Take Preventative Steps to Minimize Risk of Wage Claim Lawsuits

Article excerpt

Byline: BUSINESS AND THE LAW By Andy Lewis For The Register-Guard

While consumer class actions against manufacturers have been around for decades, a new type of class action lawsuit has quickly become popular among plaintiff's attorneys: The wage claim.

In the typical class action wage claim, a plaintiff's attorney sues a company on behalf of the company's employees for unpaid overtime or for requiring employees to work "off the clock."

The number of wage and hour lawsuits has quickly surpassed employment discrimination claims under Title VII largely because they are easy to prove, and because so many employers unknowingly violate the complex web of state and federal wage and hour regulations. And a class action wage claim can be one of the most financially devastating lawsuits a company will ever face.

In a recent Pennsylvania case, a jury awarded Wal-Mart employees more than $78 million in unpaid overtime.

That same year Smith Barney settled a California case by paying $98 million to 11,000 stock brokers who claimed they had been improperly classified as exempt.

According to a recent BusinessWeek article, legal experts estimate that U.S. companies pay roughly $1 billion annually to resolve wage and hour claims.

Those claims can be expensive because employees are entitled to recover not only their unpaid wages, but also penalties and attorney's fees. In some cases the penalties alone can exceed several thousand dollars for each violation.

Pool together scores of employees, each of whom did not receive overtime for several years, and the resulting liability can be financially disastrous for a small company.

As one plaintiff's attorney recently told BusinessWeek, "I can hit a company with a hundred sexual harassment lawsuits, and it will not inflict anywhere near the damage that (a wage and hour suit) will."

There are, however, preventive steps an employer can take to minimize the risk that it will ever face a wage claim.

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