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Wednesday
Jun082011

Suing Employers . . . There's An App For That

Your greatest risks as a business are employee wage and hour claims. In terms of number of claims and dollars involved, wage and hour claims have recently become a greater risk than discrimination, harassment, retaliation and other claims. Now your federal government is promoting an application that encourages and makes it easier for your employees to sue you.

The U.S. Department of Labor (DOL) has now entered the cell phone application business. They recently launched a free app for employees to track hours worked and compute wages owed. Both English and Spanish versions are available in iTunes.

It is reported that the DOL is planning upgrades to account for tips, commissions, bonuses, deductions, holiday and weekend pay and shift differentials.

The DOL brags in a press release how workers no longer need to rely on their employers’ records and can now keep their own time records. This is where trouble can begin.

Employers are responsible for accurately tracking hours worked by their employees. Compensation paid is based on these time records. What happens if the employee does not accurately track their time using the DOL app?

There are a lot of reasons why wage figures computed by the DOL app may not match an employee’s paycheck. Was the app properly started when the employee began work? Was it properly turned off for personal time during the day? Was it ended at the right time when the employee finished work? As you are no doubt aware, there are a number of rules and court decisions about when time begins and ends for payroll purposes. Whether by mistake or possible fraud on their employer, there is no guarantee the employee will get it right.

This is a concern. The DOL press release mentioned above also stated that the information gathered by the DOL timekeeping app “could prove invaluable during a Wage and Hour Division investigation . . . .” Notwithstanding the fact that an employee record may not properly reflect wage and hour laws and could very well be part of a premeditated plan to defraud an employer, the DOL is creating an evidentiary nightmare. “How do employers prove you did nothing wrong?”

This is no theoretical fear. A Eugene, Oregon employer is facing this very issue today. A disgruntled former employee that quit after a bad review has filed a claim with the State of Oregon saying that she was told not to record time after a certain number of hours. She has produced what she claims is her record of her actual hours worked.

There is a problem with the employee’s personal time record. She worked in a retail store. Security company records show when the last employee left and the alarm system was activated for the day. The security company’s records show she could not have been in the store at times when she claims she was inside working. The alarm had already been activated.

You and I would probably conclude that this is evidence of fraud. Not the State of Oregon. The Oregon Bureau of Labor and Industries nevertheless filed an Order of Determination against the employer for purported unpaid wages, penalties and interest.

 

Steps to Take

In light of the increase in the number of wage and hour cases, the attention the DOL is bringing to these claims by the launch of its time tracking app, the possible use and misuse of this app and employees that purport to keep time records on their own, you should consider the steps listed below.

Do: Do review your timekeeping policies and procedures to make sure they comply with wage and hour laws.

Do: Do require employees to report any errors or discrepancies in the time records you maintain.

Do: Do require employees to report anyone preventing them from accurately recording time worked.

Do: Do encourage employees to ask any questions they may have about timekeeping, hours worked and overtime provisions.

Do: Do provide an effective and legally sufficient complaint reporting process.

Do: Do provide employees with a list of alternate people they can contact when reporting complaints. It does no good to require that complaints be reported to the supervisor when he or she is alleged to be the problem.

Do: Do make it easy to report complaints. No, you will not be flooded with frivolous claims. Instead, you may have a defense if an employee invents a problem after discipline or termination and did not reported the alleged problem at the time they claim it occurred.

Do: Do provide that there will be no retaliation against employees making complaints.

Do: Do require that all employees participate in any investigations.

 

The DOL appears to believe that employers are regularly cheating employees. This has not been the case with the employers I have worked with and probably the vast majority of small businesses. Still, mistakes can be made and employees can invent claims that did not occur. You should have wage and hour and timekeeping policies and procedures that are part of a comprehensive, integrated, employer protection system.

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