Both state and federal labor departments are "on the war path" about wage and hour violations – as are plaintiffs' attorneys. There have been a number of high profile cases involving multi-million dollar recoveries against employers for wage and hour violations, including successful class actions. It is critical that employers be aware of the highly technical aspect of wage and hour law to avoid violations. Some typical traps for the unwary are:
- Overtime – Overtime must be paid in cash; there is no such time as "comp time" (compensatory time off) for private employers. Although state law varies, under federal law, employees generally must be paid time and one-half for every hour actually worked over 40 hours in any one work week. Employees cannot be given compensatory time off the following week to "make up" for overtime the prior week.
- Break Time – State and federal laws require certain break periods at specified times during an employee's shift. These break times must be given, and employees cannot forgo their break time to help out the employer, take a longer lunch, or leave early or arrive late. Employers must take steps to ensure that their employees actually take their break times. Breaks are paid time and thus employees must be paid for the time they are on these required breaks. Although meal breaks are unpaid, employees must take them. Meal breaks cannot be moved to the beginning or end of the shift to allow for late arrival or early departure.
- Last Paycheck – State laws vary, but most require the final paycheck to be paid on the day of, or the day after, termination for a layoff or involuntary layoff. Employers should check applicable state laws and ensure that employees who have been fired or who have resigned are paid in a timely manner. Huge penalties and attorney fees accumulate for each day that wages remain unpaid.
- Preparatory and Concluding Activities – Hours worked include any preparatory and concluding activities that are required to perform a job. Thus, employees who must report to work and then change into a required uniform must be paid for the time required to change if the employees are not allowed to take their uniforms home. Employees who engage in preparatory activities -- such as preparing a work area or preparing a change drawer or till -- that are required to perform the job must be paid for the time spent. Similarly, employees must be paid for the time spent in concluding activities, such as checking out at the end of the day by closing down computer programs or cashing out a till or cash box.
- Variations Between the States – Although most large employers are subject to federal wage and hour laws, state laws also apply if they are more generous to employees. Thus, an employer who operates in multiple states must be up to speed on the wage and hour laws of each state in which it operates. Because these laws vary widely and are highly technical, legal assistance should be obtained to guide the development of applicable policies and procedures.
Ensuring that payroll, benefits, and human resources staff are well educated with respect to federal wage and hour laws, as well as the laws of each state in which the employer has employees, is a critical risk management tool that should help avoid class action litigation by employees, individual lawsuits by employees, or enforcement action by a state or federal department of labor.