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4 Ways to Protect Your Business From Wage and Hour Lawsuits

Updated: Jul 18, 2022

Wage and Hour Lawsuits

In 2017, employers were hit with over 8,200 Fair Labor Standards Act (FLSA) wage and hour lawsuits, largely due to failure to pay the minimum wage. Between 1997 and 2017, FLSA lawsuits increased by 417%. For business owners trying desperately to comply with the FLSA and prevent wage and hour violations, the stakes have never been higher.

Even for employers who already navigated the complicated world of local, state, and federal labor regulations, the letter of the law is only half the battle in avoiding a costly wage and hour class action lawsuit.

Speaking to TSheets, an employee time tracking company, Lee Schreter of Littler Mendelson explained:

“About 20 years ago, we saw wage and hours cases being filed for pretty straightforward compliance issues that employers had simply missed. Over the past 20 years, that has changed dramatically. Now we find that even very sophisticated employers are the targets of successful suits.”

Why? Because noncompliance is no longer enough.

Schreter added:

“The law is changing all the time…The no-brainer cases of ‘What was that employer thinking?’ are gone. Plaintiffs’ lawyers are now challenging well-settled notions under the FLSA and arguing that past interpretations aren’t correct.”

So how can you protect your business from FLSA law violations, despite shifting wage and hour laws? Below are four suggestions.

How to protect your business from wage and hour lawsuits

How to protect your business from wage and hour lawsuits

1. Enlist allies

On its own, the FLSA is a maze of rules and guidelines. Now throw in morphing state laws that are being reinterpreted in courts across the country. Interpreting labor laws right is a challenge you shouldn’t undertake alone. Enlist HR and legal resources to keep a pulse on court cases and settlements related to your industry or the employees who work for you. Spotting a storm in the distance can mean the difference between getting caught in a downpour and taking shelter with time to spare.

2. Adjust policies proactively

It’s not just critical to keep an ear to the ground for shifts in how the FLSA is interpreted for your industry. You must also take appropriate action. Keep your policies and procedures up to date with the help of your legal and HR allies, especially when it comes to overtime, meal breaks, work off the clock, and the use of technology and equipment outside of working hours. Don’t wait for a lawsuit to make a change!

3. Audit yourself regularly

Regularly audit yourself to avoid unpleasant surprises hidden in your job descriptions, policies, procedures, employee handbooks, and other forms of employee communication. Surprises aren’t usually a good thing when it comes to labor laws and wage lawsuits. So don’t let your memory get fuzzy when it comes to what’s in your documents.

“One thing employers are often surprised about…are their own documents, including job descriptions and performance evaluations,” Schreter said. “I would urge employers to look critically at your documents. I can’t tell you how often employers are surprised, and sometimes horrified, by what their own documents say.”

4. Keep clean, accurate employee records

What’s one of the best ways to protect yourself from wage and hour lawsuits, despite changing labor laws? Document, document, document. Businesses are required to keep records of wages and time worked for all nonexempt employees for two years. However, the government doesn’t specify a method.

Many business owners opt for paper, thinking they’ll save money. Yet when time is of the essence, sifting through years’ worth of paper records is the last thing you’ll want. A paperless office – one that uses electronic timekeeping and employment management systems – is best-practice. Whatever method you choose, staying organized is your best defense in a labor dispute.


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