Better safe than sorry is the old adage. Nowhere is this maxim more applicable than for an employer’s compensation practices, especially on issues of classification, working time, and record keeping protocols and obligations.
In the last several years, there has been an escalation of wage hour lawsuits, single and class action. These cases can be grouped into certain categories that correspond almost exactly to particular payroll practices and corporate/financial decisions that impact the FLSA and state law. Some of these flashpoint areas are:
- Overtime claims arising from classification of employees as exempt or non-exempt;
- Independent contractor/consultant classification;
- Preliminary and postliminary work claims (e.g. donning and doffing, travel time);
- Automatic deductions for lunch (the curse of the smart clock)
- On-call cases; and
- The Blackberry/E-Mail Claims (a “new” type of preliminary and postliminary work).
There is no way to tell when a claim will arise. Usually, they come from workers fired for eminently good reasons but who complain to the DOL or file suit and, bad luck, have, not been properly paid. If the “policy” at issue affects a group or, class, of workers, the snow ball rolls downhill.
The best, really, the only protection employers have is to self-audit all of their compensation practices and if there are issues, fix them, but do so in ever so subtle a manner as to “not arouse suspicion.” The focus should be not only on having/drafting the legally correct (and employer friendly) policies but to exercise oversight to ensure they are implemented and maintained in a consistent manner.
The best defense is a good offense. Another adage but, here, the best defense is proactive planning. Such audits do not cost a great deal and the report that I submit to the employer when I do one highlights areas of concern and suggested remedial measures. Such an audit also provides the ability to mount a “good faith” argument/defense.
An ounce of prevention….