Wage and hour audits are necessary; here’s what they require

An employer’s strongest defense is an internal wage and hour audit of its wage payment practices and job classifications for overtime purposes

The Fair Labor Standards Act (FLSA), the federal law governing the payment of minimum and overtime wages, has proven itself to be an employer’s worst nightmare, and it may only get worse as the wage and hour landscape continues to rapidly evolve. An employer who violates the FLSA is subject to unpaid wages plus an equal amount in liquidated damages, unless the employer can prove that it acted in good faith and reasonably believed it was in compliance with the law. Monetary damages also extend forward until the employer corrects the FLSA violation; in other words, monetary damages may continue to increase even as the FLSA lawsuit is litigated. In 2013, about 10 percent more wage and hour suits were filed than in the previous year.

With these types of claims at an all-time high, it is essential for employers to ensure that their employees are classified and paid properly. Failure to do so can result in damaging claims and significant liability.

Contributing Author

author image

Jason C. Kim

Jason C. Kim is a partner in the nationally recognized Labor and Employment Practice Group at Neal, Gerber & Eisenberg LLP (Chicago). He counsels companies...

Bio and more articles

Contributing Author

author image

Natalie J. Scruton

Natalie J. Scruton is an associate in the Labor & Employment Practice at Neal, Gerber & Eisenberg LLP (Chicago). She counsels companies – public and...

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.