As an employer, you’ve never been at greater risk of getting sued by your employees in a labor dispute. Wage and hour lawsuits have skyrocketed by 432% over the last 20 years![i] Unpaid overtime is the most common wage and hour lawsuit allegation. In fact, according to NERA’s 2013 Trends in Wage and Hour Settlements Report, 40% of wage and hour cases revolved around overtime lapses.
The FLSA mandates that employers pay overtime (1-1/2 time the regular rate of pay) to nonexempt employees for any hours worked beyond 40 per week. In addition, numerous states and union agreements impose stringent restrictions.
Ultimately, the law favors whatever requirement is most beneficial to employees. Employers can get into trouble if they fail to calculate and pay overtime correctly or definitively prove that they did. To avoid getting dragged into court over an overtime violation, you should follow these best practices.
Best Practices to Avoid Unpaid Overtime Lawsuits
- Develop definitive overtime pay policies and communicate them clearly to managers and employees.
- Make sure your time and labor management system meticulously tracks work hours and automatically calculates overtime pay. Manual time tracking and payroll calculations leave employers vulnerable to errors.
- If your employees work multiple jobs with varying pay rates, you need a system that correctly calculates employees’ weighted average pay.
- Make sure your system generates detailed overtime reports. They will allow you to track and correct existing overtime issues, enforce your overtime policies, and dispute potential lawsuits.
- If overtime expenses are the real issue, consider:
✔ Revisiting your employee scheduling process.
✔ Training managers to plan better instead of relying on ad hoc overtime.
✔ Using a time and labor management system with real time alert capabilities to notify managers before employees reach their overtime thresholds.
EPAY’s time and attendance system helps employers stay on top of overtime costs and avoid lawsuits. Learn how Blueforce can help you more accurately track hours worked, automatically calculate overtime pay (even with blended overtime rates) and generate detailed overtime reports.
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