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Nov

25

2015

What’s Behind the Spike in FLSA Lawsuits?

Would it surprise you to learn that FLSA litigation is at an all-time high? Currently, wage and law litigation produces more rulings than any other type of workplace class action. Further, whereas these lawsuits were once concentrated in certain geographic regions, they’re now emerging in nearly every state and across all industries.

Much of this unfortunate trend is due to more rigorous enforcement by the Department of Labor (DOL). A disgruntled employee or former employee filing a complaint with the agency can trigger a full investigation of your pay practices, including compliance with the federal minimum wage, overtime, child labor, and proper timekeeping and recordkeeping. In fact, much of the time, investigators uncover violations beyond the initial complaint. In 2014, the DOL recovered approximately $250 million for employer violations to the FLSA.

There’s also the risk of private lawsuits. The price tag for the top 10 private settlements in 2014 amounted to nearly $215 million. Basically, an employee – or even a group of employees – can sue your business. Depending on the outcome of the lawsuit, you could be responsible for paying damages, including attorneys’ fees and plaintiffs’ costs and fees. Something else to keep in mind: Individual business owners and decision-makers can be held personally liable for violating the FLSA, which may involve supervisors, managers, and even HR personnel.

This uptick in FLSA litigation is expected to continue – largely because of changes in the DOL’s leadership and new, stronger initiatives to oversee FLSA requirements. The Wage & Hour Division has requested a 22% budget increase to support enforcement. Plans are underway to add 300 full-time positions and focus on certain industries: eating establishments, hotels/motels, residential construction, janitorial services, moving companies, agriculture, landscaping services, healthcare, and home healthcare services, grocery stores and retail trade.

Posting compliance plays an important part

As you know, all employers must post certain federal and state postings, including the current DOL notice informing employees of their rights under the FLSA. Beyond the risk of fines, failure to post can set off additional legal issues:

  • Extends “statute of limitations”

    This forces you to unnecessarily defend old claims that should have been dismissed as time-barred. It also expands potential damages for back pay or lost wages by extending the recovery period and the number of affected employees. Damage awards may increase, as well – especially in FLSA class actions.

  • Evidence of bad or good faith

    Under various employment laws, courts can impose additional damages for “bad faith” (and, in turn, reduce or excuse violations where “good faith” exists”). FLSA plaintiffs can even double damages if there are signs of bad faith, which can include failing to display the appropriate postings.

In today’s climate of increased FLSA enforcement, you need to be more diligent than ever about following the FLSA requirements. In addition to avoiding the most frequent violations – minimum wage and overtime errors due to improperly classifying employees – it’s critical that you display the latest FLSA notice along with other mandatory postings.

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