Monday, April 26, 2010

Wage and Hour audits are not without their risks (but are still necessary)

I’ve long preached the benefits of proactive wage and hour audits. In fact, in the nearly three years I’ve been writing this blog, I’ve written at least 10 different posts on this issue. (For a summary and list of links, jump here). A story posted last week at Wage & Hour—Developments & Highlights caught my eye. It illustrates that wage and hour audits have a downside of which employers must be aware, but should not deter employers from implementing this important proactive measure.

In Wlotkowski et al. v. Michigan Bell Telephone Co., a federal judge conditionally certified a class of workers who claim they are owed overtime as a result of being misclassified as “exempt”. The class is comprised of employees who are currently classified as “non-exempt.” They are suing to recover unpaid overtime for the time during which their employer had previously allegedly misclassified them as exempt. Because their job duties didn’t change when their pay classification changed, they questioned why they had been working for years without being paid overtime.

Employers may read this case and decide that they are better off burying their heads in the sand and ignoring wage and hour violations. This is a bad idea. Here’s what happens. A terminated employee goes to see a lawyer about a wrongful discharge lawsuit. The lawyer then asks this question: “Tell me about how you were paid.” The next thing you know, you are defending a class action and spending hundreds of thousands, if not millions, of dollars in legal fees, back wages, and potential liquidated damages and the plaintiffs’ attorneys’ fees. A wage and hour audit conducted by an experienced attorney can help stop this scenario from ever happening.

This Wlotkowski case teaches a very important lesson. When you audit your wage and hour practices, you should be prepared to pay for any mistakes that you find. It is much less costly to pay off a discovered mistake to than to defend a lawsuit in which you have, in essence, admitted liability.

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or

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