Wage & Hour Lawsuits Cost Both Big and Small Companies

by Michael Haberman on August 31, 2011 · 3 comments


I had an after work “adult beverage” (aka beer) with a friend of mine who also happens to be a very fine attorney. In addition to just catching up we naturally talked about what is happening in the world of human resources litigation. He has been an attorney for about 20 years. He said that the nature of the type of work they are doing has changed substantially in the last several years. Today they are doing FAR MANY MORE wage and hour defenses. Additionally they are getting harder. Government investigators are getting more aggressive. Plaintive attorneys are advertising more and more and unfortunately employers are not learning lessons until it is too late.

I asked him what was the cost of a small company lawsuit these days. He told me about a recent case which was decided in favor of the plaintiff. Because of poor recordingkeeping the company had a judgment returned against them for $34,000 in overtime. He told me that amount would be doubled. Losing means you also pay for the plaintiff attorney fees, which in this case were approximately $120,000. And of course my friend has to be paid as well. So we are looking at a cost of over $200,000 for some poor recordkeeping.

An article in the Kiplinger Newsletter, called Wage and Hour Lawsuits Costing Employers Millions, tells about the costs of to large companies, such as:

  • Wal-Mart Wage & Hour Employment Practices Litigation, $65 million.
  • Wachovia Securities Wage & Hour Litigation, $39 million
  • Westerfield v. Washington Mutual Inc., $38 million.
  • Parris v. Lowe’s Home Improvement Warehouse, $29.5 million.
  • Veliz v. Cintas Corp., $22.75 million.
  • Conley v. Pacific Gas & Electric, $17.25 million.

The reasons for these massive settlements include failure to pay overtime; misclassification of non-exempt employees; failure to pay for breaks and lunch periods; and having people work off the clock. With those dollar amounts you understand why employees, ex-employees and their attorneys are “sue happy” these days.

How do you prevent having to pay for lawsuits? Know the Fair Labor Standards Act. I have provided a lot of guidance in my blog posts so I am not going to repeat it here. To the right of this post there is a search box for this blog. Type in FLSA or Fair Labor Standards Act and you will get guidance in a number of wage and hour issues. Of course you can always hire me too…. just a hint.

ON A PERSONAL NOTE

Today marks the end of FIVE YEARS OF BLOGGING for me. This is my 711 th post and I have had over 110,000 visits. Thanks to all of you for reading. I hope you feel you have gotten good content and have learned from my posts. I also try to make them enjoyable to read with some humor as appropriate. I look forward to another five years. So stay tuned…

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{ 3 comments… read them below or add one }

career opportunities for latinos August 31, 2011 at 2:18 pm

Got to take the lawsuits really serious . Besides that i loved the beginning of the blog very funny. Keep up the good work

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Stephen September 1, 2011 at 9:36 pm

This epidemic is not just focused on those companies who took too long to learn a lesson. My company is currently going through a lawsuit where the employee called a big named firm, told them he worked OTC and we refused to pay him. We don’t know the amount he’s requesting yet but our insurance-provided attorney is trying to settle out of court.

This would be great if we (the employer) had made a mistake. We track every single minute of their time at work. They sign their time-cards every week and a payroll report. We don’t allow email access at home and it’s against company policy. Not only did the gentleman not work 40 hours a week he barely broke 30 hours and that’s exactly why he was terminated.

None of this seems to matter and this scum amongst many others like him in the US will receive some sort of settlement. I think this is much more prevalent than your aforementioned story and I’d like to know what can be done to avoid it.

Blatant lies to big named attorneys who take everyone at their word knowing that businesses will settle guilty or not.

Reply

Michael Haberman September 1, 2011 at 9:56 pm

The key to changing this is called tort reform. However, that is very unlikely to happen.

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