The Five Little Words That Will Cause Your Company a Huge Headache
It is immeasurably less expensive to get out in front of a potential problem and audit on the front end instead of settling a claim on the back end.
"Tell me how you're paid." The biggest wage and hour case I ever defended started with those five little words. A very disgruntled, and justifiably fired, ex-employee went to see a plaintiff's employment lawyer about filing a wrongful discharge lawsuit. The lawyer correctly told him that that he had no case over his termination. Then, the lawyer uttered those five words. And, we were off to the races in a multi-million dollar wage and hour derby.
I was reminded of this story by a post I read earlier this week on EmployerLINC, entitled, Trolling for employees to sue their employers. The reality is that while discrimination cases remain the bread-and-butter of the plaintiffs' bar, every plaintiff-side employment lawyer worth his or her salt is on the lookout for the huge payday of a juicy wage and hour class or collective action. While the Supreme Court has taken away some of their luster, the wage and hour class action remains the holy grail of cases.
I can almost guarantee that if one of your employees sits down with a lawyer to talk about filing a claim against your company, part of that lawyer's intake will be asking the question, "Tell me how you're paid."
My opinion on this issue hasn't changed since I first gave it almost five ago:
The question is not whether companies need to audit their workforces for wage and hour compliance, but whether they properly prioritize doing so before someone calls them on it. According to the BusinessWeek article: "While violations appear widespread, employees themselves rarely think to make wage and hour claims. Instead, they usually have it suggested to them by lawyers."
It is immeasurably less expensive to get out in front of a potential problem and audit on the front-end instead of settling a claim on the back-end. The time for companies to get their hands around these confusing issues is now, not when employees or their representatives start asking the difficult questions about how employees are classified and who is paid what.