In light of a slew of recent wage-and-hour lawsuits against big companies like Wal-Mart and UPS, now’s a good time to review how you track the hours worked by employees.
Reason: Following the Wal-Mart lawsuit lead, clever lawyers now seek out one or two unhappy employees who want to start a class-action case under the Fair Labor Standards Act ().
With only a vague allegation in hand (as in the case below), the lawyers demand that all employees receive a letter asking whether they want to join the lawsuit. Such letters trigger visions of quick paydays in employees’ heads, so suddenly you’re faced with a bigger, costlier lawsuit.
Unless you can clearly document who worked for how long, the court could turn one disgruntled employee’s complaint into a class action on behalf of everyone you might have underpaid. It’s also vital to make sure that employees are classified correctly as either exempt or nonexempt. (See more tips in box below.)
Recent case: Rebecca Carmody, a registered nurse, filed an lawsuit. She claimed her employer routinely paid her for just 40 hours no matter how long she actually worked, and automatically deducted 30 minutes for lunch whether she took a break or not.
Her attorneys asked the court to send letters to all employees, including those working in other buildings and different jobs, asking whether they wanted to opt into Carmody’s lawsuit.
The employer argued that the other employees weren’t in Carmody’s position, but it couldn’t quickly refute her charges. The court allowed the letters to go out.
Now, the employer will have to produce wage-and-hour records for every nonexempt employee. (Carmody v. Florida Center for Recovery, No. 05-14295, SD FL, 2006)
Final tip: A foolproof approach: Require everyone, exempt or not, to clock or log in and out. Just make sure you continue to pay their full salaries.