Wage And Hour Lawsuit

Steven Cesare, Ph.D.

A business owner from California called me the other day to talk about a letter he received from the lawyer of a former non-exempt employee. We have all been there; it’s never good news. The employee was recently terminated for not meeting performance expectations which were very well documented. That said, it appears that after the former employee completed his paperwork at the local Unemployment Office, he naturally stopped by a lawyer’s office to file a wage and hour lawsuit against his previous employer.

First things first, “Yes,” the business owner has $1,000,000 of Employment Practices Liability Insurance (EPLI) coverage, as well as the Wage and Hour Add-on, which addresses many of these allegations and sundry other Fair Labor Standards Act (FLSA) features.

Next, of course I realize this claim comes from the most employer-phobic state in the union. I know this, because I am an inmate; I mean, I still live here. Thus, while certain differential state law nuances obviously exist, I thought it would be useful to share some of the overarching themes (i.e., allegations of illegality) with you in the hope you can prepare your company for the inevitable wage and hour lawsuit letter that will eventually come to your mailbox sometime soon.

Keep in mind, depending upon your state laws, many such allegations possess either a three or four-year statute of limitations. That means your timekeeping, payroll, and wage and hour records from 2020/2021 are fair game.

I’m not kidding…

Failure to Pay Overtime Wages
Failure to Provide “Duty-Free” Meal Periods
Failure to Provide “Duty-Free” State-mandated Rest Periods
Failure to Maintain Wage and Hour Records and Accurate Wage Statements
Failure to Pay Final Wages to the Employee in Accordance with State Regulations
Failure to Reimburse Business Expenses
Failure to Pay for Expenses Related to Maintaining the Employees’ Company Uniform
Unfair Competition
- Failure to Pay for Off-the-Clock Work
- Failure to Pay Minimum Wages Due to Payroll Rounding Errors
- Unauthorized Deductions from the Employee’s Paycheck

To make matters worse, while those employee allegations are time-consuming, problematic, and bureaucratic, the terminated employee’s lawyer informed the company he will attempt to extend this list of offenses, into a Class Action lawsuit, meaning he will try to enlist other former/current company employees to become his clients and see if similar mistakes were made by the company to their detriment.

While the business owner will be in throes of this legal, record-keeping, and organizational culture maelstrom for many months, the rest of us must look forward. Your first step is to verify your company has adequate EPLI coverage with the Wage and Hour Add-on. Next, reacquaint yourselves, managers, and accounting staff with all relevant local, state, and federal wage and hour laws and how they manifest themselves during the workday (e.g., falsely assuming employees can take their “unpaid” meal period while driving in a company vehicle from one job site to the next, having inferior daily timekeeping practices lacking sufficient review, and “asking” employees to do work before or after their work shift, including calling them on the phone or texting them at night), train them accordingly, and hold them accountable for compliance. Also, institute monthly payroll, wage and hour, and benefits audits to verify accurate record keeping.

Certainly, no system is fool proof in today’s litigious employment. However, the abovementioned recommendations will hopefully improve your company’s legal compliance and its ability to minimize potential damage from a related lawsuit.

By the way, have you seen that letter in your company mailbox today?

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