The FLSA loves employees and their lawyers.

The federal Fair Labor Standards Act, also known as FLSA (pronounced Full-sa), is the law that requires employers to pay employees overtime wages for weekly hours worked in excess of forty.  It has been around since 1938, with some modifications on the way.

Several employee friendly clauses were built into the law and its regulations.  There have also been thousands of court decisions that have added weight to the statute.  All that being said, the FLSA has become an extremely useful tool for employee representatives.

A couple of quirks that a lawyer or an employee should know:  Employers can't shield themselves from personal liability.  Very often large and small businesses are incorporated into corporations or limited liability companies.  These legal creations usually insulate officers and owners from financial liability for actions of the corporation.  However, the FLSA broadly defines "employer" as any entity or person that has control or influence over the employees' hours of work and pay.  I have surprised many owners and managers and their lawyers by attaching personal liability for unpaid wages.

Next on the list of powerful benefits is the requirement that employers maintain records of hours

worked by, and payments made to, their employees.  The law requires a rolling three year maintenance of this information.  When there is a dispute about whether an employee worked overtime, an employer's failure to produce the records of hours worked and pay earned is a killer.  The law specifically requires that the employer maintain them.  Courts have consistently held, over decades, that in the absence of contemporaneously created records, the employee's estimate of hours worked controls.  In the absence of specific evidence to contradict the employee's estimate (like time cards) the Court will allow the employee's estimate to stand as the amount of hours worked.  An employer can't complain about the estimate when they fail to keep the lawfully required records.

Even employees who are classified as salary exempt should have time records maintained for them.  At a minimum the smart employer will record that they worked the expected amount of hours in a work week. If there is any doubt about whether the employee is exempt from overtime, even a shred of doubt, then the conservative employer will keep detailed records.  

Rounding out this incomplete list of unique FLSA features is the liquidated damage and attorney's fees provision.  Under §216 of the FLSA, an employer who is shown to have violated the law is required to pay the back wages, an equal amount in additional damages, and the employee's attorney's fees.  Congressmen in 1938 expected that the unpaid wages may be less than the attorney's fees, and Courts have consistently awarded fees based on comparable attorney rates in the geographic area where the case is tried.  Needless to say, the awards of fees can be significant. 

An employer and his lawyer ought to take claims of unpaid overtime very seriously from the first moment they are raised.  The risks of allowing litigation to proceed can well exceed an early payment of the wages that should have been paid on demand and investigation.

I had a case a few years ago where I was trying to get the employer's attorney to discuss a settlement for my six employee clients.  The attorney was unaware of the FLSA risks and finally said "you're being tiresome, go ahead and sue us."  I did and got an award the defendant is still paying, with attorney's fees in excess of the back wages. 

The FLSA is the best friend to an employee and the employee's lawyer.  It is still not very well known by employers and their lawyers, but 7,000 federal cases a year are bringing them around.  The bottom line is that is best to take allegations of FLSA violations very seriously and very quickly, before attorney's fees exceed what any employer would have anticipated.  

More information available on my website:  www.LangendorfLaw.com

Glorious blatant misclassification

Employees misclassified as independent contractors present great opportunities for major recoveries of unpaid wages and overtime.  

Undercapitalized or greedy contractors bid jobs low on the basis of low cost labor.  They will bid low because they know they can pay their laborers straight time for their hours, no matter how many, and most of those laborers will be glad to be getting paid.

Some contractors tell their employees that they will be classified as contractors and will not get unemployment insurance or workers comp. or have taxes taken from their pay, or get overtime.  The employees think this is fine.  All they hear is "no taxes." 

Prevailing wage states require contractors working on state funded jobs to pay their employees an inflated wage similar to what the local union members would get for the same work.  It's an incentive to hire union members.  The catch is that independent contractors don't have to receive prevailing wage.  They get paid for the job.  So, unscrupulous subcontractors purposely mis-classify their employees as subcontractors and then deny them the prevailing wages they are due on the grounds that they are not employees and are merely getting paid for the job. 

Even when they think they are right, they are wrong.  Some of these contractors will even issue paychecks from their in-house payroll system, to their "independent contractor" employees, showing pay for say 56 hours at regular pay for a week.  This is printed above the "overtime" line which shows 0 hours and $0.  That's 16 hours of overtime paid at the regular rate.  This violation sets up damages equal to 16 hours at the regular rate.  And that is just for one week.  Think three years of this nonsense, for multiple employees, and add in attorney's fees.  That's right, it gets big fast.

These willful violations of the Federal Fair Labor Standards act lead to three years of trailing liability and liquidated damages, not to mention attorney's fees.  Thanks to Zavala v. Wal Mart Stores, an unpaid overtime case out the federal District Court of New Jersey, liability for unpaid wages can extend to the general contractor or the owner of the job.

This kind of case makes me tingle all over. 

Offers of Judgment

Rule 68 of the federal rules of civil procedure operates to put plaintiffs suing for damages on a defensive footing.  If a defendant wants to shake a poorly financed plaintiff off their attack, then the defendant will make an offer of judgement.  In an unpaid overtime case brought under the Fair Labor Standards Act the offer has to include an amount of damages AND an offer to pay the plaintiff's attorneys fees. This damages plus requirement is a function of the mandatory fee shifting required by the FLSA.

The offer has strict time limits and because it is made by letter from defendant's counsel to plaintiff's counsel with varying terms, it can be confusing in its form.  Offers are enforced using the principles of contract law and they are often effective.

I hate them.