The US Department of Labor reported that nearly 10% more FLSA lawsuits were filed in 2010 than in 2009, and almost double the number filed in 2005. And, DOL investigations and back-pay collection claims remain at or near record levels.
Here are some tips to reduce your risk of FLSA claims:
- FLSA Audit. Consider performing an FLSA audit to review your policies and practices, especially those relating to exempt positions, salary deductions, and overtime pay calculations.
- Documentation and record keeping. Carefully document reasons for terminations and lay-off decisions. It is important that employers list any legitimate, non-retaliatory, non-discriminatory reasons for selecting a particular employee for a lay-off or termination. And, this will definitely help defend against any claim or lawsuit the employee may bring.
- Deal with off-the-clock work. Make sure that you know about any work your employees may be doing from home or outside the office. Remember, employees may be disciplined for performing off-the-clock work, but if the employee is non-exempt, he must be paid for off-the-clock work.
- Independent Contractor/Employee. You should review the status of your independent contractors. The DOL and the IRS are sharing information and are looking for workers who are wrongly classified as independent contractors. Here is a list of factors the IRS will consider in determining whether your workers are truly independent contractors.
- Know the risks of an FLSA lawsuit. It is important to understand that an FLSA claim may allow the employee to recover two times unpaid wages and attorney’s fees. It is not uncommon for attorney’s fees to greatly exceed wage claims, so an early resolution may be in your best interest.
Compliance with the FLSA can be tricky and claims under the FLSA are on the rise. Make sure you are dealing with FLSA issues proactively and effectively to minimize your risk.