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Beware hidden danger of class-action lawsuits

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in Human Resources,Overtime Labor Laws

Managers may think it’s safe to underpay employees by having them work off the clock or shaving time off their overtime tab because no one has complained. But it takes just one short-term employee to get the lawsuit ball rolling.

That worker may object—and find an enterprising attorney. Before you know it, you will be facing a federal Fair Labor Standards Act (FLSA) and New Jersey Wage and Hour Law class-action suit. That could spell big trouble! While one claim may cost you just a few hundred dollars, a collective claim involving all similarly situated employees can add up to much more.

Recent case: Bijan Shakib was a server at the Back Bay Restaurant Group for just eight months. Two years after he stopped working for the company, he filed an FLSA and New Jersey Wage and Hour Law claim against the company.

Shakib claimed that the restaurant had a company-wide policy to shave minutes off employees’ overtime and have them work off the clock setting up before work and cleaning up afterward. He also claimed that other employees such as bar­tenders, hosts and trainers also were cheated out of pay by the same informal policy.

The restaurant argued that Shakib’s lawsuit shouldn’t include employees who had been with the company for far longer than Shakib had been. Instead, it wanted him to proceed on just his individual claim.

The court denied Back Bay’s motion, and said the case could go forward as a collective action with Shakib representing all similarly situated employees. (Shakib, et al., v. Back Bay Restaurant Group, et al., No, 10-CV-4564, DC NJ, 2011)

Final note: Don’t wait for a law­suit to check for unpaid over­­time or off-the-clock work. Instead, include a policy prohibiting such practices in your handbook.

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