The number of wage and hour lawsuits filed in the United States is dramatically increasing, with thousands of federal wage and hour claims brought against employers so far this year. The increase is due in large part to the weak economy and high unemployment rate. These lawsuits arise primarily out of the Fair Labor Standards Act (the “FLSA”) which is the federal law governing minimum wage, overtime pay, recordkeeping requirements, child labor standards, and equal pay in employment. Wage and hour claims can also arise under state law, and, recently, we have seen a “hybrid” of cases consisting of both federal and state law claims. Not surprisingly, the staffing industry has been impacted by this rapid rise in wage and hour claims.

On October 22, 2012, a group of temporary workers filed a wage and hour lawsuit against two staffing firms and their client, Wal-Mart. The lawsuit, titled Twanda Burkes et al v. Wal-Mart Stores Inc., Labor Ready Midwest Inc., and QPS Employment Group Inc., is pending in a Chicago federal court and the plaintiffs are seeking class action status for potentially hundreds of temporary workers. The complaint asserts various violations of the FLSA including failure to pay employees minimum wage and overtime. Specifically, the temporary workers claim they were not paid for time worked during lunch breaks, for time worked “off the clock,” and for time spent in safety training. They also allege that they were required to show up early for work and stay late but were not compensated for their time. In addition, Wal-Mart allegedly failed to send accurate records of the employees’ work hours to the staffing firms. Finally, the staffing firms have been accused of not providing their temporary workers with itemized pay stubs showing the hours worked and the specific name, address, and telephone number of the client.

What does this mean for the staffing industry? Staffing firms have always been required to abide by the minimum wage and overtime requirements of the FLSA, as well as the North Carolina Wage & Hour Act. However, given the publicity of this recent lawsuit, the staffing industry could quickly become a target for the Department of Labor and plaintiff attorneys. Staffing firms should closely review their policies governing payroll, the recording of hours worked by their temporary employees, and the payment of overtime. It is also recommended that staffing firms communicate with their clients regarding the work hours of the temporary workers assigned to their job site and how that time is being recorded and communicated to the staffing firm. A common problem for the staffing industry is temporary workers who work overtime without prior authorization from the client or client’s on-site supervisor. Although employees can be disciplined for arriving early or staying late without approval, they are nevertheless entitled to compensation for all time worked including any overtime.

Furthermore, it is equally important that employers make sure they have properly classified employees as “exempt” from the overtime requirements of the FLSA. Misclassification of employees exposes employers to significant liability. An annual review or audit of all the company’s exempt positions is recommended to ensure that employees are correctly classified under the FLSA.

Wage and hour claims will continue to be a major threat to employers as we head into the New Year.

This article first appeared in the November/December 2012 issue of Staffing Now, the North Carolina Association of Staffing Professionals (NCASP) Ezine.