Check pay policies for massive lawsuit threat–simple underpayment can quickly balloon — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
  • LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Check pay policies for massive lawsuit threat–simple underpayment can quickly balloon

Get PDF file

by on
in Human Resources

Make a small mistake in how you pay hourly employees, and the stakes can be quite high.

Individually, a wage-and-hour claim may amount to just a few hundred dollars. But multiply an underpayment as small as $350 by 1,000 employees and now you’re looking at a $700,000 tab. That’s because courts routinely double unpaid wage awards in Fair Labor Standards Act (FLSA) cases.

That can easily happen if you have a blanket policy that wrongly dictates when the workday begins and ends.

Plus, your company may have to pay attorneys’ fees on top of those doubled wages.

Recent case: Mary McLaurin and Carrie Moore worked for Prestage Foods at a turkey processing plant in St. Pauls.

They were hourly employees who worked on the processing line. Prestage used a “line time” compensation system that paid employees only for the time the production lines were scheduled to operate. Employees were not paid for any other time spent at the plant.

The women sued and asked the court to include another 1,000 present and former Prestage Foods employees who had worked under the same pay policy.

They claimed they all should have been paid for the time they spent changing into and out of safety gear, as well as time spent washing, sanitizing and storing work tools, and the time spent traveling to and waiting at the production lines.

Prestage asked the court to dismiss the case and force the employees to bring individual lawsuits for their alleged unpaid wages.

But the court said the case should go forward because the women were challenging a specific pay policy (the “line time” system”) on behalf of all other employees who worked on the turkey processing line. It said joining their lawsuits into one was an appropriate way to save time and court resources.

Plus, requiring individual employees to file their own lawsuits over small unpaid sums might encourage employers to violate the FLSA without fear. (McLaurin & Moore v. Prestage Foods, No. 7:09-CV-100, ED NC, 2010)

Leave a Comment

Previous post:

Next post: