Minimizing the risk of wage and hour lawsuits

The Fair Labor Standards Act (“FLSA”) establishes the federal minimum wage and other laws relating to overtime pay and recordkeeping. The FLSA applies to all states and Washington D.C. If states like Virginia have their own laws that are more protective of employees than the FLSA, the state laws will apply; otherwise, the FLSA applies.

Wage and hour lawsuits under the FLSA have been on the rise for over two decades, primarily for minimum wage violations. The minimum wage law may seem straightforward, but employees have been focusing on various nuances of the law and arguing that past interpretations are incorrect. Even businesses that are seemingly sophisticated have lost lawsuits.

Though there is never a guarantee of avoiding class actions or other wage and hour litigation, there are some steps businesses can take to help minimize their exposure. Employers should consider implementing an electronic timekeeping system to track hours worked. An electronic system helps employers avoid calculation errors, and it makes it easier for employers to keep time records on file for a few years. Employers may need to speak with their payroll providers to ensure that employee payroll records are preserved and made accessible to the employer for at least three years as well.

Employers should also maintain up-to-date written policies and include them in an employee handbook and/or in a conspicuous place for employees to see. Since policies can quickly become outdated, it is a good idea for companies to regularly have someone conduct an audit of their written policies, procedures, and handbooks. It would also be a good idea to audit employee records to ensure they are being paid accurately for all regular and overtime hours worked.

Employers may also want to enlist a business law attorney to advise them on current employment laws and best business practices. Attorneys can be vigilant of evolving court cases to determine whether any judicial interpretations of the law require an employer to make policy changes.