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Labor

by Frank T. Mamat

Summary

Recent headlines in the Wall Street Journal detailed ongoing battles in Congress regarding adjustments to the minimum wage for U.S. workers as well as the shrinking enforcement capabilities at the Department of Labor. The thrust of the article was because of the temptation to roll the dice, many employers were intentionally not paying correctly overtime or minimum wage payments assuming that they would never be caught or prosecuted. First-hand experience, as well as review of recent cases, indicates that there are two very common ways employers make very costly mistakes in wage and hour issues.

Lesson 1. "Failure of an employer to prove that it had relied on labor lawyer's advice doubles damages for wage and hour violations." In a major new case, the Montgomery Ward company was hit with liquidated damages on top of an award of overtime compensation because the Loss Prevention Manager for the corporation concluded that it was ont required to pay a certain person overtime on the mistaken belief that person was exempt under the Fair Labor Standards Act. Despite the credentials, resume and training of the Loss Prevention Manager, the federal court held that since Montgomery Ward personnel had access both in-house and outside legal counsel to review its position as to refusing to pay this individual overtime, and chose not to consult with experienced legal pro- fessionals on that issue, that this conscious decision not to attempt to get the correct legal answer indicated a willful violation by the company thus entitling the plaintiff employee to recover double damages.

Lesson 2. "Even if the rats eat the payroll records, the employer still gets that stomach ache." In another new federal court case, which we see repeated all across the country, employers mistakenly assume that if they don't have any incriminating payroll records then any claims by employees of improper payment or nonpayment of overtime of even minimum wage will be unsuccessful. Unfortunately, it has long been the case that the burden of proof is on the employer to come forward with convincing evidence rebutting the employee's wage and hour claims. "If the employer fails to provide such evidence, the court may then award damages to the employee even if the result may only be approximate." In short,k it does not matter what the employee's claims are or whether they are only backed up by oral testimony or "guesstimony." Unless the company has written appropriate business records the court will almost always side with the claiming plaintiff employee.

A former senior attorney with the National Labor Relations Board in Washington, D.C., Frank T. Mamat is a member of Clark Hill, P.L.C. based in the Labor and Employment Department. (The intent of this column is to inform CBR's readers, not provide legal advice. an attorney should be contacted for specific advice before taking action on the information presented.)