The Threat of Wage-and-Hour Lawsuits
Wage-and-hour lawsuits have been an escalating threat to companies of all sizes over the past decade. Now outranking discrimination lawsuits, measured by both number of filings and size of settlements, these employment practices lawsuits have become an unforeseen calamity for companies across all industry sectors and a new challenge for risk managers. Alterations made to the Federal Labor Standards Act (FLSA) by the US Department of Labor (DOL) in 2004, originally intended to clarify definitions to make it easier for companies to comply, woke this sleeping giant as they sparked awareness among the plaintiff's bar. The DOL and certain state labor departments have stepped up enforcement efforts in recent years, and the DOL has ramped up its Wage-and-Hour Division under the Obama Administration. These elevated regulatory efforts not only result in more fines, but precipitate class action civil lawsuits by employees allowed under the FLSA and equivalent state labor laws.
FLSA rules, the basic federal rules governing minimum wage and overtime pay, appear straightforward on the surface. Digging in deeper, it becomes apparent that many of the rules draw blurry lines in the real world. Defining on-the-clock versus off-the-clock hours can be a challenge, and distinguishing exempt from nonexempt employees is much more complex than most realize. The FLSA was initially devised in a time when most of the American workforce was blue-collar, but much of the Act applies to the largely white-collar salaried workforce of today, and its application to these jobs is still being worked out in the courts.
Wal-Mart has been the target of over 80 wage-and-hour class action civil suits, and has agreed to settlements in the hundreds of millions of dollars. Observers might not be surprised that most of Wal-Mart's employees are covered by the FLSA, and its 1.4 million US employees provide plenty of opportunities for lawsuits. Companies primarily employing salaried professionals, however, have been subject to large class action suits as well, and there have been eye-popping settlements, such as IBM, Siebel Systems, UBS Financial Services, Morgan Stanley and Merrill Lynch.
Insurers have regarded wage-and-hour liability as largely an uninsurable risk because the incidences are perceived as resulting from deliberate and illegal acts, as opposed to negligence. Despite recent evidence of negligence being the primary driver in many cases, most insurers have shied away from covering this liability in their employment practices liability insurance (EPLI) policies. Companies are advised to develop compliance procedures regarding the FLSA, review the exempt status of each employee, and stress the importance of strictly following work-and-hour procedures in management training.
Price: $499
Advisen Premier Wage & Hour Webinar
Join Advisen's Premier Wage-and-Hour Webinar on Wednesday June 16, 2010 from 11:00-12:00 PM EDT to ensure that you manage the increased risks of wage and hour claims, stay on top of recent developments , and understand the drivers behind these claims.
According to the Department of Labor, wage and hour class actions currently out number all other discrimination class actions combined. The retail sector has been the hardest hit. Wal-Mart alone has been named in over 80 wage-and-hour class action civil suits, and has agreed to settlements in the hundreds of millions of dollars. However, no sector is immune. To better understand this epidemic and effectively manage increased risks of wage and hour claims, purchase the recorded audio below from Advisen's June 16th, 2010 webinar.
Advisen's Premier Wage-and-Hour Webinar Panel included:
- Robert Bonsignore, Trial Lawyer at Bonsignore & Brewster
- Philip Gordon, Attorney and Managing Partner at Gordon Law Group
- Gerald L. Maatman Jr, Attorney and Partner at Seyfarth Shaw
- Sharmila Mahendra, VP Financial Lines Center of Excellence, Zurich North America
Purchase the audio from this webinar by clicking below.
Price: $25
