Ammunition

With the speed at which companies had to accommodate remote work, reassign responsibilities, and shift work schedules during the pandemic it comes as no surprise that mistakes happened.

The most common issues that tripped up employers included misclassification and ensuring that a change in work habits did not affect workers’ exempt vs. non-exempt status. Other areas for concern were pay cuts caused by the pandemic and restoration to full pay.

As many companies now plan to make remote and flexible working arrangements a permanent option in 2021 and beyond, ensuring compliance is more important than ever.

Extinguishing the Threat

Follow these best practices to ensure wage and hour compliance:

Train front-line managers. They are your first line of defense for wage and hour compliance. Ensure that managers are fully trained in the nuances of federal, state, and local wage and hour laws. Without doing so, managers may unknowingly violate the law.

Maintain accurate timekeeping. Lawsuits typically stem from employees alleging that the hours paid were not accurate and that hours worked were either not reported or under-reported. Being able to produce accurate records to defend your organization is invaluable; online time tracking software streamlines the process.

Keep accurate and complete employee records. This includes hire date, termination date, dates of any leaves of absence, as well as tracking any changes in job, supervisor, work location, state of employment, work schedule and pay rate. These records should be stored electronically in an HRIS.

Stay up to date on changes in law. Federal and state wage and hour laws are constantly changing. To help keep you current, you need a competent HR resource by your side.

If you are uncertain of your ability to maintain wage and hour compliance, schedule a consultation with the BPHR team.

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