Wage and Hour Litigation | Unpaid Work Time | Time and Attendance Best Practices

ADP Research Institute®

Time and Attendance: Practical Steps to Help Employers Stay Ahead of Wage and Hour Litigation Trends

This insight is from: "Trends in Wage and Hour Litigation Over Unpaid Work Time and the Precautions Employers Should Take"

With wage and hour litigation on the rise, accurate tracking of employee time and attendance is more important than ever. Our review of court data shows that of all state and federal court employment law class actions filed in the United States, 90 percent are wage and hour claims. Why? Increased wage and hour litigation stems from Department of Labor initiatives that seek to inform employees of their FLSA rights and the growing number of lawyers specializing in Fair Labor Standards Act (FLSA) cases. The potential damages in these cases are staggering:  in 2010 the average settlement in the top 10 reported wage and hour class and collective actions was $34 million. Today’s most prevalent claims in wage and hour litigation involve: 1) unpaid work time resulting in pay dropping below minimum wage, non-payment for overtime, or both; and 2) misclassification of exempt versus non-exempt status, leading to denial of overtime pay. This paper discusses current trends in unpaid work time litigation and presents time and attendance practices that may help you, the employer, minimize your exposure to these claims.

Automatically Deducting for Meal Periods Can be Risky Business

Many recent wage and hour class or collective action lawsuits involve claims that time for meal breaks was automatically deducted from employees’ pay even when an employee worked through all or part of the meal break period. Automatic deductions are not unlawful provided that employees either always take a meal break or record time worked during meal periods. However, the practice is fraught with monitoring challenges that make it risky in the current litigation climate. Employers who have invested in an automated time and attendance solution may be able to implement specific policies to address the most common problems arising from auto-deduct practices — without sacrificing associated labor cost savings.

Claims of Improper Rounding Persist, Highlighting the Need for Effective Time and Attendance Practices

Over the past two and a half years, at least 35 reported decisions or settlements in federal district courts involved allegations of improper rounding. The Department of Labor accepts rounding if the arrangement devised by the employer averages out so employees are fully compensated for all the time they have actually worked. The problem with rounding is that the net effect may be that the employee’s time is always rounded down, but never rounded up. Regardless of whether the employer or the employee is the more frequent beneficiary of the rounding policy, even a few employees who are negatively impacted by the policy can turn a personal gripe into a costly collective action.

Remote Work Presents Time and Attendance Challenges that Put Employers at Risk for Wage and Hour Lawsuits

Remote work refers to various circumstances, such as logging onto a company computer from home or driving for work-related purposes, in which an employee is able to perform work outside of visual observation by a supervisor or active monitoring by the employer. Many employers struggle with how to account for and compensate employees for such time, if at all. Nonetheless, risks for these types of situations can be significant and unexpected. For example, Sears Roebuck entered into a $15 million settlement for failing to properly pay employees who began their workday at home by checking computers.

Off-The-Clock Work Presents Liability Risks, But May Be Addressed by Strictly Enforced Time and Attendance Policies

Off-the-clock work occurs whenever an employee performs work while on work premises, but not clocked in, whether before or after shifts or during meal periods. The amount of unpaid work time, and by extension the monetary liability, in off-the-clock situations can reach significant levels especially if employees fall into the habits that create off-the-clock issues, such as arriving early, skipping lunch, or staying past the end of their shift. Although it can be a source of significant liability, off-the-clock work can be largely averted through implementation and strict enforcement of a clear, written, time and attendance policy that requires employees to accurately record all work time and submit completed, signed time records in a timely manner.

Time and Attendance Best Practices Can Help Employers Avoid Wage and Hour Compliance Issues and Litigation

Employers can minimize wage and hour compliance and litigation risks associated with unpaid work time by adopting proven time and attendance practices. Specifically, the implementation of policies, training and auditing in conjunction with automated time and attendance and payroll systems will help minimize internal employee complaints and address those that may still arise.

 * A complete list of sources and citations can be found in the full report.

90% of all state and federal class or collective actions are wage and hour claims. Source: Littler Mendelson review of court data.

About This Report: This report was commissioned by ADP and authored by Laurent Badoux, Esq., of Littler Mendelson, P.C.  Littler Mendelson is the largest U.S.-based law firm exclusively devoted to representing management in every aspect of labor and employment law. The expert opinions and best practice recommendations in this report are those of the author alone.

Keywords: HR Management, Time and Attendance

Business Types: Research for Small Organizations, Research for Midsized Organizations, Research for Large Organizations

Roles: Research for Human Resources Professionals

Trends in Wage and Hour Litigation Over Unpaid Work Time and the Precautions Employers Should Take

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