HR CORNER - Collective Actions Seeking Unpaid Wages and Overtime Pay Are on the Rise

By Kevin Ceglowski

Most employers are aware that the Federal Fair Labor Standards Act (“FLSA”) requires them to pay at least minimum wage for all hours worked and to pay overtime for hours worked over forty within a week to employees who are not exempt from the FLSA’s requirements. Although these rules seem simple, employers are increasingly being challenged under the FLSA based on the way they count hours worked and on their decisions to classify employees as exempt from overtime requirements.

Long term care providers have not been exempt from recent wage and hour litigation. For example, employees of Augustine Home Health Care, Inc., recently sued the company for failing to record their overtime hours properly and failing to pay them at the overtime rate in violation of the FLSA. The plaintiffs were all CNAs who were paid hourly for work they did at nursing homes, assisted living centers, and in home health care settings. They alleged that Augustine engaged in a company-wide practice of refusing to pay overtime to CNAs who worked more than 40 hours per week.

A large Southeastern provider doing business in North Carolina was recently sued by an employee who sought to bring other employees into the case. The defendant employer routinely contracts with health care facilities, such as nursing facilities and assisted living communities, to provide various health care related services to patients in those facilities. The plaintiff alleged that the defendant employer engaged in a company-wide practice of failing to pay its employees proper minimum wage and overtime because the company automatically deducted a 30-minute meal period from employees’ wages. Although the plaintiff was not successful in turning her individual claim into a class action, this case illustrates the growing trend of employees not being satisfied with making individual claims, but seeking to “up the ante” by filing class or collective actions.

Over the past two years, we have seen a significant increase in large-scale wage and hour suits. Many collective and class actions have been filed against large and small employers seeking unpaid wages and overtime. Such suits can be quite costly for employers because, in addition to unpaid wages, employers face the risk of liquidated damages and attorneys’ fees if a violation of the FLSA is proven. These multi-plaintiff actions also pose a substantially greater risk to employers because they present claims of large groups of employees. Defending these claims requires more time and greater cost and attorneys’ fees than does a single plaintiff case.

Because multiparty wage and hour lawsuits are on the rise, prudent employers should examine their payroll practices to make sure they have properly classified all employees as exempt or non-exempt and that they are recording and paying wages for all time worked by their employees. It does not cost much to conduct a self-audit, particularly in light of the substantial cost and risk of defending a class action.

Kevin Ceglowski is an associate in our Employment Law Group. He represents employers in employment discrimination, wrongful discharge, and ERISA claims, and advises and defends clients in race, age, disability, and sex discrimination and harassment cases before administrative agencies and in state and federal courts. Kevin also provides guidance to ensure employment practices are in full compliance with all applicable statutes and regulations. He may be reached at kceglowski@poynerspruill.com or 919.783.2853. You may also contact Susie Gibbons, Employment Law Practice Group Leader, regarding employment law-related issues at sgibbons@poynerspruill.com or 919.783.2813.

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