Ready for a Wage-and-Hour Audit?

Improper pay practices are in the news, with a wave of wage-and-hour lawsuits filed by employees who claim they’ve been cheated by their employers.

What steps can employers take to protect themselves from these potentially disastrous claims?

According to employment law giant Littler Mendelson, roughly half (49 percent) of the respondents in a national survey said they’re concerned about the threat of misclassification litigation or a DOL audit.

In response, many employers have either conducted their own audits to assess exempt classifications (54 percent) or intend to do so in the next year (14 percent).

More than half say they’re monitoring trends in exempt misclassification litigation to some degree, and 43 percent say they’re monitoring these lawsuits closely.

The Littler survey pinpointed one key component in many wage-and-hour suits that poses a real dilemma for employers: Employees who misrepresent their exempt job duties.

“Employers often lose or settle exemption cases not because the position was misclassified, but because the employer cannot marshal sufficient evidence to counter the plaintiff’s self-serving efforts to downplay decision-making responsibilities,” said Littler’s Lee Schreter.

“Employers can effectively counter ‘job deflation’ by creating contemporaneous business records of exempt duties as those tasks are performed rather than attempting to reconstruct those activities after a lawsuit is filed.”

Translation: Keep a current, detailed record of the day-to-day activities of exempt employees.

One of the better ways to track exempt duties can be performance evaluations that ask employees to describe and assess their own performance. 

This kind of evidence provides a written affirmation of job responsibilities in the employee’s own words and can be used to impeach any contradictory testimony.

Other effective measures to consider: The majority of respondents indicated having up-to-date job descriptions (82 percent) and employee performance reviews (73 percent). 

About the Author

Larry Hannappel

Larry spent 16 years with Century Casino’s and was instrumental in the start-up and growth of the company through expansions in Canada, South Africa, the Czech Republic, Poland and on several cruise ships as well as in Colorado. He was most recently the SVP, Principal Finance Officer and COO of North American operations for Century Casinos Inc., a multinational, Nasdaq-traded gaming company. Earlier in his career, Larry worked at the Johns Manville Corp. Larry spent 13 years in various accounting and finance functions in the company’s fiberglass manufacturing division and was key in the start-up of a molding plant in Indiana. Larry and his wife Kathy and three children live in Colorado. He enjoys four-wheeling, motorcycling, golfing, skiing and brewing beer.

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