by Roger A. Smith, CPP, Payroll Management Consultant

Notes from the Payroll Prof

“Employees Can Sue for Unpaid Overtime without Identifying Hours Worked”

If you don’t think accurate time records are important, how does that headline grab you? In this case (Vivian Brown v. Family Dollar Stores of Indiana, L.P.) the employee didn’t have accurate records of overtime she should have been paid, but provided evidence of a pattern of underpayments and inaccurate timekeeping records. The court ruled that that where an employer failed to keep the proper and accurate records required by the FLSA, the employer, rather than the employee, should bear the consequences of that failure. Fortunately, for Family Dollar, this is not a class action suit.

Class action suits can lead to huge liabilities. According to Workforce Management, the top 10 2006 Wage and Hour Settlements totaled over $500 million. The odds are your employer is out of compliance with wage and hour laws. According to the Department of Labor, 70% of businesses are out of compliance. Can your employer afford a class action Wage & Hour suit?

If you haven’t done it recently, I’d suggest you conduct a thorough internal review of your wage and hour compliance. Here are ten items you can include in your review to avoid wage and hour lawsuits:

1. Develop/update strong wage and hour policies and practices.
2. Correctly identify exempt vs. non-exempt employees.
3. Correctly identify employees and non-employees.
4. Evaluate employee activities and identify work time and non-work time.
5. Review overtime practices for all non-exempt employees – hourly and salaried.
6. Evaluate your “rounding” process – is it consistent?
7. Automate policies and procedures as much as possible.
8. Train managers and supervisors in all wage and hour areas.
9. Where possible, implement biometric time systems.
10. Review state wage and hour labor laws for possible additional requirements.

Don’t wait for a complaint or a lawsuit. Spend the time now to address these issues.

As always, if you have any questions or comments, my email address is Roger.Smith@PayrollProf.com.