From Kansas City firefighters to New York cops, employers continue to trip over the Fair Labor Standards Act. Although the headlines often paint this as a largely public sector issue, businesses increasingly feel the impact.
The FLSA is a federal law that has been around since the late 1930s. It relates to overtime and requirements for employers to pay straight time for any work done less than 40 hours per week, and time-and-a-half for any hours over 40 per week.
Until the past two years, the law’s impact was not that dramatic. During the final four years of the Bush administration, 3,000 FLSA-related cases were adjudicated by the federal Department of Labor. During just the first six months of 2010, 3,300 FLSA related cases were reported. That increase—and it continues to grow—has a stark meaning for employers.
First, there is no opting out of accountability to FLSA. Unlike laws such as the Americans With Disabilities Act (ADA), which doesn’t apply until you have 15 or more employees, or the Family Medical Leave Act (FMLA) which kicks in at the 50th employee, FSLA is ever present. If you have one or more employees, you are accountable to comply with the FLSA.
One of its first elements requires employers to classify employee positions using specific criteria that must be met. There are exemptions, but this criterion is fixed.
Next, employers must maintain accurate time records for all hours worked by all employees. The Department of Labor, in an FLSA dispute, does not require the employees to prove they actually worked the hours they claim. An employee can claim any wild number he or she wishes or claim hours without any documentation, and the employer can be compelled to pay the employee all of those hours at time-and-a-half unless there are records to dispute the employee’s assertion. No records, or poor records, mean no defense for any wild claim made by an employee.
The Department of Labor is empowered to levy a fine of up to three times actual damage to the employee. So if an employee claims $4,000 in unpaid overtime, and the employer has no records to dispute that, the Department of Labor will compel the employer to pay that $4,000 to the employee and a $12,000 fine back to the Department of Labor. This is how the DOL actually supports itself!
A claim of ignorance or mistake on the part of the employer is also irrelevant. The Department of Labor is promoting hotlines encouraging employees to report any concerns that they may have about the employer.
That’s why the number of cases has exploded—in owners and managers’ faces.
Steve Cohen is president/partner of Labor Management Advisory Group Inc., and HR Solutions: On-Call. He has more than 35 years of specialized experience solving HR problems in companies of all sizes. He recently wrote “Mess Management: Lessons from a Corporate Hit Man.” He’ll be providing insight on HR topics every month exclusively for KCBCentral.