Wage and hour lawsuits are on the rise, in large part because the claims are quite lucrative. As a quick reminder – under the federal Fair Labor Standards Act (FLSA) the liability is generally two times the amount of unpaid wages, plus attorney fees.
The only way the employer can avoid double damages is to demonstrate that the failure to pay wages was not “willful.” This is done by convincing the court that (i) the actions were taken in good faith; and (ii) the employer had reasonable grounds for the belief that it was complying with the FLSA.
As the 5th Circuit’s decision in Miles v. HSC-Hobson Services Company, Inc., reminds, this standard is very difficult to satisfy.
In Miles the employer argued that he was not liable for double damages because the internet confirmed that he did not have to pay his non-exempt employees for set-up and clean-up. The internet was wrong, and the employer lost this argument.
There are 2 lessons here. First- if the employee is doing something for you (like setting up and cleaning up….) you typically will have to compensate the employee for his/her time. Second- You cannot in good faith rely on the internet for your legal advice.
In this case the court concluded that the employee either should have known he needed to pay his employees, or that he showed “reckless disregard” for the FLSA. And thus he had to pay the double damages.
Don’t end up like the employer in this case. If you have questions about properly compensating your employees, reach out to your attorney or an actual authority on the matter. Save yourself the hassle of a lawsuit and get proactive on the front end.
Contact info: Meredith S. Campbell Co-Chair, Employment and Labor Group, Shulman Rogers mcampbell@shulmanrogers.com | T 301.255.0550 | F 301.230.2891
Excellent article! There is much bogus advice scattered across the Internet and in written publications. You can’t even believe what some of the FLSA regulations say! Several of the regs are decades out of date. Employers must exercise great caution to avoid owing back wages and liquidated damages.