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Wage and Hour Lawsuits Are on the Rise. How Can You Protect Your Small Business?

September 27th, 2012 ::

By Maria Valdez Haubrich

Are you following wage and hours laws when it comes to your small business’s employees? If you’re not sure, you’d better make sure. Wage and hour lawsuits are on the rise. LifeInc. recently reported that more wage and hour lawsuits were filed against employers in the first seven months of 2012 than in all of 2011.  At that time, 7,064 Fair Labor Standards Act lawsuits had been filed, compared to 7,006 in the entire year of 2011.

The increase in legal actions isn’t necessarily a sign that more companies are breaking the law. The federal government has started more strictly enforcing wage and hour laws, and media attention to wage and hour lawsuits (such as a case earlier this year where Wal-Mart had to pay employees some $5 million in back wages and damages) have brought attention to the issue. Finally, tough economic times may have made some employees or former employees more likely to bring a lawsuit in hopes of making some money.

What steps should you take to ensure you’re on the right side of wage and hour laws?

Pay employees for hours worked. This sounds obvious, but includes:

  • Paying for overtime
  • Providing adequate rest and meal breaks as prescribed by law
  • Counting hours worked from home

Classify employees correctly. Misclassifying employees is the number-one cause of employee lawsuits. This can include misclassifying employees as independent contractors (which means they don’t get access to employee benefits) or misclassifying non-exempt employees as exempt.

Know when the Family and Medical Leave Act applies. The FMLA provides employees with leave for certain medical or family conditions. Failing to abide by this law is another common cause of lawsuits.

With more employees working from home, working on weekends or answering work emails during “off time,” the lines between work and personal life have blurred, adding to the complexity of wage and hour issues. The Department of Labor’s Wage and Hour Division is a good starting point for learning the basics about laws affecting wages and hours, but if you have any uncertainty about an employee’s status, you should always consult an attorney familiar with labor law.

Image by Flickr user srqpix (Creative Commons)

The views expressed here are the author's alone and not those of Network Solutions or its partners.

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