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Wage lawsuits may be costly

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Many large companies, such as Walmart, Amazon and Uber, have been sued in legal actions concerning wages. For smaller firms, however, these wage-and-hour lawsuits may have even more serious business law and financial consequences, because these entities have fewer resources to absorb a judgment.

Plaintiffs won 79 percent of the 273 wage and hour certification decisions last year. This was a 6% increase from 2017. Companies also experienced a 11% drop of their odds of separating cases with successful motions for decertification.

Wage complaints can begin with a dissatisfied employee and even grow into a class-action lawsuit. Federal and Florida government wage inspectors can also independently conduct random inspections and audits and commence legal action.

There are several ways to help avoid these problems. First, an employer should ensure that all of their workers are classified correctly and paid in accordance with federal and Florida laws. It is important to comply with the rules classifying contractors, staff, overtime-exempt and non-exempt workers and ensure that these classifications are updated.

This area of law is very detail-oriented and it is important to understand the nuances. For example, many employers assume that the overtime rate is just 1.5 times a worker’s regular wage. But, workers are entitled to 1.5 their regular rate, which includes some non-cash goods or benefits that are given as wages.

Employers should also have strong and conforming wage and hour policies that are placed in writing. These may be contained in well-drafted handbooks, contracts and other resources. In addition to protecting employees, these also may play a role in defending a legal action.

An arbitration agreement in which each new worker agrees to resolve disputes individually and without joining a class action lawsuit may also be helpful. The U.S. Supreme Court upheld the legality of arbitration agreements governing these class actions in 2018. Employers may need to offer incentives, such as a one-time bonus, to induce current employees to enter these agreements.

This may become even more complicated. It is anticipated that a new U.S. Department of Labor rule will take effect early next year which may make an estimated one million additional workers eligible for overtime pay.