1. FLSA: The Hits Keep Coming
In 2013, the number of wage and hour lawsuits increased by 10%. Although the numbers are not out yet, I anticipate there will be an increase in 2014, and I anticipate an additional increase in 2015. As cases continue to be frequently filed in federal court, a number of plaintiffs’ attorneys are actively seeking out these lawsuits through advertising and other methods. The FLSA is also one of the most complicated areas of the numerous laws governing the workplace, and often times employers are not in compliance with or do not understand the intricacies of the FLSA. Now is a good time for employers to examine their job descriptions, classification of workers (employees or independent contractors) and determine that wages and overtime are paid as required by law.
The Department of Labor continues to closely examine how companies classify their workers, as either independent contractors or employees. If employees are improperly misclassified as independent contractors, the employer is subject to financial exposure, including back taxes, wages (including overtime), benefits, such as health insurance and retirement, as well as penalties and interest. On October 2, 2014, a Memorandum of Understanding was signed between the Alabama and the federal Department of Labor. This Memorandum of Understanding is meant to coordinate enforcement and facilitate information sharing in an effort to reduce misclassification of workers. Alabama Labor Commissioner Fitzgerald Washington stated that Alabama employers misclassified more than 1,500 employees as independent contractors in 2013. Let me emphasize that the Department of Labor has added more than 300 new investigators to strongly pursuing the misclassification of employees. In 2013, DOL investigations recovered more than $83 million in back wages for over 108,000 workers.
One of the more recent FLSA lawsuits in Alabama was filed on December 6, 2014. This lawsuit was filed by two women who worked at Hooters, one was a server and one was a server and bartender. The lawsuit alleges that Hooters required the plaintiffs to share tips in an illegal manner with individuals who worked in the kitchen area and who did not directly interact with customers. Additionally, the workers alleged that they had to attend meetings before their shifts, and were required to perform non-tip producing cleaning and prep work, for which they were not paid minimum wage.
In 2014, one of the biggest recoveries involving the FLSA was $10.9 million in a case involving “exotic dancers” in New York. Unpaid interns were also big winners, including a $6.4 million settlement paid by NBC Universal Media. Conde Nest agreed to a settlement worth up to $5.85 million to interns at the New Yorker and “W” magazines.
Finally, in March 2014, President Obama directed Secretary of Labor Thomas Perez to “begin the process of addressing overtime pay protections to help make sure millions of workers are paid fair wage for a hard day’s work and rules are simplified for employers and workers alike.” The first draft of the revised rules is expected in February 2015.
Practice Pointer: FLSA claims are difficult to defend, and can result in large verdicts or settlements, attorney fees (including for plaintiffs), costs and are very disruptive to the workplace. Employers should consult regularly with their legal counsel to insure compliance.
Effective in 2015, the business reimbursement rate for mileage is 0.575 per mile. Interestingly, this increase comes as gas prices continue to decrease.