It is Not Just the NLRB You Need to Fear

Pamela Kingsley,  |  March 16, 2017

“LOW HANGING FRUIT.”  That is what local attorneys are calling their pickings when their clients have not been paid in strict accordance with the Fair Labor Standards Act.  If you think your company is safe, think again.

MINIMUM WAGE AND OVERTIME PAY FOR MORE THAN A 40-HOUR WORKWEEK.  These are the basic requirements.  Unless a statutory exception applies, persons must be paid minimum wage and, if employed for a workweek longer than forty hours, must be paid for the excess time “at a rate not less than one and one-half times the regular rate at which he is employed.”  29 U.S.C.A. § 207.

SALARIED DOES NOT MEAN EXEMPT.  Whenever a group of business owners is discussing exempt employees, probably more than one will identify all salaried employees as exempt.  While salaried employees may be exempt, exemption requires more than just being salaried.  Someone making a salary of $60,000 a year, unless specifically exempt, earns that annual sum in 5 to 15 minute increments.

TO QUALIFY AS AN EXEMPT EMPLOYEE, SPECIFIC TESTS MUST BE MET.  The statute provides exemptions for bona fide executive, administrative, professional (learned and creative), computer, and outside sales employees if they are paid at least $455 per week.  If you are unsure about one or more of your employee designations, visit the Fact Sheets from the Department of Labor (“DOL”) at http://www.dol.gov/elaws/esa/flsa/screen75.asp.

WHAT TO DO IF YOUR EMPLOYEES ARE NOT EXEMPT.  Assuming your company pays above minimum wage and your employees work close to forty hours a week, make sure your employees accurately report their actual hours worked.  You can round off to the nearest 5 minutes or even quarter of an hour, as long as it happens both ways, and does “not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.”  29 C.F.R. § 785.48(b).

IMPLEMENT WHAT YOU KNOW IS THE LAW.  Unless your company is going to pay time and a half, do not look the other way when your non-exempt employee takes work home or works through lunch without having him later leaving early or coming in late.  And stop permitting him to go full steam logging fifty hours one week and then giving him “comp” time of ten hours the next.  All time spent by an employee in a single work week must be accounted for in that week.

THE LAW ALLOWS RECOVERY OF UP TO DOUBLE THE AMOUNT OF 2 TO 3 YEARS OF BACK PAY.  It is bad enough when the DOL comes knocking.  But the law allows an employee to “sue for back pay and an additional sum, up to the amount of back pay, as liquidated damages, plus attorney’s fees and court costs.”  29 C.F.R. § 1620.33.  The employee can go back two years under normal circumstances, and three years if the violation is willful.

THE SHARKS WILL CIRCLE FOR BLOOD.  More and more, employees are bypassing the government and going straight to law firms with reputations for prosecuting wage and hour claims.  Once an occasional occurrence, handfuls of lawsuits are filed weekly in Maricopa County, with judges ordering companies to turn over their time and payroll records, allowing wholesale depositions of employees and, when the plaintiff’s co-workers are added to the lawsuit, awarding not just damages for all (up to a sum equal to six years of “under pay” for each), but all fees and costs incurred by the filing attorneys.  The law firms have learned that the majority of defendant companies will plead for a settlement just to stop the pain.  If you do not want your company to be one of them, heed this cautionary message.