What does the NLRB have in common with Lady Gaga? Overtime. And a lot of it. While Lady Gaga is being sued by a single personal assistant for almost $400,000 of overtime, the National Labor Relations Board is throwing out agreements designed to protect businesses from class action overtime suits. In other words, while the pop singer's overtime challenges are highlighting workers' rights to overtime pay (as if they needed any more publicity) the NLRB is striking out against contracts which require employees to arbitrate overtime claims on an individual basis in lieu of pursuing or participating in class actions.
Many in the mortgage field have already felt the brunt of overtime claims, with mortgage companies paying hundreds of millions to settle minimum wage and overtime pay claims. However, just when it appeared these claims were on their way out, the notoriety of Lady Gaga's case, coupled with the erosion of contracts that precluded class actions, present the possibility that another waive of complaints may well be on the horizon.
Employers must remember that the danger of overtime claims is the simplicity with which class actions can be certified, the reality that a defendant who loses must pay the employees' legal fees (as well as their own legal fees), is typically liable for at least twice the unpaid wages, and the fact that there is direct personal liability for owners and officers of an entity who had the ability to control working conditions. Added to this is the fact that it is the employer's burden to prove an employee (or group of employees) was exempt. In the event an exemption cannot be sustained, in the absence of contemporaneous time records, an employee's recollection of work hours can be given presumptive effect. In sum, this means that an employer who did not maintain time records for non-exempt workers, faces personal liability of an amount equal to two times the unpaid wages for every employee, based on the employee's self serving recollection of the hours they collectively worked, as well as all legal fees. While such numbers may seem small, any analysis of settlements demonstrates they often and routinely eclipse several million dollars.
Fortunately, employers who wish to get ahead of the curve can institute a variety of proactive measures that can protect the company from lawsuits. Indeed, there are many strategies that allow employers to fully comply with the law, without significantly changing business operations. The key is to finding and implementing the right strategy that fits your business. Employers who have not instituted wage-hour compliance should do so immediately-before the next wave of claims begins.
