Are You Adequately Insured Against Alleged FLSA Violations?

Unlike most employment discrimination class actions, which often allege disparate treatment of members of a protected class, wage and hour claims may target apparently neutral company policies that fail to distinguish correctly between exempt and non-exempt employees.

Some estimates value FLSA settlements and judgments at approximately $1 billion per year, dwarfing employers’ annual liability for discrimination actions.

Wage and hour claims are often based on an employer’s alleged failure to pay overtime to “nonexempt” employees however, there are numerous other bases for wage and hour claims. These may include:

• Relying on the misconception that salaried employees are automatically classified as “exempt” and not eligible for overtime pay
• Not properly paying employees for all overtime, i.e., compensation for hours worked in excess of 8 hours in a given day or more than 40 hours in a week
• Misclassifying employees as independent contractors and not paying them overtime
• Miscalculating the amount of wages owed, e.g., applying the wrong rate, improperly crediting tips, etc.
• Not paying qualified employees for time they are “on call”
• Requiring employees to work “off the clock” e.g., not paying for time spent on opening tasks or closing duties, or time worked before and after the official workday, or for time spent donning uniforms or attending seminars
• Not allowing employees to take meal or rest breaks
• Not paying all wages due and owing at the time of termination
• Docking exempt employees’ salaries for absences

Exposure to these claims is not limited to large employers. In fact, the impact upon smaller companies with limited financial resources may be more devastating. In one recent case, a single employee recovered a six-figure settlement because he meticulously documented the time he spent “on call”. In contrast, his employer failed to properly utilize time cards or otherwise document hours worked.

Ask yourself:

Do you have employment practices liability insurance and if you do, does your policy have a “Wage and Hour” endorsement to cover unpaid wages under FLSA?

For solutions on how to protect your organization against alleged FLSA violations, contact us for more information.