Employers must ensure that managers are trained to comply with the nuances of federal, state, and local wage and hour laws. Without training, managers may unknowingly violate the law. For example, managers may miscalculate time worked or fail to comply with mandatory rest and meal periods.
In recent years, litigation over wage and hour issues has exploded. Violations have led to dire consequences, including lengthy litigations that end in multi-million-dollar settlements. By investing in training now, companies can stop problems before they arise, minimize legal risk, and steer clear of costly verdicts and settlements.
This article will cover:
- What are wage and hour laws?
- What happens when managers are not trained?
- What legal protections are employers afforded when they train managers?
- What topics should effective wage and hour training include?
- Where do you find interactive, online manager training?
What Are Wage and Hour Laws?
There are numerous laws governing wage and hour obligations at the federal, state, and local levels. The most prominent is the Fair Labor Standards Act (FLSA). The FLSA sets basic federal employment law requirements, including overtime pay requirements, child labor laws, recordkeeping requirements, and the federal minimum wage. The FLSA is administered by the U.S. Department of Labor’s Wage and Hour Division, which is tasked with ensuring that basic labor standards are met.
In addition to requirements imposed by the federal government through the FLSA, states also have their own employment laws. They relate to the same topics, including minimum wage, overtime requirements, child labor, and recordkeeping. In addition, several states and localities impose minimum meal and break period requirements and predictive scheduling requirements. These state and local government requirements vary widely, so it is critical that managers are trained to know the requirements where they work.
What Happens When Managers Are Not Trained?
When managers are not trained in wage and hour laws, they are more likely to violate such laws, which can lead to significant monetary and non-monetary costs. In recent years, businesses have had to pay millions of dollars in fines and class action settlements for miscalculations and violations. Among others:
- Bank of America and its Merrill Lynch unit had to pay $14 million to settle lawsuits that claimed they failed to pay financial advisers overtime.
- Walmart reached a deal with the United States Department of Labor to pay $33.5 million in back wages after the company was accused of violating overtime laws.
- The Children’s Hospital Los Angeles paid $27 million to resolve four class action lawsuits brought on behalf of thousands of workers who claimed they were denied breaks and not paid their full wages.
In addition to financial costs, an organization can suffer significant reputational harm when its name is associated with wage and hour violations. Employers who fail to properly pay and calculate wages seem less competent, trustworthy, and business savvy. These violations can make consumers wary about buying a company’s products or services and make potential employees skeptical about working there.
Organizations can protect their reputation by avoiding wage and hour violations altogether. Training managers on proper wage and hour practices that comply with federal, state, and local laws is essential and will help stop problems before they arise.
What Legal Protections Are Employers Afforded When They Train Managers?
Training managers can help employers minimize their liability under the FLSA. Employers that violate the FLSA can expose themselves to “liquidated damages,” which is equivalent to the unpaid wages the employee should have received. Congress, however, has provided employers a good faith defense if they violate the FLSA. If employers prove “to the satisfaction of the court that the act or omission was in good faith and that [the employer] had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act, the court may, in its sound discretion, award no liquidated damages.” This means that so long as an employer was acting in good faith and had a reasonable belief its conduct was not in violation of the FLSA, the court may choose not to impose liquidated damages.
Liquidated damages in an FLSA action are very costly. In addition to paying the employee his unpaid wages, the court can also order the employer to pay double that in the form of liquidated damages. For example, if an employee is owed $10,000 in unpaid wages, the court could order the employer to pay him $10,000 in unpaid wages and an additional $10,000 in liquidated damages for a total of $20,000. Thus, establishing a good faith defense and eliminating liquidated damages can dramatically reduce the amount employers have to pay if a violation occurs.
Training managers on wage and hour laws helps employers assert a good faith defense to FLSA violations. As stated by one federal district court judge, “[t]he employer must show it ‘actively endeavored’ and took ‘affirmative ‘steps’ to ensure compliance’ with the FLSA” to receive the good faith defense. When an organization trains managers, it is taking a proactive step to comply with the FLSA.
Hence, manager training can help effectively limit liability for an employer against a wage and hour claim.
What Topics Should Effective Wage and Hour Training Include?
Effective training addresses managers’ responsibilities for complying not only with the federal FLSA but also with comparable state and local wage and hour laws. Though the FLSA is important, many state and local laws often are much more expansive and provide for greater damages.
Effective wage and hour training will teach managers how to take the actions listed below.
Recognize Which Employees are Classified as Exempt
This is critical because exempt employees are not entitled to overtime while non-exempt employees are.
Identify Which Activities of Non-Exempt Employees are Paid
Managers must be trained on the nuances of when employees must be paid for off-duty calls and texts, commuting time, on-call time, and work done over lunch.
Ensure that Employees’ Work Hours are Properly Scheduled and Recorded
Managers must learn how to comply with mandatory rest and meal periods and predictive scheduling requirements.
By training employees on all relevant wage and hour requirements, organizations can more effectively run their business and significantly reduce the risk of noncompliance.
Where to Find Interactive, Online Manager Training
By providing wage and hour training, employers can stop violations before they happen. A company may have detailed, effective corporate policies about wage and hour requirements and still be open to liability if managers do not understand and follow these policies.
Clear Law Institute’s Wage and Hour Law for Managers course provides practical guidance for managers on the Fair Labor Standards Act (FLSA) as well as comparable state and local laws. The training can be customized to an organization’s specific policies and procedures so that managers receive the exact guidance they need to comply with the organization’s policies.
Learn more about Clear Law Institute’s online training, Wage and Hour Law for Managers.
About the Author
Michael Johnson, CEO of Clear Law Institute, is a former Trial Attorney in the U.S. Department of Justice, where he litigated cases against employers around the nation. He has provided training and consulting around the world for organizations such as Google, FedEx, HP, the EEOC, and the United Nations. He is a graduate of Duke University and Harvard Law School.