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Here is how HR can help prevent the missteps that could cost your company big in court.
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Ongoing activity by the Department of Labor (DOL) regarding overtime regulations, coupled with recent federal court decisions regarding compliance with the Fair Labor Standards Act (FLSA), have raised the level of interest in wage payment issues—and increased the risk of employer liability—to new heights. A recent decision by the 5th U.S. Circuit Court of Appeals provides a clear illustration of the type of action that triggers that risk.
Donald Miles, a plumber, brought an action under the FLSA against his employer, HSC-Hopson Services Co. (HSC). Miles claimed that he was not paid for all of the time he spent working and that overtime wages were owed to him. He based that claim on the following facts:
•He was directed to appear at work at 7:30 a.m. to load his truck and receive his first assignment of the day, but he was not paid for that 30-minute block of time.
•He was not paid for time worked after the last job of the day, during which he was required to return and unload the same truck and lock everything up.
The FLSA requires employers to pay nonexempt employees, such as plumbers, at least one and one-half times their regular hourly wage for every hour worked in excess of 40 in a week. The act further requires employers to keep track of and document fully the time employees spend working. Courts regularly have held that the goal of the FLSA is to counteract the inequality of bargaining power between employees and employers.
Miles’ case was tried to a jury and included testimony from HSC’s owner, Hopson. Hopson confirmed that HSC did not pay for the time worked before the first assignment or after the last assignment. He also said that if he disagreed with a time indicated on a timecard, he would direct his office manager to change the card or he would change it himself.
Importantly, Hopson testified that while he did not seek the advice of counsel or contact the DOL for direction or advice, he visited an “e-law” website to assure himself that his actions were compliant with the FLSA.
A jury found in Miles’ favor and awarded actual damages and lost wages in the amount of $16,132, with an equal amount in liquidated damages for “willful” violation of the FLSA.
On appeal, Hopson argued that the imposition of liquidated damages was “not fair” because he had acted in “good faith reliance” on the DOL’s regulations regarding overtime payment, based on his reading of the “e-law” site. The 5th Circuit disagreed, citing the language of the FLSA that a violation is willful “if the employer either knew or showed reckless disregard for ... whether its conduct was prohibited by the statute.”
The combination of Hopson’s reliance on an “e-law” site, rather than on legal advice geared to his specific situation, coupled with his arbitrary reduction of and nonpayment for work hours, led to this adverse decision.
Miles v. HSC-Hopson Services Co. Inc., 5th Cir., No. 14-11237 (Sept. 8, 2015).
Professional Pointer: Employers should work closely with HR personnel and legal advisors to ensure compliance with and awareness of laws related to wage payments to employees, especially in light of the pending revision to the regulations related to the calculation of overtime payments.
Maria Greco Danaher is an attorney with Ogletree Deakins in Pittsburgh.
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