In announcing wage settlements with private employers, the DOL routinely states that it wants employees to get “every penny they earn." However, realistically the stakes of a wage and hour investigation by the DOL or a wage and hour class action by a current or former employee are much higher than paying each employee down to the penny. You might ask yourself, “Is it better or worse to draw a DOL investigation as opposed to a private class action?” The answer is that the stakes are different but high in either case—it’s truly a coin toss that you can’t win.
Heads! - DOL Investigation
If you find yourself the subject of a DOL investigation, you may be looking at not only back wages but also penalties. Furthermore, these investigations often occur with little to no warning. If you are lucky, you may receive an advance call. If you are not, you may merely have the DOL showing up on your doorstep to interview your employees. Furthermore, since the DOL’s Wage and Hour Division has hired 250 new wage and hour investigators, representing a staff increase of 1/3, the DOL’s on-site investigating activities have more momentum than ever.
Tails! - Class Action by Current or Former Employee
Sometimes a plaintiff’s lawyer comes knocking instead of the DOL. Rarely do we see plaintiffs’ attorneys filing wage-related suits on an individual basis. Instead, most are class actions. Furthermore, in these class action lawsuits, the class representatives seek not only back wages for up to 3 years under federal law alone, but also significant attorneys’ fees, liquidated (double) damages, and class representative incentives.
With this kind of money at stake, it is no wonder that the number of wage and hour lawsuit filings continue to skyrocket, with 7,764 wage and hour lawsuits having been filed under the Fair Labor Standards Act during the 12-month period ending March 30, 2013. This figure is a 10% increase over similar filings in 2012.
Is there any way to win the coin toss?
The answer is yes, but it requires that you move “wage and hour compliance” to the top of your priority list. Whether you know your house isn’t in order, you aren’t sure, or think it is in order, you should still work with a professional to conduct a self-audit. Issues that you should review, regardless of your company size, include:
- Are your employees correctly classified as exempt (not subject to overtime) or non-exempt (subject to minimum wage and overtime)?
- Do you limit deductions from the salaries of exempt employees to permissible deductions?
- Do you use independent contractors and, if so, are you sure they aren’t really your employees?
- Is there a chance that your hourly employees are working off the clock (i.e. through the use of mobile devices and other remote access)?
- Are your employees working through unpaid meal periods? (While “bona fide” meal periods are not work time, employees must be completely relieved from duty during a bona fide meal period.)
- Are you complying with all state wage deduction, business expense and other payroll laws?
Taking the time now to dig into your payroll practices, ensure compliance and communicate your compliant policies to your employees will make you infinitely more prepared if you find yourself the subject of a wage-related investigation or claim, and will also provide you with a good faith defense if you identify issues and take steps to correct them.