While wage and hour lawsuits filed against employers around the country declined between 2022 and 2023, there were still nearly 6,000 complaint filings under the federal Fair Labor Standards Act.
These types of complaints are the most common employee actions against employers and they typically cover failure to pay workers for hours worked, overtime infractions or requiring them to work during their lunch period.
With the onset of remote work and mobile devices, the chances of an employee working off the clock have increased substantially.
For example, if a manager texts a non-exempt employee while they are home and during non-working hours and asks them to send a client an e-mail, they are essentially requiring the employee to work unpaid.
If your require or allow your staff to work off the clock, the employee must be compensated for all of that time. This means that even if you did not ask the employee to work, you may still be required to compensate them, as long as:
- You know or have reason to believe that the employee is continuing to work, and
- You are benefiting from the work being done.
This is true regardless of where the work is performed at in the office or at home, for example.
Nine steps to protect your business
To protect your business from being sued for wage and hour infractions:
- Calculate overtime correctly. In some cases, an employee is paid by salary or piecework, and may receive bonuses and commissions. All of these are factors that must be considered in correctly calculating overtime pay.
- Keep detailed records of everything related to wages and hours.
- Do not allow non-exempt employees to remotely access their work e-mail account.
- If you give an employee access to their work e-mail at home, ensure that they are paid for their time in reviewing and responding to e-mails when not at work.
- Educate managers about text messaging or e-mailing non-exempt employees when they are off the clock. Conversely, tell non-exempt staff avoid answering text messages or e-mails about work when they are off the clock.
- Do not allow employees to take lunch at their assigned work area. If a worker answers a phone call or writes an e-mail during a lunch break (even if they weren’t not ordered to do so), they may be entitled to payment for time worked.
- If an employee is asked to stay after their scheduled end time to finish up a project, they need to remain on the clock and paid for that time.
- If a supervisor knows that a worker is staying late to finish a project, that time is compensable, even if the supervisor never asked them to stay late.
- Have in place a written policy that bars unauthorized work or unauthorized overtime. Ensure that your employee handbooks and wage and hour policies and procedures are up-to-date and compliant.
Insurance
If an employee is successful in an FLSA claim, they may recover twice the amount of their unpaid wages, plus a mandatory award of attorney fees, which often far exceed the amount of any unpaid wages.
Many employers purchase employment practices liability insurance to help cover the costs of employee lawsuits, but policies typically exclude coverage for wage and hour claims.
However, there are some insurers that will provide a wage and hour defense-cost-only sublimit on the EPL policy.
There are some specialized insurance policies that are sold by offshore companies that will cover wage and hour infractions, the costs of litigation and awards. However, they are uncommon.
In light of the scarcity of coverage, it’s important that you have in place strong policies to deter employees from working unauthorized overtime.
BGES Group is one of New York, New Jersey, and Connecticut’s Construction Insurance Specialists representing 50+ companies, including all the BEST general & umbrella liability programs. We offer all the coverage needed, including property, builders’ risk, inland marine, general liability, umbrella liability, auto, bid & performance bonds, workers’ compensation, N.Y.S. disability, and group health. Our commitment to you goes beyond the policies we provide. We are always just a call, text, or email away, ready to assist you, even on weekends. We understand the importance of your business and are here to help you navigate any insurance challenges.
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If you want to speak with us, call Gary Wallach at 914-806-5853, click here to email, or visit our website.
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