What can employers do to avoid overtime lawsuits?

The rising number of overtime lawsuits and increasing amount of back wages collected is prompting companies to take a more proactive approach to examining how they may be affected by the wage and hours laws. "Wage and hour complaints are among the most prevalent workplace actions facing employers today," said Johnathan Kane, a partner with Pepper Hamiliton LLP. "In response, more employers are taking a proactive approach and not waiting for employee wage and hour complaints and lawsuits to arise."

Kane, the chairman of Pepper Hamilton's Labor and Employment Group, suggests that employers consider adopting some of the following steps to cut down on overtime complaints:

• Internal audit of job duties and descriptions. The federal wage and hour laws frown on giving people titles and classifying them as exempt in an effort to exclude them from receiving overtime pay. According to Kane, "Employers need to take a realistic look at job descriptions and compare them to the work people are actually performing to ensure there aren't conscious or erroneous misclassifications."
• Carefully examine any new positions added as a result of mergers and acquisitions. Companies that have completed mergers or acquisitions may have gained some positions they have not yet fully audited to see if they are in compliance with overtime laws. These companies may not be aware of, or may be mistaken about, the duties of some of these jobs. "Acquirers should normally be alerted of potential legal liabilities posed by the addition of new job classifications during the due diligence process," said Kane.
• Conduct exit interviews with employees who leave. If employees who leave cite not getting overtime pay they feel they should have received, this should set off a red flag that the employer may have a potential problem.
• Pay special attention to those employees whose salaries fall in the middle between the exempt and non-exempt overtime pay levels. This gray area is where the potential for litigation and complaints is the highest. "It's fairly easy to see who is clearly exempt and who isn't, but when you get into the middle area, it's less apparent," said Kane.
• Ask employees what's on their minds and listen to them. "Take a proactive approach to uncovering problems, rather than reacting to those that crop up," suggested Kane. "Also, keep in mind that when employees say communications are not up to par, they are not asking for a suggestion box or another meeting. They are saying 'You are not listening.'"