If you don’t track hours, overtime lawsuit may become nightmare — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

If you don’t track hours, overtime lawsuit may become nightmare

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Many employers make mistakes when it comes to classifying employees—either exempt (salaried) or nonexempt (hourly) from the federal overtime rules. Those mistakes can lead to expensive class-action lawsuits. And if employers failed to track hours worked, it makes it all the more difficult to settle the case.

That can open the litigation floodgates, involving all employees affected by a misclassification.

Recent case:
Shoneka Davis and several other loss-prevention agents who had worked for Abercrombie & Fitch sued for unpaid overtime.

They claimed the company had first misclassified them as exempt employees when they were called loss-prevention supervisors. Apparently the company determined the classification was wrong and renamed the position to “agent.” The duties didn’t change. The company, however, did say it would pay overtime for those who worked more than 40 hours in a week.

But the employees told the court they continued to work hours in excess of 40 without pay, even though they now clocked in and out. Back when they were misclassified, they had kept no time records. Now, they claimed, the company told them to record just 40 hours no matter how long they worked.

The lawsuit was filed as a collective action, and the employees wanted to bring more employees on board.

But the company offered to settle the case by calculating what it thought it owed. Based on the time clock records, it believed employees worked no more than 45 hours per week. It offered to pay each employee the equivalent of time-and-a-half for five hours per week and doubled that figure as the penalty. It also offered to pay interest plus reasonable attorneys’ fees.

The court rejected the settlement offer. Because the company had no record of the hours actually worked before the employees were required to track their hours, the court said there was no way to know whether the employees were perhaps owed more.

The case will now go forward and employees will get to estimate how many hours they actually worked. (Davis, et al., v. Abercrombie & Fitch, No. 08-Civ-1859, SD NY, 2008)

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