5 Reasons Why Employers Settle Unpaid Overtime Claims
The Federal Labor Standards Act is very clear: all employees must be paid at least minimum wage for every hour worked and overtime pay for every hour worked over forty hours in a week. Unfortunately, even when employers do their absolute best to comply, compliance checks and balances fail, delegation to third party payroll processors fail, technology fail or human errors abound. If an employer find’s itself in this situations there are good reasons to settle the claim. Some of these are as follows:
- You made a mistake – such as deducting lunchtime from the number of hours worked per week even though you do not permit the employee to take a lunch break or the employee cannot halt work to take a lunch break, or failing to keep adequate time records in the first place
- A class action is no joke – should there be more than a few employees claiming unpaid overtime, whether their allegations are valid or not, the cost of defending such a suit would be enormous and if they’re successful, the costs of back pay and penalties can also be crippling
- Treble damages – this is legal speak for if found to be liable, you’ll pay double the unpaid wages owed. Hence if you’ve made a mistake (see reason number one above) – settlement for the amount owed without treble damages makes sense
- Attorneys Fees – the law provides for automatic entitlement to reimbursement for attorneys fees for all successful plaintiffs in such lawsuits, thus, if found to be liable you’ll pay double the unpaid wages owed, treble damages and attorneys fees incurred by the plaintiff (or plaintiffs – see number two above)
- Unwelcome visitors from the Department of Labor – the DOL will not launch a full investigation for an isolated case of unpaid overtime, trust me, I’ve tried to get them to do it; however if the employees can muster any semblance of a class or if you business has been reported systemically, expect a visit from some unwelcome visitors