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Wage & Hour – Development & Highlights To Highlight Recent and Noteworthy Developments In Cases And Regulations on Wage and Hour Laws That Affect Large and Small Businesses

Employers Fear Exemption Audits And Then Some

Posted in Exemptions

I just read a recent article about survey results that indicate that employers fear wage hour suits contesting employee classification as exempt (or not). The report advised that “in recent years, employers have faced an explosion of wage and hour lawsuits, which are often driven by disagreements over how workers are classified.”

This area is good fodder for plaintiff’s lawyers. Usually, if a group (large or small) of workers is held to be exempt by the employer, that overall classification works to show the common policy, practice or plan that plaintiffs need to get conditional certification. In 2012, more than 4000 class actions were filed and settlements totaled $467 million.

The fee shifting aspects of wage hour laws (e.g. FLSA) also creates a great deal of worry (and potential liability) for employer/defendants. The longer the case “drags on,” the bigger the fee petition will be. On an exemption issues, especially if it is the administrative exemption, the grayest of the three, the risks of losing at trial and the concomitant claims for fees (plus actual damages) can be daunting, to say the least.

There are other FLSA “popular” causes of action. There have also been a host of case alleging non-payment for “hours worked.” Travel time cases, automatic lunch deduction cases, pre-shift activity cases and the increasingly infamous “blackberry cases.” These perils are also out there, with the same fee shifting consequences and potential for exposure.

The best defense is to be proactive. Scrutinizing job classifications with an eye towards making true, up-and-down calls on exemption issues and reducing potential back pay liability is paramount. Moreover, work time policies must also be examined, especially with a focus on “off-duty” activities, i.e. preliminary and postliminary activities. Keeping abreast of lawsuits within one’s industry is also key. Once plaintiff attorneys get into an industry (e.g. restaurant industry) there is a seemingly geometric multiplying effect that occurs.