Did you know that under the FLSA, employees can sue individuals within the company personally, and not just the organization itself?
The Fair Labors Standard Act (FLSA) was designed to protect workers against employers taking advantage of them through unpaid overtime and other methods of wage exploitation.
I have seen managers who, wanting to meet deadlines or accomplish more in a given day, allow their non-exempt employees to work extra hours “off the clock.” I have seen situations where employers do not authorize overtime but ignore the reality when non-exempt employees are working “off the clock.” It is important that executives and others at the upper levels realize that this could leave them personally exposed to lawsuits from their team members.
Under the FLSA, employees can sue individuals within the organization personally, not just the organization itself. This is because of the FLSA’s liberal definition of “employer,” which is “any person acting directly or indirectly in the interest of an employer.”
This means that if you are a decision-maker at your organization, and FLSA standards are violated, your personal assets could be forfeited.
Lawyers have been increasingly seeking out such cases, because they can target a large number of individuals, as well as easily expand the case into class-action lawsuits by involving other employees.
What is at stake?
If found guilty of an FLSA violation, professionals could be liable for the following:
- Up to two years of unpaid back wages
- Fines up to $1,100 for each violation determined to be willful
- Additional damages up to two times the unpaid wages, or up to three times for a willful violation
- Repeat offenders can face up to six months in jail
One case from 2012 explored by Business Management Daily involved a North Carolina farm worker who filed suit for wages going back three years. The case, Bautista v. Zubiga ED NC concluded with the employer being forced to grant the worker the full three year’s pay, which was then doubled as a penalty. The employer was also forced to pay the worker’s legal fees.
One can clearly see how the risk is exponentially larger for organizations with multiple employees, who would each be awarded their own back pays, as well as any additional individual penalties.
How to avoid a FLSA suit
Any employer that believes he or she is saving money or gaining a competitive edge by disregarding FLSA regulations needs to research the mounting number of cases where lawsuits have financially crippled organizations of all sizes, as well as caused irreparable damage to the organization’s reputation. Many professionals in decision-making positions are surprised to find that their organization offers little to no protection in the event they are personally named in a FLSA suit.
One of the most effective means of preventing a suit is to train employees on your organization’s timekeeping procedures, ensure non-exempt employees never work unpaid hours and store redundant copies of time records. In the event of a dispute, the inability to promptly produce the necessary records could leave defendants liable.
Leaders also need to ensure that they have drafted a comprehensive overtime policy, and that all team members have received a copy and understand it. Employers should keep an up-to-date list of all employees who have received the overtime policy, as well as collect their signatures after they demonstrate that it is understood. Non-exempt employees who continue to work overtime without the go-ahead from management should be disciplined, but also must receive the appropriate compensation for the time they worked.