The FLSA has two major goals. One is that employees are paid at least the minimum wage and the second that non-exempt employees are paid sufficient overtime wages for any time over forty hours in a work week. Overtime pay is at a minimum one and one-half times the regular rate of pay.
With the recent increase in Florida’s minimum wage on June 1, 2011 from $7.25 an hour to $7.31 an hour and a similar increase from $4.23 an hour to $4.29 an hour for tipped employees, every employer should review their wage structure to ensure that they are properly paying their employees at least the minimum wage and proper overtime pay. While this modest increase of six cents may appear small and is a relatively minor increase, plaintiff attorneys may use a failure to pay this increase as a way to establish a foothold for a class action lawsuit.
To discourage an employer from violating the act (and unfortunately to encourage lawsuits) the act allows employees to collect unpaid wages, additional liquidated damages equal to the amount of unpaid wages, court costs and a fee for the employee’s attorney. Cases in which the underlying claim is for less than one hundred dollars in unpaid wages rapidly become claims for thousands of dollars once the employee’s lawyer steps in and files a lawsuit. As an employer, the goal should be to take preventive actions to avoid any FLSA claims. FLSA claims can seek wages going back two years and for up to three years if the violation is deemed willful. With a look back period that can extend three years, disgruntled ex-employees are prime candidates for FLSA lawsuits.
A trend in FLSA cases is the seeking of class action status. Some examples of FLSA settlements with class action claims include: Pilgrim’s Pride Corp. settlement of $1,001,438 in February of 2010 involving 798 former and current employees; APAC Customer Services Inc. settlement in June of 2010 of $4,000,000 for 23 former and current employees with the bulk of the money $2.6 million being set aside for employees not in the lawsuit and $1.32 million for attorneys’ fees; Olan Mills, Inc. settlement of $3,000,000 in September of 2010; and Alternative Entertainment, Inc. settlement in November of 2010 for $2,330,000 involving over 900 former and current employees.
Expanding the lawsuit with court authorization for additional employees to opt-in creates the potential for large claims and larger associated claims from the attorney representing the employees for fees. Class actions are allowed by judges when there are a group of similarly situated employees with unpaid wage claims. Claims commonly arise if the policy enforced by managers for the payment of wages or overtime does not properly meet the legal minimum requirements.
To avoid a class action lawsuit in FLSA, perform regular reviews to confirm that all employees are: properly classified as either exempt or non-exempt; paid for all of the time that they are required to be paid; paid at least the new minimum wage; and paid overtime wages that are properly calculated. Additionally, accurate records must be kept to prove the time worked by the employees and that your managers followed the correct standards in calculating wages.
This little change of six cents is enough for a potential claim and more than enough to take steps now to make affirmative changes to prevent a class action FLSA lawsuit.
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