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What can my business do to reduce risk of wage claims?

| Sep 2, 2015 | Business Litigation |

Claims of so-called “wage theft” are on the rise in the U.S. According to the Federal Judicial Center, record numbers of wage-and-hour lawsuits are making their way into the federal court system.

The center, which does research for the federal courts, says there were more than 8,100 such cases filed in the reporting year ending March 31, 2014. That represented a 5 percent increase over the previous year. When compared to the past 15 years, it represented an increase of 438 percent. And experts say the trend is only likely to continue in light of increased enforcement of the Fair Labor Standards Act (FLSA).

What does this suggest for businesses in North Carolina and other states that might be concerned about exposure to possible claims? Here’s what some analysts offer as ways to minimize the risks.

  • Understand the salary rules. Just because a worker is salaried doesn’t mean they are automatically exempt from being paid overtime. If those salaried workers make less than FLSA standards, they are entitled to receive overtime pay based on a calculation of how much they would make if they were paid hourly.
  • Keep solid payroll records. If a worker is a nonexempt, hourly worker, keep effective records of all hours worked. However. If the employee is legally exempt, don’t track the hours because it could raise questions about their exempt status.
  • Have clear policies on time reporting and see they’re followed. Employees should be trained so they know how compensation will work for such things as overtime, meals, travel or training. And give workers a clear process for how concerns about pay can be raised and how they’ll be addressed.
  • Make sure management and human resources know the rules. You can’t very well minimize your risk of a claim if your oversight personnel aren’t fully trained and enforcing policies.
  • Review employee classifications annually. Job misclassification is a really hot issue right now. For evidence look no further than the driver class action against Uber. Annual reviews allow for timely corrections and might be helpful in showing a business’ good faith efforts to abide by FLSA if wage claims are made.

By being proactive on wages a business can stave off claims and harm resulting from business litigation.

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