Mitigating Exposure to Wage and Hour Claims
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Below is a guest blog post by Martin Borosko, a Managing Member at Becker LLC - a mid-market law firm serving the New York, New Jersey and Philadelphia corridor.
Wage and hour claims are on the rise. Federal agencies, state agencies, plaintiff’s lawyers and disgruntled employees are targeting employers, especially those in the staffing industry, with wage and hour claims. The increase is dramatic. In fact, it has been exponential over the last 15 years.
Why the Uptick
The rise in claims has been driven by the congruence of a number of factors. The Fair Labor Standards Act is a Depression-era statute created to solve problems in older industries. Many of its terms are ill defined and ambiguous, particularly in today’s economy. Most states have adopted similar laws that overlay further regulation and provide additional remedies to plaintiffs. Employees have become increasingly aware of their ability to sue and informed about regulation through access to information on the internet and advertisements by plaintiff’s lawyers who view this as a lucrative area of the law given the possibility for class actions.
However, there are a number of best practices your staffing firm can integrate into their contracting, on-boarding and off-boarding processes to help mitigate against these claims.
Proactive Communication with Clients
Whenever you’re working with a new client, at a new location, or on a new assignment for an existing client, have a dialogue with them. Understand the number of hours your temporary employees will work, process for clocking in and out, when they should report to work, whether they’ll receive breaks, etc. As part of that dialogue, confirm that the client knows the federal, state and local laws governing wages for temporary employees.
Class Action Waivers and Mandatory Arbitration Clauses
Your staffing firm should also consider requiring temporary employees to waive their right to file a class action and force them to agree to arbitrate any disputes. The best practice is to require temporary employees to execute a separate agreement as part of the onboarding process. Therefore, an arbitration agreement should be provided along with a FAQ sheet explaining in simple terms the purpose of the agreement. The separate agreement and FAQ sheet must contain specific information and certain language to be effective, such as language that explains the employee is waiving his/her right to participate in a class action.
You should regularly audit assignments. These audits should consist of a combination of client interviews, temporary employee interviews, site visits and audits of wage and hour logs.
Staffing firms often develop robust onboarding processes, but neglect off-boarding processes. Off-boarding processes can often be automated to create efficiency. Through a combination of surveys and exit interviews, you can confirm compliance with wage and hour regulations.
- Dissecting the Uptick in Wage & Hour Claims
- Game of Tic Tac Toe: Employment Practices Liability
- Understanding Employment Practices Liability Insurance Webcast
- Liability E-Book
ABOUT THE AUTHOR
Martin L. Borosko