FLSA wage and hour lawsuits are up 417%

The original data set provided by the DOL included both unsuccessful and successful prosecutions. Significantly, a steep 79 percent of the cases pursued by the DOL for wage and hours infractions resulted in back wages being awarded to employees. In other words, once the DOL has decided to pursue an investigation or legal action, the odds are high they’ll succeed. Meaning you’re likely to pay back wages, civil penalties, and legal fees — your own and your employee’s.

However, even “winning” or settling out of court can be an expensive experience, in terms of time and money. The more preventative measures business owners take to head off legal action in the first place and the more they know about potential pitfalls in FLSA lawsuits, the better.

Read what the experts say you must know about dealing with an FLSA wage and hour suit

Learn more about how to protect your business from wage and hour suits

QuickBooks Time analyzed 253,442 WHD violations prosecuted by the US Department of Labor since 1984. Here’s what we found:

Including non-FLSA wage and hour violations (e.g. Family and Medical Leave Act and work visa violations), the WHD has recovered $2.8 billion from employers since 1984. When you add up all of the back wages and fines the WHD has recovered from employers for minimum wage and overtime violations under the FLSA, the total cost is just over $2 billion.

Over 70 percent of the money recovered by the WHD is due to an FLSA infraction — and nearly 3 million workers have been affected. The WHD has prosecuted more than 3 million wage and hour violations under the FLSA since 1984, affecting 2.7 million workers.

The total cost of FLSA wage and hour violations to Texas employers since 1984 is $316 million — that’s equivalent to $10,387 for each prosecuted employer. But while Texans might be most at risk for an FLSA lawsuit, employers in Arkansas see the highest cost per prosecution.

The average cost of FLSA wage and hour violations to Arkansas employers since 1984 is $16,579. By comparison, employers in Washington, DC have experienced the lowest average cost, at $2,568 per employer.

FLSA lawsuits occur when a group of employees files a lawsuit against their employer for wage and hour or other FLSA violations, including unpaid overtime and minimum wage violations. These lawsuits are most often considered “collective claims,” but they can sometimes turn into class-action lawsuits, effectively involving all potentially affected employees — past and present. However, less than 2 percent of FLSA violations are taken to court. The majority are resolved long before they can turn into full-fledged lawsuits.

Common FLSA violations include:

» Misclassifying employees

» Overlooking off-the-clock work

» Failing to pay unauthorized overtime

» Not tracking breaks properly

» Keeping inaccurate or incomplete records

» Not compensating interns or volunteers

» Failing to stay up-to-date with regulations

Avoiding common FLSA lawsuits

In 2017, TGI Fridays reached a $19 million settlement after employees claimed shortened wages. The same year, Victoria’s Secret settled for $12 million due to unpaid compensation for “call-in” shifts, and MetLife paid out more than $50 million for unpaid overtime.

In 2016, FedEx famously settled an FLSA lawsuit regarding unpaid overtime for $240 million. Meanwhile, Walmart settled for more than $62 million when their employees claimed they were forced to work through breaks, and GNC settled for $9 million when they were accused of keeping incomplete records of employee hours.

These lawsuits are extreme examples, but not uncommon — and suits just like these are on the rise. Unfortunately, many employers are committing one or more of the seven deadly sins of the FLSA unknowingly. Are you one of them?

Ignorance of the law won’t hold up in court. It’s up to you to take a hard look at your business and business practices to ensure you aren’t unknowingly violating the rules. When in doubt, check with your employment counsel or attorney to ensure your employees are classified correctly, your employee time records are accurate and accessible, and your business is in compliance with state and federal labor laws.

The Wage and Hour Division (WHD) of the Department of Labor (DOL) is charged with enforcing the FLSA — a statute that establishes working hours, minimum wage, overtime pay, record keeping, and child labor standards for full- and part-time workers in the United States.

In addition to the FLSA, the WHD also oversees and enforces work visa laws, the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) and the Service Contract Act (SCA), among others.

Common wage and hour violations include:

» Incorrect overtime pay

» Failing to meet minimum wage requirements

» Illegal paycheck deductions

» Stolen tips

» Unpaid off-the-clock work

» Unpaid overtime

Avoiding common wage and hour violations

A whopping 72 percent of all the money recovered from employers by the WHD comes from FLSA violations (for a total of over $2 billion) — and 83 percent of that comes from overtime violations. In fact, FLSA back wages for unpaid overtime accounts for more than $1.7 billion. FLSA back wages for minimum wage violations comes in at nearly $300 million. In short, when it comes to wage and hour disputes, employers are more at risk for FLSA overtime prosecutions than anything else.

When reported, these violations can lead to prosecutions that include in-depth investigations and audits of businesses in question. When hit with a WHD or FLSA prosecution, business owners may have to pay owed back wages and/or civil money penalties. In extreme cases, these violations and prosecutions can lead to even more expensive lawsuits.

What you need to know about FLSA wage and hour lawsuits.

To avoid committing a wage and hour violation, hold regular check-ins with your employment counsel to ensure you’re in compliance with DOL, WHD, and FLSA regulations. Study up on federal and applicable state minimum wage and overtime laws to confirm you’re paying your employees fairly. Finally, when it comes to WHD violations, keeping accurate and accessible records of employee time worked (for at least two years) can be your best defense!