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Three Areas to Watch Out for Related to Wage and Hour Laws

Posted on Mon, Dec 10, 2012 @ 01:31 PM

Jack B. Harrisonby Jack B. Harrison

Paying your employees for their time on the job should be a simple issue, but often it is not.  According to CNN Money: “Collective action lawsuits alleging wage and hour violations have risen 400 percent in the last 11 years.”  In 2011, there were more than 7,000 such lawsuits filed in federal court — a huge increase since the turn of the century.  These lawsuits involve workers who claim they did not get paid the full amount for all the hours they worked — either because they were improperly listed as ineligible for overtime, or because they simply never got the money for the work they put in.

Below are three wage and hour issues that should be on every employer’s radar screen:

  1. Overtime and Minimum Wages—Over the past year, the U.S. Department of Labor (‘DOL’) has increased its enforcement nationwide, specifically directed at businesses that it deems ‘low wage’ employers, including restaurants.  For example, since 2006, the DOL’s Los Angeles office has found federal Fair Labor Standards Act violations at 72 percent of the restaurants it investigated, awarding more than $2.2 million in minimum and overtime wages owed to over 1400 workers.  When violations are discovered, investigators pursue corrective actions, including back wages, penalties, liquidated damages and possible litigation.
  2. Exempt Employees—According to the Fair Labor Standards Act (‘FLSA’), employees are to be categorized as either exempt or non-exempt. Exempt employees are paid a salary for all hours worked and do not receive overtime pay. Exempt employees must meet certain criteria under the FLSA to qualify as exempt based on the primary duties of the employee’s job and they must be paid on a salary basis. Non-exempt employees are generally paid on an hourly basis. They must be paid for all hours worked in a workweek and receive overtime pay if they work over forty hours in a workweek. Employers must ensure that their non-exempt employees are properly compensated for all hours worked, including all overtime hours worked.
  3. Unpaid Internships—As summer approaches, many employers are making plans to welcome summer interns.  For their part, interns often receive valuable experience and the opportunity to make connections that may lead to future employment. In short, internships are generally seen as a ‘win-win’ situation. Recently, however, a number of interns have sued their former employers, claiming that they should have been classified as employees for purposes of state and federal wage and hour laws. The plaintiffs in these cases – who were not paid while serving as interns – are seeking to recover wages for all hours worked, as well as any overtime due.  These actions have made it difficult for employers who wish to offer interns a valuable experience, while developing their own pool of potential future employees.

Because of increased enforcement and litigation in the wage and hour area, employers should be vigilant about reviewing their policies and employee classifications to ensure their compliance with federal and state laws.

Tags: Wage and Hour Laws, Overtime, Minimum Wages, Exempt Employees, Unpaid Internships