How to Protect Your Business From a Wage and Hour Lawsuit

Did you know the total value of the top 10 class-action lawsuits in 2020 was a staggering $449.05 million? That’s almost double what it was in 2018, and the trend seems to be going nowhere but up. Now more than ever, you must protect your business.

Employees file wage and hour lawsuits if they feel their employers haven’t been fair with their wages. Something as minor as denying overtime pay could warrant a wage and hour lawsuit.

A wage and hour lawsuit could cost your company a bundle and send your business to its knees. The million-dollar question thus becomes, “How does one protect their business from this type of lawsuit?”

What Is a Wage and Hour Lawsuit?

As mentioned earlier, wage and hour lawsuits are lawsuits in response to violations under the fair labor standards acts or labor laws non-compliance. Those filed under the former are classified as collective actions, while those under the latter are traditional class action lawsuits like a paga lawsuit.

Employees have the right to file a wage and hour lawsuit if they feel their employers have been unfair with their wage handling. Some instances of unfairness include:

• Denial of overtime pay
• Unpaid wages
• Forceful working during overtime

Of course, these are minor violations, but they still pose a considerable business risk. With that out of the way, let’s look at how you can sidestep wage and hour lawsuits.

Tips on How to Protect Your Business From Wage and Hour Lawsuits

You don’t need a law degree to protect your business from wage and hour lawsuits. However, some of these violations aren’t too obvious.  That said, here are a couple of tips for keeping wage and hour lawsuits at bay.

1. Pay Your Employees Accurately and on Time

Employees aren’t very happy when they experience issues with their paycheck. If this happens more than twice, they’re likely to switch jobs, and litigation will almost certainly follow suit.

To avoid this, ensure you enter accurate timesheets into the payroll. Also, try to create a process that ascertains you pay employees precisely what they’ve earned.  Pay keen attention to overtime errors, seeing that it’s one of the leading causes of wage and hour lawsuits.

On overtime, here are a few things to note:

• Overtime is 40 hours for non-exempt employees
• You can’t average each week your employee works over two weeks
• You can’t pay overtime for this week in next week’s check
• Swapping out overtime for a paid vacation is a violation of labor laws

Put in place systems to ensure that your employees get paid on time and what they earn. This will save you a heap of wage and hour litigation issues down the line.

2. Track and Record Punch Time Data

Make sure you track, save and keep accurate records of punch time data. Doing so helps you avoid any claims of unpaid work or back pay. Keep records of at least three years of payroll to be on the safe side.

Also, keep accurate records of your employees’ names, genders, addresses, and hourly wages. Aside from that, it helps to have accurate and up-to-date records of the number of hours your employers work every week and how much they earn, including overtime.

You can consider adopting an automated time-tracking tool to help you keep track of how many hours your employees work. You should also consider custom software that lets your workers verify their work hours when they report and clock out. Integrate these tools for accurate tracking and recording of punch time data.

3. Clarify Each Worker’s Duty

Wrongly classifying a worker as exempt hence denying them overtime is a violation that can lead to a wage and hour lawsuit. As such, you need to be clear about the duties performed by each employee to avoid such unpleasant scenarios. Ensure you classify your workers and allocate duties accordingly.

Classifying your worker is more than just understanding their job descriptions. It means looking into the actual duties they perform. Only then can you classify your workers as exempt or non-exempt.

When it’s time to evaluate your employees ask them to confirm their job descriptions. It‘s not uncommon for some employees not to have a job description. If that’s the case, ask them to record their duties for at least a week and draw up one.

4. Correctly Classify Contractors and Employees

If you work with both contractors and employees, you need to classify them as they are. As a rule of thumb, an employee is anyone you can tell where to be, what to do, and when to do it. To classify between the two, you need to consider.

• Do you have control over how the worker performs their duty, including when and where
• Are there any employee-type or contract-type benefits
• How long is the employment relationship; is it permanent or temporary
• Do you control some or all business aspects of the worker’s job

The above questions will help you conclusively establish whether the individual in question is a contractor or an employee.  Losing a wage and hour suit regarding misclassifying employees means you’ll have to pay rollback taxes and back pay, which puts you on the government’s radar.

No Wage and Hour Lawsuits for You!

The above tips should help protect your business from expensive wage and hour suits. Make sure you take the above tips to heart, and you’ll be safe. It’s also a good idea to seek legal counsel on the same if necessary.

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