With Workers on the Clock, Companies Must Defend Against Class-Action FLSA Claim

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Employers with hourly workers should remember this: The clock never stops.

You could find yourself in court defending a class-action FLSA (Fair Labor Standards Act) claim for overtime pay even when you think you’re doing everything right.

The law may seem clear enough about overtime pay: You must pay a 50 percent premium on hourly wages for hours worked past 40 in a week. But numerous court decisions have accumulated over the years, showing things weren’t always so clear.

Understand previous court rulings and best practices for companies with hourly workers. It could help prevent or minimize risk and liability for a class-action FLSA claim for overtime.

Statistical Analysis: A Class Act

A common FLSA issue is the meaning of “work.” For example, the current law states that the time employees spend putting on and taking off protective gear needs to be compensated.

But what happens if an adequate timekeeping system isn’t in place to keep track of that kind of activity?

The U.S. Supreme Court upheld a class-action case against Tyson Foods Inc. in 2016 on this issue.

The question wasn’t whether employees were entitled to overtime pay for the time they spent “donning and doffing” protective gear. Instead, the question was whether employees could use statistical analysis to calculate what they were owed in the absence of good documentation.

Lawyers for the employees showed a video of workers putting on and taking off the required equipment. They estimated the average time it took, then projected that time onto the relevant employee base.

Quality Evidence Rules

“A representative or statistical sample, like all evidence, is a means to establish or defend against liability,” wrote Justice Anthony Kennedy. The key is “the degree to which the evidence is reliable.”

In other words? The quality of the statistical analysis is vital.

The court cited a 1946 ruling that said employees could rely on “sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.”

It’s essential to have a comprehensive time-tracking system in place to prevent such a class-action FLSA claim.

The best defense? Keep tabs on nonexempt employees’ hours, not only on your premises but also when they’re working remotely or traveling.

Time Modeling Alternative

A critical footnote to the 2016 ruling: The court implicitly left the door open to using sophisticated modeling systems instead of simple statistical analysis techniques.

A technology-based modeling system that leverages big data and other analytical tools can produce far more accurate estimates than the rough, sample-based methods used in the past. The kind of data that can be used in that process essentially amounts to information that points to what employees have been up to from when they set foot on your premises.

Electronic time-clock systems can identify most of that: arrival, time spent putting on gear to perform a job, time on the work floor, breaks, lunches and other activities.

Up-to-date payroll systems keep tabs on the following:

  • Paid time off (PTO)
  • Sick days
  • Holidays
  • Jury duty
  • Bereavement leave
  • Weekend work
  • Third shift
  • Paid and unpaid training time
  • Performance-based and discretionary bonuses

A CPA-led financial advisory firm can brief you on timekeeping systems and modeling techniques that might prove useful should you ever face a class-action FLSA claim.

Protect your workers and your business with an efficient system to record work time for hourly employees. Defending your company against a class-action FLSA claim may boil down to expecting the unexpected, because time does not stand still.

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