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Now a local plaintiff’s firm has filed lawsuits against more than 20 Virginia companies since July 2009 under the Fair Labor Standards Act for alleged wage and hour violations. This plaintiffs’ firm is attempting to expand its practice base and gain a foothold in an area of the law that has proven to be very lucrative for other small plaintiffs’ firms. Personal injury lawyers are soliciting potential clients by advertising on local television, and workers hard hit by a worsening economy are easy targets.
The increase of FLSA filings in such a short amount of time is alarming, because traditionally the overall volume of FLSA lawsuits brought in our area has been relatively low compared to other jurisdictions. Defendants in these cases range from small local businesses to national corporations.
Because of the recent up-swing of these types of cases, employers must reevaluate their wage and hour practices. It is much cheaper for a company to self-audit on the front end than to defend itself in a federal lawsuit. Some of the cases mentioned above could have been easily prevented. Business owners must review their policies now.
One area plaintiffs and their lawyers are targeting is overtime. In many of these recent cases, the plaintiffs have asserted that they have frequently worked more than 40 hours in a workweek but were not paid overtime for those hours. Employers need to make certain that they have their employees properly classified as exempt or non-exempt from the overtime provisions of the FLSA. It is a common misconception that employees who are paid a salary are not entitled to overtime. Whether someone is exempt from overtime pay does not turn on how they are paid or the title of their position. Rather, the exempt status of an employee usually depends on their specific job duties and responsibilities. For example, there are certain exemptions related to the person’s position. Doctors and teachers, for instance, are exempt employees.
Another target of these plaintiffs has been employers who require their employees to perform “off the clock” work. Although 10 minutes here and there might not seem like much, when a large group of plaintiffs sue an employer for violations going back two or three years, the potential for a large recovery quickly grows. Thus, employers should also ensure that proper policies are adopted and followed to ensure proper timekeeping for all employees – especially those who are classified as non-exempt – and that these policies are followed at all times.
Indeed, employers across the country have been forced to pay millions of dollars to settle FLSA cases and, in some cases, have had multimillion-dollar judgments entered against them following lengthy (and costly) trials. Should a plaintiff in any type of FLSA case prevail, the law generally requires the defendant employer to pay the plaintiff’s legal fees in addition to money damages. Even if the employer wins, the cost of defending these lawsuits can easily be six or seven figures, and the employer is not likely to recoup that money from the unsuccessful plaintiffs.
In some circumstances, the plaintiffs in these local cases have successfully certified a “collective” or “class” action — a litigation tool that permits multiple (sometimes hundreds or thousands) of individual cases to be tried together, a potentially debilitating scenario for any defendant employer. Such cases can expose an employer to potentially high damage awards. These lawsuits can have a negative impact on employee morale and distract a company and its managements from the company’s everyday business. For the defendant employer, the key is to fight the formation or “certification” of the class at the outset and with vigor, as individual lawsuits can often be resolved at a lesser cost to the employer. Once a class has been certified, the defense or resolution of such a case can be extremely costly.
The recent trend of filings in its federal courts strongly suggests that the number of FLSA lawsuits in Virginia will only increase.