Businesses that employ workers need to comply with the law very carefully. They generally also need to stay on good terms with current and former workers to mitigate the risk of employment litigation. Workers may file lawsuits against companies for a variety of reasons. They may claim that a company discriminated against certain groups or retaliated against those who made use of certain employment rights. One of the more common reasons that employees take legal action against the organizations that hired them involves wage and hour law violations.
Companies may intentionally underpay workers by denying them overtime, paying less than minimum wage or otherwise depriving them of the compensation they have earned through their labor. How can organizations minimize the likelihood of wage and hour lawsuits brought by workers?
Learning and complying with the law
Both state and federal wage laws apply to conflicts about pay. Businesses need to be aware of what laws apply and comply with them very carefully. From meeting minimum wage standards to fulfilling overtime pay requirements, an understanding of what the law requires and a consistent practice of abiding by those rules will help minimize the likelihood that workers would have a viable wage claim against the company.
Maintaining accurate records
Employment records are often a key component of a company’s defense against wage claims. In general, organizations must maintain timekeeping and other payroll information for at least three years. The more accurate and thorough those records are, the harder it will be for employees to claim that the company manipulated payroll matters or otherwise engaged in some form of wage theft. The organization’s internal records can typically play a major role in the response to a lawsuit. The company’s timekeeping records, for example, can help show that the checks issued by the payroll department accurately reflect when workers clocked in and out of their shifts.
Establishing protective employment contracts
Making sure that workers understand the compensation they will receive is as important as following the law. Employees who develop impractical expectations may become embittered when the company does not meet those expectations. Clarifying who receives bonuses and how regularly the company provides cost-of-living wage increases in employment contracts could reduce the likelihood that workers will become angry about the pay they receive. Requiring mediation or other alternative dispute resolution efforts prior to litigation can also deter workers from bringing a questionable lawsuit without first trying to settle the matter with the company.
Being proactive about preventing wage and hour lawsuit risks can help a company preserve its finances and its reputation.