10 Lessons Employers Can Learn From FLSA Lawsuits
The volume of collective actions brought under the Fair Labor Standards Act ("FLSA") against large and small companies has reached a dizzying level, up more than 400% in 20 years, and up 5% since April 2014. Plaintiffs' lawyers may have cut their teeth on smaller companies, but they have now found high value cases among the nation's largest employers. No industry segment or job category has been immune. Everything about worker pay has been challenged. Even lawyers have tried unsuccessfully to become plaintiffs in FLSA cases. So why do the lawsuits continue in companies that have qualified human resources professionals and in-house counsel? Lack of knowledge and low pay can't be the answer. Instead, it may be that employers complacently think, "This can't happen to me."
The general nature of the actions, size of the classes and the amount of the settlements should jolt general counsels, vice presidents of human resources, CFOs, and CEOs out of their comfort zones. In its simplest form, the FLSA requires employers to pay employees minimum wage and overtime at one and one-half the regular rate of pay for all hours worked over forty in a workweek. Keep in mind that work time and paid time (holidays and vacations) are different. The permissible exemptions from these requirements are far narrower than employers may want to believe. Litigation is bringing some costly clarity. Here are some lessons to be learned:
Lowe's human resources manager lawsuit: The test for an exemption has nothing to do with an employee's job title. The regulations focus instead on the employee's primary job duties. A human resources manager or any other manager that does not exercise independent judgment and discretion, supervises no employees, makes no decisions, and whose recommendations are not given substantial weight, will be unlikely to meet any test for exemption from the FLSA's minimum wage and overtime requirements. The case (Lytle v. Lowe's Home Centers, Inc.) settled for $9.5 million dollars for more than 880 opt-in members. The case was filed in August 2012 and settled in August 2014. The court eventually approved a settlement of $3.3 million with $1.9 million for attorney fees. The lesson for employers: Look carefully and objectively at employees' job duties, not just their titles; and be sure their job descriptions match their duties. Misclassifications can cost big money. Restaurants and tip pools: Tips belong to employees. Keep in mind that the law allows...
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