These three words describe one of the most common problems that confront employers in managing today’s workplace: paying people properly. The failure to pay employees properly as required by the Fair Labor Standards Act (FLSA) and similar state wage and hour laws is the basis for the most frequently filed legal actions against employers. The FLSA has been in place since the darkest days of the Great Depression in the 1930s. In addition to mandating a federal minimum wage to combat a plague of sweatshops, it required overtime pay of one and one-half times for all hours over forty. It was also at least partially intended to create more jobs in response to massive unemployment. By requiring a hefty premium for working an employee more than forty hours, employers might find it cheaper to hire another employee to work those additional hours at straight time pay. Whether it actually had a significant effect on unemployment is not entirely clear. Today, the FLSA applies to virtually every workplace in America. Coverage is tied to interstate commerce. Given the realities of day-to-day commerce in the U.S., there is hardly any place in our economy where a service, product, or employee activity does not in some manner reach across state lines.
A primary reason why alleged FLSA violations are the subject of so many legal actions is that such lawsuits pay very well. An award of damages for a successful action normally includes liquidated (double) damages as well as payment of all attorney’s fees. In addition, the liability period can stretch back three years. Class actions involving unpaid overtime have resulted in multi-million dollar settlements and judgments covering thousands of employees.