The Fair Labor Standards Act, often referred to as FLSA or
the Wage and Hours Bill, has been the backbone of ethical employment in the United States
for decades. First introduced in 1938, FLSA has traveled a long road of
amendments and scrutiny in becoming what it is today. Generally,
employers who produce $500,000 or more in gross sales are subject to FLSA
requirements on minimum wage, hours, overtime and working with children. If
you fall below this revenue line and are a
hospital, school or public agency, you are likely still subject to these
regulations. An issue consistently under debate, the FLSA is still changing
with proposed amendment in April 2014 that would bring the federal minimum wage
for employees to $10.10.
Employers have been blurring the lines of FLSA for years. Even
those with good intentions can fall into FLSA related issues. While large
corporations are highly publicized for FLSA lawsuits, it is smaller companies
that are hit harder when claims occur. As not all EPL insurance covers FLSA
related claims, many small companies are unprotected and don’t even know it! In
fact, the U.S. Department of Labor estimates that as many as 70 percent
of employers are not in compliance with the FLSA in some material way.
Most Common FLSA Offenses for Small Businesses
- Not
paying overtime for time worked over 40 hours in a week
- Four
Janitors that were not paid for overtime worked won $103,736 for
overtime pay and liquidated damages
- Misclassifying
managers and assistant managers as exempt
- Retail
Clothing Store Manager was misclassified as exempt as he spent
more than half of his time engaged in non-exempt,non-managerial
activities. Plaintiff awarded $38,000 in back overtime pay and $62,000 in
attorney’s fees
- Paying
Lump Sum amounts for overtime hours worked vs. paying 1.5 times the normal
hourly rate
- Small
Concrete Company paid a $12,900 settlement and $20,000 in attorney
fees for paying non-exempt workers a lump sum amount for overtime rather
than time and a half for hours worked over 40
Two additional common FLSA offenses for small businesses
include not paying for overtime since it had not been pre-approved and allowing
employees to “waive” their rights under the FLSA
More FLSA Claims Examples
Between January 2006 and September 2013 FLSA cases totaled
$2.95 billion in settlement dollars.
Misunderstanding of Regulations
A mortgage company was sued by 54 of its loan officers for over
$220,000 in unpaid overtime. The owner was under the impression that FLSA did
not apply to highly compensated employees. Many of his staff members earned
well over 150k per year with the average compensation being $105,000. There is
an exception to the FLSA law for highly compensated individuals earning at
$100,000 per year or more but the exception also stipulates that a minimum of $455
per week must be paid. These employees were not paid during weeks where they
did not close loans.
Exempt Employee Confusion
A laser machining plant was sued for unpaid overtime after firing
an employee for what the company described as tardiness and an uncooperative
attitude. The administrative assistant was listed as exempt although many of
her job responsibilities are considered to be traits of a non-exempt classification.
Her lawyer argued that she could not have been an exempt employee since she was
docked pay for every hour that she did not work that was less than 38 in a week.
The lawsuit settled for $73,000 in liquidated damages for intentional misclassification.
Underage Employees
A grocery store was directed to pay over $52,000 in
restitution to thirteen employees all under the age of sixteen for willful
violations of the Fair Labor Standards Acts (FLSA) youth employment provisions.
The market had minors working six consecutive hour shifts as well as performing
such tasks as cleaning a meat slicer, loading a paper baler and operating the
power driven baking machine. The FLSA’s youth employment provisions identify
hazardous orders that prohibit these specific activities for workers under
eighteen and limits the number of hours that minors can work on school
days/weeks.
FLSA Coverage at Apogee
At Apogee we can work with you to insure that your small
business is insured under federal labor regulations. Access to top markets and
years of expertise allow us to provide high quality, competitive quotes when
you need them.
Learn more about FLSA and EPL coverage at Apogee
here
Submit completed applications
here
Application Requirements
- Application
- Loss runs, if applicable
- Copy of current declarations page
Contact Information
 |
Chris Hoxie
Senior Account Manager
(610) 337-3200 Ext. 7027
choxie@apogeeinsgroup.com |
