Human Resources

FLSA – A 77 Year Old Law

Oh my goodness!

Will someone please address the problems with FLSA before this whole country explodes!

Have you heard the news lately? Do you know how many lawsuits and DOL cases are pending against employers in the U.S. right now? Ok, I don’t know the exact number, but I did read a blog by a reputable law firm in West Virginia that said employee vs. employer suits have increased by 400% since 2010. They also went on to say that as of June 2013, the number of employment law suits had doubled the 2012 total number.

So, what is up you’re asking? Well, the Fair Labor Standards Act is 75 years old this year. It has been amended some over the past 40 years, but not enough. Employees did not have computers and smart phones back in 1938 when the law was born. Over the years, if an employee didn’t come to work then no work was performed and no pay was due. If an employee wasn’t standing by a land-line telephone in their house, there was no way to engage them after hours or on a day off. So, no work was performed.

That is just not the case today. Employees are working off the clock more than ever and not getting paid. As a matter of fact, the DOL estimates that about 80% of employers are guilty in some way, shape, or form, of underpaying workers by dismissing this off the clock work. Law suits and audits are at a high because they are so fruitful. Of course, the government wants employees to be treated fairly. But, an even bigger reason to pursue these cases is the amount of tax revenue that can be swept in when all of the final disbursements are made.

Sadly, the employees are still not winning in many of these cases. The attorneys are raking it in, though.  I had a lady in one of my Payroll Law seminars a few months ago who was a part of the class action suit against Abercrombie and Fitch a few years back. It seems Abercrombie was classifying Assistant Managers as ‘exempt’ employees. Under the law, they cannot be exempt as they perform too many of the hands-on duties an associate would also perform. In the end, they were required to pay a $42,000,000 settlement to these employees for unpaid overtime. My attendee said she personally received a check for less than $10.00. I don’t know how many employees and ancillary fees were involved in this suit, but it seems like the attorney’s made out with most of the dough. No wonder they enjoy taking these cases!

Wage and hour infractions are no joke. Employers may be making innocent mistakes. However, intentions are not always taken into consideration when an action is filed. What an employer can prove is way more important than what the employer ‘thought’ was OK. A well-meaning business owner in one of my recent classes told me he had to pay over $3 million in back wages to 300 employees who had been allowed to eat lunch (off the clock of course) at their desks over the previous three years. He ‘thought’ he was being a kind and flexible employer by allowing this activity at the workstations. After an angry employee made a call to the DOL, he found out he was actually falling just short of running a slave labor den by causing people to work through lunch for free! Yep, his intentions were not considered. The law is the law. If you are at your desk – even eating- you are getting paid.

Long story short – If you are an employer, know the law! Get yourself educated about the way you must administer your payroll in today’s world. Telling an auditor or a judge “This is the way we’ve always done it” or “I didn’t mean it that way” is no longer going to be the defense you want to bring to the table.

Until next time, Keep Calm and Employ On!

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