When times are tough and the economy is struggling, legitimate concerns rise about wage claims. Wage claims can be filed with a state agency or the U.S. Department of Labor.
U.S. employers are responsible for complying with the Fair Labor Standards Act (FLSA) and any similar state law which governs pay practices, minimum wage, overtime, recordkeeping and child labor laws. The FLSA applies to employment within any state of the United States, the District of Columbia or any territory or possession of the United States.
During tough times when companies are laying off employees, it’s important that employers are sensitive and aware, particularly from the employees’ perspectives, to some of the issues that surface.
Unfortunately, these issues if not properly managed and handled can result in wage claims. For example, those employees who are classified and covered as nonexempt must receive overtime pay for hours worked over 40.
Oftentimes, especially during uncertain and fragile economic periods, employers will find that some employees feel under pressure to appear as very productive and very visible. Consequently, these employees may tend to work more hours than what they are reporting to the employer and/or getting paid for.
It’s a tendency that employers should watch out for and take appropriate action.
So what can happen is this: These employees, with the best of intentions, may choose to work "off the clock" or on their own time. In other words, they may choose not to report those hours as worked time. These employees understandably want to shine on their performance reviews. They want to be viewed as productive, and they want to stand out in hopes that they would be salvaged in the event of a layoff.
Good intentions aside: It is important that employers avoid placing undue pressure on employees to ‘do more with less;’ instead, employers should insist that employees report all their work hours properly. It is important that employers stay in compliance with the FLSA regulations and all applicable state laws, as well.
In order to minimize the possibility of future wage claims, here are a few suggestions that employers may want to consider:
- Make sure all employees are properly classified as either exempt or nonexempt.
- Regardless of the business size, employers should make sure that all hourly or nonexempt employees follow through and record the hours they work; and break times should also be included. The employee’s manager or supervisor should also sign off on this record and on a weekly basis. This is important documentation in the event that a wage claim is filed.
- Make sure that all overtime hours are documented and are paid. Again, your documentation is very important. Employers who are faced with a wage claim are often required to provide two years of records.
- Keep in mind that an employee can make a wage claim simply by placing a call to the U.S. Department of Labor or to their state agency. If the employee has their own personal record of hours worked—for instance, a daily calendar—that can be enough to trigger an audit. This is why it’s very important to have the employee sign off on the employer’s records, on a weekly basis.
Wage claims and government audits can be costly, disruptive and time consuming. It’s important to understand, too, that employers have other options and alternatives for working around productivity issues; and yet still remain in compliance with federal/state wage and hour regulations.