Whether the C-suite is an esteemed group of highly regarded talent or merely an intrepid business owner building a small team on his or her own, there is one common worry for company leaders: the hefty risk to the bottom-line that is complex wage and hour litigation.
It’s not an unfounded fear. Over the past decade, experienced plaintiffs’ lawyers have figured out that FLSA lawsuits, in particular, can yield more opportunities for quicker settlements with employers because of an upward trend of plaintiffs achieving initial conditional certification rulings of wage and hour collective actions. This class certification trend means that companies can come under intense pressure to settle almost immediately upon the case being filed against them. With its potential to decimate the budget, workplace litigation is a chief exposure for companies of all sizes. From corporate giants to “mom and pop” shops, no business is immune to wage and hour disputes.
To safeguard your company against a potentially devastating workplace lawsuit, the best practice is to be proactive.
- Self-audit now.
Dedicate the time and attention now to reviewing and analyzing the company’s policies and procedures. Don’t wait until you’ve been served with a lawsuit to take stock of employment practices. It is far more prudent to invest the time and resources now to ensure the company’s compliance with relevant federal and state laws before there are problems rather than scurrying after a lawsuit has been filed. A thorough self-audit should identify any hidden compliance gaps as well as identify practical measures to redress them. This is a crucial step to avoiding potentially significant liability for wage and hour violations.
- Document it.
Once the company has its practices up-to-date and legally compliant, it is imperative to create well-written and thorough employment policies. Strong policies signal to the workforce—and plaintiffs’ attorneys—that the company is a stickler for compliance and takes its obligations seriously. Well-crafted employment documentation could be a strong deterrent for potential litigants.
- Communicate it.
These policies must be communicated clearly in company handbooks, contracts, and periodic updates to workers. Proudly display these policies in the workplace with appropriate signage and posters so that employees can readily stay informed. Clearly visible and well-communicated policies can benefit and sustain the company’s workplace.
- Implement it.
Reduce the company’s risk and exposure by not only ensuring that there are well-documented and well-communicated policies but also by remaining vigilant that they are put into practice. Classify workers—contractors, staff, overtime-exempt and nonexempt—correctly and rectify any pay issues identified in the self-audit. The company could also consider asking its employees to agree to resolve employment disputes on an individual basis rather than as part of a class action. The Supreme Court upheld the legality of such class action waivers in 2018.
It is easy to become complacent about compliance, but companies do so at their peril. The time and effort that you spend ensuring that your company is abiding by relevant federal and state labor laws is a prudent investment and protection against potentially significant liability to a successful plaintiffs’ class action suit.
To learn more about the labor laws that apply to your business, visit us at the Poster Compliance Center.