Top Five Issues in Wage and Hour Litigation

August 13, 2021

Private party wage and hour litigation has increased substantially over the last decade. Our review of court filings indicates that almost one private wage and hour lawsuit per day is filed in Arkansas. If you have not been sued yet, you are likely to be the target of such a suit in the near future. We also note that the Wage and Hour Division of the Department of Labor continues its increased focus into traditional wage hour matters. The slightly good news is that the Wage and Hour Division now has a portal much like the EEOC, which allows employers to upload documents and not have an investigator on site in all circumstances.

The following is a summary of the top five issues we are seeing based on our involvement in private party wage and hour cases:

Off the Clock Work - Plaintiffs bring a variety of allegations about working off the clock. These include donning and doffing cases, where an employee is required to change clothes or use PPE in their job and claim that they put their equipment on and take it off without compensation.

1. Preliminary and Postliminary Activities

While donning and doffing cases can fall into this category, that’s not the only type of case that may be a trap for the unwary. If employees perform any task that is integral to their main duty, that can be "work." For example, in meat processing plants, the sharpening of knives is “work.”

2. Automatic Deductions for Lunch and Breaks

Other “off the clock” cases may involve allegations that employers make automatic deduction for a 30-minute or one-hour lunch break, but employees are sometimes or often interrupted or not allowed to take that break. Employers who do automatic deductions should ensure they implement a mechanism for employees to report a missed or interrupted unpaid break or lunch. This should be reflected in a policy or procedure that is well communicated and this “exception form” (that can be as simple as email), is actually used by employees. Supervisors who become aware of the potential that employees are missing lunch breaks or getting interrupted should audit the use of whatever system you have for ensuring exceptions are being reported and paid.

3. Traditional "off the clock" cases versus “long punch cases"

A traditional "off the clock" case is one where employees allege that they were required to punch out and keep working, typically to avoid overtime. Another area where this might arise is where an employer allows employees to clock in up to 15 minutes before the shift and clock out 15 minutes after their shift to avoid long lines at the time clock, but the work is supposed to begin on a bell, buzzer, or whistle for example. This scenario is likely more common in manufacturing, but is expressly permitted by the FLSA regulations. See 29 CFR § 785.48. This regulation warns, however, "that major discrepancies between time clock hours and actual hours should be discouraged since they may raise a doubt as to the accuracy of the records of the hours actually worked.” While the burden of proof in such a case should be on the employee, employers who pay for a set shift, would be well-advised to make sure that employees are instructed and reminded to do nothing that could be considered work before the start of the shift. That would include the aforementioned knife sharpening or other duties that are preliminary, but integral to the main work duties. Finally, to avoid claims of working off the clock in this manner, employers should ensure compliance and document warnings or discipline for non-compliance.

4. Failure to include all compensation in the regular rate

We also have seen many lawsuits which allege that an employee receives a nondiscretionary bonus, but that bonus is not included in their “regular rate” for overtime computation. These nondiscretionary bonuses can take many forms, including performance goals, attendance goals or safety goals.  The FLSA provides that nondiscretionary bonuses are to be included in the employee’s regular rate of pay for purposes of calculating overtime. A nondiscretionary bonus is one where an employer advertises or sets forth the conditions for the bonus and informs employees of those conditions. It is nondiscretionary,   in that when an employee meets the stated criteria, they receive the bonus. Separate from nondiscretionary bonuses are those that are completely discretionary, that both the fact and the amount of the bonus are left completely to the discretion of the employer at the time they are made.

Misclassification Cases - We continue to see lawsuits alleging that employees were misclassified as exempt, when in actuality, they either did not receive a sufficient salary to be exempt, or did not perform a sufficient amount of exempt duties to be exempt, or were not paid on a “salary basis."

5. Exempt Verses Non-Exempt Misclassification

Wage hour plaintiff’s lawyers love these cases because the burden to prove the exemption is on the employer. If the employer cannot establish the exemption, damages are an easy hill to climb. That is because, typically, if the employer has classified the employee as exempt, the employer does not require the employee to keep up with her time. The absence of time records for a non-exempt employee (the one who was misclassified), is a separate record-keeping violation. The reasult of that violation is that whatever hours the employee says she worked is presumed to be correct, and can only be rebutted with “clear and convincing” evidence.

Employers should periodically audit time keeping practice in light of the above, as well as audit your exempt classified employees to ensure they perform exempt duties, are paid the minimum salary, and are paid on a true salary basis with only those few deductions from that regular salary that are expressly allowed by the FLSA and implementing regulations.

Disclaimer: The information included here is provided for general informational purposes only and should not be a substitute for legal advice nor is it intended to be a substitute for legal counsel. For more information or if you have further questions, please contact one of our Attorneys