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Employers are increasingly under fire from wage/hour class action suits filed under the federal Fair Labor Standards Act (FLSA).
Many of these lawsuits result from misclassification of employees. The FLSA does allow for certain exemptions from overtime pay—primarily for workers performing executive or managerial jobs. However, many companies mistakenly place too many workers into these exempt categories – a temptation for any business looking to cut costs.
Some businesses, such as call centers and retail companies, may have hundreds of employees misclassified as exempt. Some legal experts have speculated that the FLSA is the most frequently violated federal labor and employment statute on the books.
While no industry sector is immune from attack, those most likely to be challenged are employers with substantial numbers of employees in the service sector, including retail, financial services and information technology companies.
Triggered by the Department of Labor’s revision of its “white-collar” exemption regulations—a category encompassing executive, administrative, professional, outside sales, and computer professional employees—FLSA claims, along with suits brought under state wage-hour laws, have far outstripped employment discrimination as a major concern for employers. The legal standard for determining exemption is the actual duties performed by the employee, not his or her title or job description. The burden falls on employers to prove that an employee is properly classified as exempt, regardless of intent.
FLSA class or “collective” actions can be lucrative for plaintiffs and their attorneys, since violators must pay both double damages and attorneys’ fees. This makes FLSA cases an attractive target for plaintiffs’ attorneys.
Conversely, the potential risks to employers are severe. Given the scope of the damages, a class action suit on FLSA exemption grounds could be crippling to many employers. These frequently are “bet the company” types of lawsuits.
Major employers such as Burger King and Costco currently face potential FLSA class actions that could result in literally billions of dollars in damages if successful. One mortgage lender recently settled a class action for $2.45 million after loan officers claimed they hadn’t been rightfully paid overtime.
Womble Carlyle’s FLSA Team can provide an aggressive defense for employers, with a particular focus on FLSA misclassification matters.
The primary goal of the Womble Carlyle FLSA Team is to keep clients out of the courtroom. Attorneys work to identify and correct existing problems before they rise to the level of litigation. Even if these preventative efforts don’t stave off every lawsuit, they provide a powerful “good faith” defense in court, leaving the employer in a far better position to win a positive outcome.
Many companies encounter exemption compliance problems because they do not truly understand the nature of the FLSA exemptions. The law contains a fair amount of gray area, meaning prepackaged compliance kits aren’t the answer. Companies need counsel that understands the nuances of the law—both in how it is written and how it is enforced in real-world situations.
However, should a conflict arise, the FLSA Team provides the defense that only battle-tested litigators can deliver. Our experience includes representing employers in investigation, administrative proceedings and litigation involving the full array of wage-hour claims under state and federal law. That includes classification of employees, alleged “off the clock” work, recordkeeping, and issues peculiar to a wide variety of industries. We have represented a major retailer in defeating an attempt at class certification, have defended a government contractor against a FLSA and False Claims Act action and have dealt with class actions and multiple actions in courts throughout the country.
The firm’s Case Management Facility (CMF) is a key strategic advantage in litigating large-scale cases. The CMF organizes, tracks, searches and synthesizes these documents into information attorneys can use. The state-of-the-art technology is backed by a staff that includes experienced trial lawyers and paralegals who understand large-scale litigation and what litigators need to win cases. The CMF provides more than simple case management—the facility assists in the development and implementation of strategies tailored to the client’s need for consistency, given the enormous volume of litigation across jurisdictions, cases and plaintiff lawyer adversaries. The resources provided by the CMF help clients save money and, more importantly, win cases.
In 2006 alone, the CMF handled more than 30,000 active cases in all 50 states and more than two million litigation-related documents. The CMF supports more than 2,000 lawyers and legal support professionals at multiple locations and multiple offices within law firms nationwide. CMF clients include 50 of AmLaw 200 list of the country’s largest law firms.
Womble Carlyle also has decades of experience in document discovery, including discovery of electronically stored information (ESI). As businesses and courts have moved toward electronic documents, the firm has established an E-Discovery practice. The attorneys in this practice have experience and knowledge about federal and state laws governing electronic discovery, as well as the technical processes used to identify, gather, preserve and review this electronically stored information in the context of anticipated or ongoing litigation. They also have experience in working with in-house IT departments and vendors who provide complementary technology services.
The FLSA Team can tailor its FLSA exemption practice to meet the needs of any specific client. Services range from conducting small-scale, limited-scope audits to full, company-wide examinations to litigation defense.