As the number of wage-and-hour lawsuits under the Fair Labor Standards Act (FLSA) hits an all time high, recruiters can help clients avoid what one attorney calls “one of the top threats to U.S. employers.”
Human Resource Executive Online recently reported that 7,764 FLSA lawsuits were filed between April 2012 and March 2013, which is the reporting year that is used by the Federal Judicial Center.
“With no clear catalyst during the past 12 months, this strong spike and new high for FLSA claims makes them one of the top threats to U.S. employers,” Richard Alfred, chair of Seyfarth Shaw’s wage-and-hour litigation practice, told Human Resource Executive Online.
While there is no obvious reason for the spike, Alfred largely blames the economy. As the economy improves, he believes attorneys are targeting new companies with growing workforces. On the flip side, the long, stretched out recovery has put increased pressure on existing employees who may be looking more closely at their employer’s pay practices as a result. Social media has also made employees more aware of the FLSA and their rights under it.
As a recruiter, clients often look to you as an employment expert, so it’s important that you are familiar with the FLSA and counsel your clients on the proper application of the law to help them avoid this fate. Some key points to remember:
- Overtime (1.5 times the regular pay rate) must be paid to most employees for any hours worked over 40 in a work week.
- Your clients also need to be aware of state laws that may be more generous to employees. For example, in California, employees must be paid overtime (OT) for any hours worked over 8 in a work day.
- Your clients MUST prohibit off the clock work. They should require that employees get pre-authorization before working overtime and that they keep accurate records, Alfred told HRE Online.
- Some employees may be considered exempt from OT, but they must fall into the Executive, Administrative, Learned Professional, Computer-Related, or Outside Sales classifications. They must meet speific requirements to fall under these categories. Please see the exempt requirements provided on the Department of Labor Web site.
- Exempt individuals must also be paid on a salary basis of at least $455 a week on a salary, not hourly basis. There are a couple exceptions to this rule. Computer-Related professionals may be paid at an hourly rate of at least $27.63 per hour ($39.90 per hour in California). Additionally, the salary requirements do not apply to those under the Outside Sales exemption.
- DO NOT let your clients misclassify W-2 employees as Independent Contractors to avoid the FLSA overtime rules. Doing so is just asking for IRS audits and FLSA lawsuits for back OT wages.
This article is for informational purposes only and should not be considered legal advice.