The threat of wage and hour lawsuits is troubling employers more and more these days. I know first hand about this issue. In 2006, I was working for Costco in Utah and received a letter from an attorney’s office asking me to fill out a questionnaire regarding my overtime hours and mandatory breaks when I worked for the company at previous location in California over a several month period in 2004. I filled it out truthfully, I did work a lot of overtime and Costco paid me well for it, but I did miss out on quite a few mandatory breaks that I was entitled to. Several months later, after I had completely forgotten about the questionnaire, I got a check in the mail for about $1000. I though to myself, “Ouch! This really hurts for Costco.” I spoke to several other coworkers about the award and most of them made out a whole lot better than I did.
Under the Fair Labor Standards Act (FLSA), scores of cooperative claims of employee misclassification as exempt or not exempt from overtime pay, like the one I was involved in, have spiked by an incredible 77 percent during 2000-05. What’s very interesting is that these figures have actually exceeded claims under Title VII of the Civil Rights Act for equal employment opportunity. It’s critical for an employer to be aware that these FLSA claims are yielding verdicts in the hundreds of millions of dollars for employees who were owed overtime pay or misclassified as exempt.
According to the US Department of Labor, as many as 70 percent of employers are not in compliance with the FLSA in some way. Employers, like Costco, need to find out where they are making their biggest misclassification mistakes and how to fix them without getting sued. In my case, it would have helped Costco a great deal to have invested in competent front-line supervisors who allowed employees to take their legally mandated 15 minute breaks every two hours. Because Costco’s management got sloppy, supervisors seized the opportunity to oppress and it came back to hurt the company's bottom line.
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