FLSA Myths: How They Can Bust Your Budget and Blow Your Reputation

Way back when telephones had rotary dials, a law was passed called the Fair Labor Standards Act (FLSA). For years no one paid much attention to it, but recently it has become a gold mine for plaintiffs’ attorneys and a financial and public relations nightmare for businesses.

Because the law is complicated, many employers aren’t familiar with its ins and outs, especially when it comes to wage and hour issues. There are all kinds of pesky details and definitions, like exempt vs. non-exempt, record-keeping standards, and preliminary and postliminary activities. Instead of learning the facts,

It’s much easier to cling to reassuring myths. But it’s also riskier (find out why by watching my new Wage and Hour video).

Let’s examine (a few of) those myths and just how dangerous it can be — to your organization’s budget and reputation — to ignore the facts.

MYTH 1: The problem will go away if we ignore it long enough

Fact: You can bury your head in the sand if you want to, but don’t expect the rest of the world to go away. Or your company’s wage and hour liabil- ity, for that matter. You could, however, lose massive amounts of money in a lawsuit and find your formerly shining reputation tarnished.

And the longer you ignore the problem, the worse it gets. Here’s why: Take a practice that involves several minutes of unpaid work a day, spread it over a population of hundreds of workers, let damages accumulate over three years, and double the wage loss.

And that’s just the beginning. Don’t forget plaintiffs’ costs plus your company’s time lost defending claims. See how easily a simple, seemingly innocent wage and hour violation can become a business disaster?

MYTH 2: This won’t happen to us. We’re under the radar

Fact: You may think you’re under the radar, but you are in the crosshairs of the U.S. Department of Labor (DOL), whether you have five employees or 50,000. The DOL has recently awarded settlements for back wages ranging from $20,000 to $500,000 in virtually every kind of workplace, from nail salons to electrical contracting.

Attorneys know that between 70 percent and 90 percent of employers are in violation, and it’s now standard practice for them to dig for wage and hour violations when clients come in with any employ- ment-related issues. One plaintiff’s lawyer described the process of finding these violations about as difficult as “shooting fish in a barrel.”

MYTH 3: Wage and hour laws will change

Fact: In the current climate of shifting job responsibilities, reclassification misunderstandings, economic uncertainty, and litigious attitudes, it’s doubtful this law will go away. In fact, claims are up — way up.

Article Continues Below

There were 26,312 complaints filed with the DOL in 2009 alone. Consider also that the DOL has hired 250 new employees to investigate complaints and launched a “We Can Help” campaign complete with website, catchy jingle, and bilingual public service announcements. All designed to encourage workers to report possible violations without fear of reprisal.

MYTH 4: Lawyers will stop suing

Fact: If you watch late-night television, you’ve seen the barrage of commercials from wage and hour lawyers in search of new business. FLSA litigation is so lucrative that there are even attorneys who specialize in wage and hour claims within the health care, pharmaceutical, telecommu-nications, and utilities industries. And the fact that these cases are easier to prove than other kinds of claims makes them even more attractive.

In 2009, the volume of federal wage and hour collective actions outnumbered all other private class suits in employment-related cases. As long as there is money to be made, lawyers will continue to mine wage and hour for new claims.

It’s time to face facts about FLSA. Download your free copy of How 8 Myths about FLSA Can Bust Your Budget & Blow Your Reputation now. And of course, view my Wage and Hour video.

Copyright info: © 2011 Employment Learning Innovations, (ELI) Inc.

Stephen Paskoff  writes frequently about how to build a civil workplace on his blog at www.eliinc.com.

Stephen M. Paskoff, Esq., is the founder, president and CEO of ELI® eliinc.com, an Atlanta-based training company that teaches professional workplace conduct, helping clients translate their values into behaviors, increase employee contribution, build respectful and inclusive cultures, and reduce legal and ethical risk. Contact him at info@eliinc.com.