How to Avoid FLSA Lawsuit?
Did you know that 1 in 5 small and medium-sized businesses are at risk of being hit with an employment-related lawsuit, costing them $125,000 on average?
The Fair Labor Standards Act (FLSA) makes sure that employees are protected against unfair employment and pay practices.
When you start your company with a couple of employees, it’s easier to keep track of their working hours. But, as you grow your business, things become more challenging from the organizational and HR point of view.
That’s why you have to take serious preemptive measures if you want to avoid an FLSA lawsuit, pay your employees what they deserve, and stay compliant with overtime and tax laws.
Here are some tips to help you prevent FLSA violation lawsuits and keep your employees happy.
What Steps Can You Take to Avoid an FLSA Lawsuit?
The first thing to bear in mind is that to avoid an FLSA lawsuit, you should be careful about implementing it. There’s no room for mistakes, as every faux pas can be very costly.
Watch Out for Clocking In Early
If you have hourly employees or pay non-exempt employees a salary, the FLS stipulated that these categories of workers should be paid for all hours in a week they spend working. Straightforward as this rule may seem, many employers find themselves embroiled in litigation over not paying their employees what they deserve.
Additional clarification will help you avoid an FLSA lawsuit.
Let’s say an employee shows up at work 20 minutes earlier to prepare for their shift. For example, they want to warm up or load their vehicle, log into their business accounts, organize their workstation, or put on their uniform.
All these activities are work-related and if an employee starts performing them before their shift starts, you’re under a legal obligation to compensate them for the time they spend getting ready for work. However, the FLSA doesn’t treat each of these activities in the same way - some are perceived as integral or indispensable principle activities while others aren’t.
And it’s this distinction that makes a difference between whether you should allow your employees to clock in earlier regularly and compensate them accordingly.
For example, in some cases, employees have to put on personal protective equipment (PPE) or safely remove it without contaminating their clothing or skin. Inspecting work equipment prior to starting a shift or conducting a security inspection afterward are other examples of activities that are essential to performing a job responsibly and efficiently.
During the COVID-19 pandemic, nurses had to check their temperature before starting their shifts and working with patients. This step was absolutely necessary as it ensured that nurses could perform their job safely and without risking spreading the infection, which is why these 5 minutes were compensable.
There’s another fundamental distinction we should mention: preventing your employees from clocking in doesn’t mean the same as preventing them from working. Not allowing your employees to clock in early while they’re preparing for work won’t look good in court in case of a lawsuit. The same applies to asking them to clock out the moment their shift ends even though they still haven’t completed all their work-related duties.
So, how to handle this issue and avoid an FLSA lawsuit?
Block Access to Company Premises
One way is to block access to company premises, offices, equipment, or materials, and practically eliminate the odds that your employees will work off the clock. Even though this might sound too drastic, it’s better than letting your employees in but preventing them from clocking in early.
The fact that in 2018, the WHD managed to recover a whopping $304 million in wages employers owed to their employees speaks for itself. To avoid a similar FLSA lawsuit and becoming part of such an expensive statistic, extreme measures are absolutely justified.
Detect and Deter
Another solution is letting your employees clock in when they start getting ready for their tasks and clock out once they finish all their responsibilities.
While this means you’ll have to pay for the work they do outside their regular hours from time to time, it will put you in a position to react when you notice that an employee is abusing these relaxed clock-in/clock-out measures and have everything documented in case you need to take disciplinary action against them.
Just make sure to include rules related to working off the clock and overtime pay in your internal Wage and Hour Policy.
Understand the FLSA Timekeeping Requirements
As already mentioned, the FLSA aims to protect employees from unlawful employers’ practices by establishing:
- What a 40-hour workweek is
- Minimum wage
- Overtime pay
- Child labor standards.
All these provisions cover both full and part-time employees in the private sector and Federal, State, and local governments.
However, Wage and Hour laws are intricate, and compliance is often an issue. Although a company may have policies and systems in place, a supervisor or a manager can put the organization at risk for unpaid wages if they are not familiar with the FLSA timekeeping requirements.
There can be vagueness as to what constitutes compensable time.
For instance, does an employee need to be paid for commuting to work?
When does a workday start and end?
Who qualifies for overtime pay?
Determining when a worker is “off the clock” is not as easy as many employers may think. The use of common sense and doing what “seems right” most times leads to Wage and Hour FLSA violations.
Keep Accurate and Organized Records
Maintaining accurate records is the best thing a company can do to avoid an FLSA lawsuit.
Producing such evidence will make it easier for you to defend yourself if an employee still decides to press charges over unfair pay, overtime, or scheduling. Aside from misclassification claims, most Fair Labor Standards Act lawsuits revolve around allegations that workers were not paid at the right rate for the time worked or not paid for all the time worked.
Otherwise, it will be difficult to establish that disgruntled employees’ FLSA violation claims don’t hold up.
Check out our blog post on how long you should keep your business records to prevent deleting some crucial information before it’s legally allowed.
How Can Timeero Help You to Avoid an FLSA Lawsuit?
It’s the employer’s responsibility to pay employees for their work correctly and accurately.
A timekeeping system like Timeero allows you to track employees’ hours precisely, and its GPS-time clock functionality paired with timestamps allows you to track all the changes that were made in the records. What’s more important is that with our time-tracking tool, you’ll have proof that can serve as evidence in court.
Here’s how it works.
- Once your employees download Timeero, you’ll be able to assign them tasks and include them in the schedule.
- A digital location-based clock will streamline employee timecards and give you a clear overview of where each team member is at any time.
- If your employees clock in earlier or forget to clock out, you’ll receive a notification so you’ll be in the know whenever such an incident occurs.
Timeero will streamline the entire time-tracking process. Hence, you won’t have to worry about getting employee hours right or risk the legal consequences of accidentally underpaying them.
Who’s Responsible for Keeping Track of Hours Worked?
Employers can allow supervisors to keep track of their employees' work hours, have employees track their own time, or both.
Under the FLSA, however, employers and not employees have the ultimate duty to maintain these records. For this reason, employers can change workers' time records but must ensure that the records accurately reflect the time worked.
Create and Enforce Good Wage and Hour Policies
To avoid an FLSA lawsuit, your company should create and uniformly implement Wage and Hour policies that meet federal, state, and local requirements.
It’s important to have wage and hours policies that are detailed so that there are no ambiguities that can be interpreted in different ways. Your policies should cover the following:
- General business hours guidelines concerning shift standards and timekeeping expectations
- The process of approving overtime
- The consequences for unauthorized overtime
- Any other issues that govern how workers are paid and what your company expects of its workforce when it comes to hours.
Before creating such a policy, it’s essential to thoroughly research all Wage and Hour Laws in states where you have employees. An employee’s claim about a suspected FLSA violation will put your company on The Wage and Hour Division’s radar, although the agency also performs random audits. The WHD is part of the U.S. Department of Labor, and it conducts investigations to
- ensure that employers keep workers' basic payroll and employment records properly
- check if employee working hours are paid accurately
- limit working hours and types of jobs for underage individuals.
The FLSA permits WHD representatives to investigate and gather data concerning wages, hours, and other employment practices by entering employers’ premises, inspecting records, and interviewing employees. To avoid an FLSA lawsuit and potential legal complications, it’s critical to understand and closely follow relevant Wage and Hour Laws and conduct your own audits.
Since overtime policies differ from state to state, we created a useful resource where you can find what applies in your state or country.
Stay Up to Date with the FLSA Changes
Being unaware of the latest regulatory changes won’t absolve you of the responsibility for a potential FLSA violation, so it’s crucial to stay up to date.
To avoid an FLSA lawsuit, make sure to regularly check the DOL’s webpage with relevant FLSA resources and guidelines. Another useful online source to bookmark is SHRM, particularly their Legal & Compliance section, where you can find State & Local Updates.
Don’t Turn a Blind Eye to Working Off the Clock
FLSA requires that hourly and non-exempt workers receive overtime pay at a rate of no less than time and a half of their regular pay rate after 40 hours of work in a workweek.
This means that failing to compensate your non-exempt or hourly employee who works more than 40 hours in a workweek according to legal requirements constitutes an overtime violation.
Sometimes organizations encourage managers to look the other way while employees work off the clock, and at times it’s just an oversight.
Either way, your company is liable for a costly lawsuit. To reduce this risk, it’s important to understand what off-the-clock work is and have a plan in place to prevent it from happening.
Working off the clock refers to performing any work or duties for the employer that won’t be included in the employee’s weekly overtime hours and compensation. This is an illegal practice, and the best way to prevent it and avoid an FLSA lawsuit is to implement a time-tracking solution that will alert you in case an employee forgets to clock in or out while at work.
Seek Advice from an Expert
If you have any doubts about whether your organizations are compliant with the FLSA or not, it’s best to seek counsel from a seasoned lawyer and ensure you have your affairs in order.
Don’t forget that although the FLSA is a roof legislation that overrides state laws, there are many other provisions that the states themselves outline and that aren’t included in this document. In some cases, state regulations have tougher requirements than the FLSA.
So, How to Avoid an FLSA Lawsuit and Protect Your Business from Hefty Fines?
The key to avoiding breaking both federal and state labor laws is retaining extensive detailed records of each employee’s hours and other work activities, as well as compensating employees according to the FLSA timekeeping requirements.