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Employment Practices – Wage & Hour Information

Wage & Hour claims are based upon disputes over hourly pay, failure of employers to pay overtime, meals and breaks, but also to appropriately categorize employees as exempt or non-exempt. These disputes are determined by the courts and lawsuits are on the rise.

Regulations vary drastically by state, which makes it critical that you work with someone like CSRisks, that knows what EPL coverage to seek for each unique situation.

Fair Labor Standards Act Rules & Regulations

Wage & Hour regulations fall under the Fair Labor Standards Act (FLSA), which provides rules and regulations for Employers on:

  • Coverage – who is covered by the Act
  • Minimum Wage (Federal minimum but states and even local municipalities can increase)
  • Overtime Pay
  • Youth Employment
  • Recordkeeping
Common Wage & Hour Claims and Penalties

These are some common Wage & Hour claims as issued by the U.S. Department of Labor’s Wage & Hour Division:

  • Making improper deductions from wages that cut into the required minimum wage or overtime.  Examples: shortages, drive-offs, damage, tools, and uniforms
  • Treating an employee as an independent contractor
  • Confusing Federal law and State law

An employee may file a private suit for back pay and an equal amount as liquidated damages, plus attorney’s fees and court costs.

Penalties for Violating FLSA (Wage & Hour) can add up quickly:

  • Employers who willfully violate the Act may be prosecuted criminally and fined up to $11,000
  • Employers who violate the youth employment provisions are subject to a civil money penalty of up to $11,000 for each employee who was the subject of a violation
  • Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to a civil money penalty of up to $1,100 for each such violation
2013 Wage & Hour Claims Examples *
  • Bank of America $73 Million – for multi-jurisdictional lawsuit of 185,000 former and current employees for working off-the-clock
  • Tata Consultancy Services, Ltd. $29.75 Million – two workers from India filed suit against the form in California for tax processing and return issues
  • Merrill Lynch $21 Million – for acquisition issues which created benefits and deferred compensation packages for employees
  • Rite Aid $21 Million – for managers who had not been classified as exempt for overtime
  • Old Republic Title Co. $12 million – for denying overtime and not offering proper meal and rest breaks as well as off-the-clock work requirements
Make Sure Your EPL Policy Measures Up:
While these claims are significant, there are just as many smaller claims for companies that simply fade away after they are unable to respond to the allegations and properly defend themselves.

This summary is for general discussion purposes and does not carry any legal opinion. Information was found at the U.S. Department of Labor presentation on Wage & Hour.
* Source: Inside Counsel, 8/4/2014