stipulates that workers cannot do work during rest or meal breaks, and if they do, they must be compensated.
The federal FLSA does not require breaks or meals, but some states do. The federal law does not preempt oftentimes stricter local and state wage-hour provisions.
The plaintiffs are seeking damages in the amount of unpaid wages owed, liquidated damages and penalties where provided by state and federal law.
Other areas in wage-hour law that can bring a company into a sticky legal situation include “off-the-clock” work, deductions or other offsets to legally required pay, failing to figure overtime properly, or failing to figure overtime on bonuses or other incentive amounts, and failing to take into account differences between federal and state wage-hour laws.
Wal-Mart Stores, IBM, Caribou Coffee, Starbucks and other large corporations have recently settled large wage-hour class-action lawsuits (but not admitted liability). Some, like Wal-Mart, are facing a series of lawsuits by different groups of employees.
According to a recent article in BusinessWeek, lawyers on both sides estimate that companies have collectively paid more than $1 billion each year to resolve wage-hour claims.
Attorney Michael Mitchell of Fisher & Phillips told MDM that open communication with employees is key to avoiding legal problems in connection with FLSA. A first-class internal complaint handling system is also important.
In addition, keep in mind the employee has the burden to present evidence showing he worked time for which he was not properly compensated. Still, Mitchell says, the burden is not “all that heavy.” Keep accurate time records so that the employee can be disproved.
In regard to employee exemption claims, the employer typically bears the burden of proving each element of an FLSA exemption or exception.
Common Errors to Avoid with Fair Labor Standards Act
& bull; Assuming that all employees paid a salary are not due overtime
& bull; Improperly labeling an employee as exempt
& bull; Failing to pay for all hours an employee works
& bull; Limiting the number of hours employees are allowed to record
& bull; Failing to include all pay required to be included in calculating the regular rate for overtime
& bull; Failing to add all hours worked in separate establishments for the same employer when calculating overtime due
& bull; Making improper deductions from wages that cut into the required minimum wage or overtime. Examples: damage, tools, and uniforms.
& bull; Treating an employee as an independent contractor
& bull; Confusing federal and state laws
Multiple wage-hour lawsuits have reared their heads in the past few years. Distributors have been targeted as well. Last year C & S Wholesale Grocers was hit with a class-action; this month, two former Fastenal employees have followed suit, saying they were misclassified as assistant managers and as a result, denied overtime under the Fair Labor Standards Act.
Two former employees filed a lawsuit against The Fastenal Co., Winona, MN, on Oct. 18, 2007, alleging the industrial and construction supplies distributor violated the wage-hour provisions of the Fair Labor Standards Act (FLSA).
Three others have joined the suit, and the law firm representing the employees, Nichols, Kaster and Anderson, is hoping to add what it says in the lawsuit is potentially hundreds. Fastenal did not return calls seeking comment.
The lawsuit was filed in the Northern District Court of California. Lawsuits filed under the FLSA are often lengthy and costly for an employer.
The 60-year-old federal Fair Labor Standards Act is known more commonly as the wage-hour law. FLSA prescribes standards for basic minimum wage and overtime pay and affects most private and public employment. More than 130 million workers in 7 million workplaces are covered by the FLSA, or close to 90 percent, according to the U.S. Department of Labor.
Under the law, employers must pay employees at least the minimum wage for hours worked; must keep accurate records of daily and weekly hours worked; and must pay the 1.5 times their regular hourly rate for all time worked over 40 hours, unless they are exempt as defined by the law.
The latter is the sticking point for the former Fastenal employees who have filed suit against Fastenal. The former Fastenal employees claim that the distributor misclassified them as assistant general managers to avoid paying them overtime wages.
According to Fisher & Phillips, a law firm specializing in employment law, it’s not unusual to see legal problems arise from confusion over the exemption status of certain workers.
The firm outlines white-collar” exemptions to overtime pay in its online FLSA booklet (free to download at laborlawyers.com). According to the booklet, the exemptions apply to “those employed in a bona fide executive administrative or professional capacity, to certain computer employees, or to an & lsquo; outside’salesperson.
The exemptions depend in part on what kind of work the employee actually performs rather than whether the employee is well-paid or high skilled, or whether the employee has a “”high-sounding”” job title or in a position with an “”impressive-looking”” job description, according to Fisher & Phillips.
It also depends on how much the employee is paid, with few exceptions. The employees must be paid a salary at a rate of at least $455 a week, though salaried employees are not always exempt.
The Fastenal Complaint
Two employees -Shanan Calhoun and James Mulderig -have brought the case against Fastenal. They claim their duties were not managerial, though they were labeled as assistant managers, and that they should receive overtime pay for working more than 40 hours a week.
Calhoun, of Bakersfield, CA, worked for Fastenal for 16 months as an assistant general manager, working in San Pablo, Berkeley, Concord and Petaluma, CA, between May 2005 and August 2006. Mulderig, of Scranton, PA, worked for the company for 34 months as an assistant general manager in Jessup, PA, between February 2003 and December 2006.
In addition to allegations of failing to pay overtime, the lawsuit also alleges that Fastenal did not accurately record or report the hours worked. Calhoun claims that Fastenal did not provide rest breaks and meal periods as required by California law. The law