Wage and Hour

What is it about wage and hour law that some employers just do not get? The law seems so simple. If an employee does not meet very specific conditions, that employee is entitled to being paid overtime (generally 1 ½ times their hourly pay rate for all hours worked over 40 hours in a seven day period).

There are many other provisions of the federal law, (Fair Labor Standards Act or “FLSA”) but employers seem to routinely violate this provision. Just look at the numbers! In 2009 the top ten FLSA lawsuits totaled $363.6 million in damages. This is an increase of 44% over 2008. The U.S. Department of Labor estimates that as many as 70% of employers violate the FLSA.

As employers try and wring every penny of profit to keep their businesses open, it seems that employers want to get the most employee productivity for the least amount of cost they can. It is very easy to slip over the line into violating a law that has significant financial teeth. The choice of shaving overtime by calling the employee “a salaried” employee is just too tempting, particularly in these tough economic times.

Is the reward worth the risk? I hear employers ask the same questions and give the same excuses: The lawsuits only happen to big companies who employ lots of employees, right? I’m a small guy with just a few employees, so I won’t get caught. I pay my employee[s] a good salary so I don’t have to pay overtime…

A new law is currently under consideration which will add the penalty of a fine for every person who is misclassified as not eligible for overtime. If the misclassification is an accident or negligent, the fine would be $5000 PER PERSON (triple the amount if the employer misclassified the employee on purpose) in addition damages assessed as a result of the employee suing for violation of their rights under the FLSA equaling unpaid wages for up to 3 years. If a business gets caught, if this law passes, the fine coupled with the damages and legal fees and penalties will be financially devastating!!!

Now, with the Department of Labor recently hiring 250 investigators to find violations of wage and hour laws and the promise of hiring an additional 177 investigators, the question to businesses violating the FLSA is why are you taking any risk at all? Seek help from professionals, audit your pay practices, and make sure your employee classifications are correct and up to date. There are ways to comply with the FLSA and still control paying overtime wages.

The real question is not “what have you got to lose”? It is “what do have to save?

Glenn Brown is the CEO of G & J Consultants, LLC. In addition to having directed the HR Department of a health care services company, Glenn is an attorney with 15 years experience assisting businesses of all sizes and industries in complying with employment and labor legal issues. G & J Consultants specializes in providing small and medium sized businesses with traditional HR services as well as compliance with employment laws and regulations.