World Journal Article 05/25/2014 Why Now, More Than Ever, You Need to Comply with the FLSA?

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Article for World Journal

Why Now, More Than Ever, You Need to Comply with the FLSA?

The Fair Labor Standards Act (FLSA) contains the provisions of the minimum wage, overtime, and record keeping laws. Private litigation under the (FLSA) has been increasing dramatically over the past several years and has doubled over the past 10 years.

The federal government has also increase their enforcement efforts over the past several years by hiring hundreds of additional investigators and changing the Wage and Hour Division’s goals by vigorously pursuing impact cases and utilizing expanded enforcement tools, like subpoenas, assessment of liquidated damages, enhanced enforcement agreements, litigation, civil monetary penalties and willful three year statute of limitation.

What does this mean to you as a businessman? What this means is that the stakes have been raised and not complying with the FLSA has become more costly and the risk of being subject to a private or government action has increased severely. An FLSA suit can be a devastating blow to a business, both financially and psychologically.

Attorneys are filing more private action suits and petitioning the courts to expand these suits to class action status. In NY State once a class action is established by the courts, everyone in that class is part of the class action, unless they opt out. These class actions not only pursue back pay for all members of the class, over a six year period, but also an equal amount of the unpaid wages in liquidated damages. But the real issue is the extremely high attorney’s fees and costs sought by counsel that are a major and additional part of the suit.

I recently sat in chambers with a magistrate, in the US Eastern District Court, who stated that 35% of his docket were private action FLSA cases and that the biggest stumbling block to a resolution on most of these cases were the very high attorney fees. What you face as an employer is not just making the employee whole for the minimum wage or overtime violations over a six year period and paying a penalty of 100% liquidated damages, but also extremely high attorney’s fees and costs.

Also, the Wage and Hour Division has poured resources into targeted industries that have been traditionally not in compliance with the FLSA, such as; restaurants, construction, factories, healthcare facilities, car washes, and gas stations. The department currently seeks cases that will impact the industry and change behaviors over a broad spectrum. The government does not get attorney’s fees, but they do pursue Civil Monetary Penalties, which are computed based upon the number of employees found in violation, which can be substantial.

Therefore, it is wise and a good business practice to be proactive in assessing your compliance position with the FLSA. There are simple ways to comply, if you know the law and are willing to make some fairly simple changes with your business practices.

You can comply by installing a record keeping system for hours of work and pay, coupled with the knowledge of the applicability of the labor laws under the FLSA. Today the potential of a private action suit or a government investigation looming over a business, is not a secure, smart or pleasant way to conduct a business.

Contacting your human resource department, attorney, accountant or labor consultant is the first step in addressing the FLSA’s potential threat to your business, your bottom line and your peace of mind.

Richard A. Mormile