FCRA Class Action Lawsuits: The Most Common Violations

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FCRA Class Action Lawsuits: The Most Common Violations

Every year, the number of FCRA class action lawsuits against employers keeps growing. The main reason for this: there’s money to be made. With a number of well-publicized high-dollar settlements, including Home Depot’s $3 million and Publix Super Market’s $6.8 million, as well as the potential for large payouts, it’s expected that this trend will continue.
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Congress Passes Bill to Reauthorize E-Verify

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On September 13, 2012, the U.S. House of Representatives passed bill S. 3245. If signed by President Obama, this bill would reauthorize the E-Verify program, the EB-5 Regional Center program, the Special Immigrant Non-Minister Religious Worker program, and the Conrad State 30 J-1 Visa Waiver program from September 30, 2012 to September 30, 2015.

Currently, more than 300,000 employers use E-Verify, which is an online service that allows employers to verify new employees’ employment eligibility to work in the United States. Using E-Verify, employers can compare information on an employee’s I-9 form to data in U.S. governmental records.

Source: SHRM – “Congress Passes Key Visa Reauthorization Bill” (9-17-2012)

3 Frequently Asked Questions about FLSA

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Employers usually have a number of questions about the Fair Labor Standards Act (FLSA), which governs wage and hour rules - when and how employers are obligated to pay employees for time worked or not worked under law. Here are answers to 3 frequently asked questions about issues related to FLSA.

1. Can we dock exempt employees' pay?

Some employers seek to dock or withhold pay as a disciplinary measure for exempt employees, particularly for reasons such as absenteeism, tardiness, or performance. Under FLSA, however, employers may not reduce an exempt employee's pay for showing up late, leaving work early, or because they did not perform the quality of quantity of work expected of them. Other guidelines regarding the docking of exempt employees' pay include:

  • If your organization has a written paid sick time, paid leave, or other time off policy, it may reduce the employee's sick or paid leave account for absences due to illness, injury, or medical appointments. 
  • Once an employee's sick or paid leave account is exhausted for these absences, you must pay employees for partial day absences unless they qualify under FMLA and are using intermittent leave. 
  • If your organization does not have a sick or paid leave policy and it is implied that employees receive pay for their absences, it cannot deduct pay for full or partial day absences for exempt employees.
  • Exempt employees who are new to the organization and not yet eligible to receive holiday or vacation pay, should generally be provided with it, given these above guidelines.

There are situations where your organization has the ability to dock or reduce pay of exempt employees, such as if they did not work some days during their first or last week of employment, were absent for an entire week, or received an unpaid disciplinary suspension. Deducting pay for exempt employees is usually permissible under these circumstances, however, you can only dock pay if employees are not working (i.e. not checking email, voicemail, etc.) in these situations.

2. For what time do we need to pay non-exempt employees?

Unlike exempt employees who are paid to complete a job, non-exempt employees only need to be paid for time worked, so naturally, the issue of what constitutes "working time" for non-exempt employees is a common question and issue employers face. Job-related or required training, department or staff meetings, and time spent on work travel are all considered working time for non-exempt employees and must be paid. This even includes seminars, training, or meetings on job-related topics held after hours.

In addition, unauthorized working time may also be considered time worked. Even though an employer may not specifically authorize an employee to work, non-exempt employees must be paid for all work they complete. For example, if a non-exempt employee works at home off-the-clock on their own accord, that time must be considered hours worked even though the time was unscheduled. Additionally, if an employee starts work early or stays late, that time must also be paid. Non-exempt employees must be paid for all hours worked.

Employers are increasingly facing this issue when non-exempt employees access work at home, such as via electronic devices like a Smartphone. For example, if a non-exempt employee sends an email to another employee outside of work hours, they are entitled to be compensated for the time spent responding to that email.

3. Is this job exempt or non-exempt?

Employees exempt from both the minimum wage and overtime pay requirements not only include those that fall under the Department of Labor's  exemptions for executive, administrative, professional, outside sales, and certain computer professionals, but seasonal employees who are employed at certain seasonal amusement or recreational establishments also fall under those exempt from these provisions. Correctly classifying employees as exempt or non-exempt can be tricky given the many guidelines for exemptions.

Terming employees "hourly" or "salaried" can commonly lead to issues of misclassification. Salaried employees are not automatically "exempt" and hourly employees are not automatically "non-exempt." Also, a professional, highly-skilled, or managerial-related job tile (such as engineer, analyst, administrator, or supervisor) does not sufficiently guarantee exemption. Employers need to evaluate employees' specific job duties (regardless of how they are paid) and their job title to determine exemption status, as well as use specific tests to determine their status.

Outdated job descriptions can commonly lead to issues with FLSA compliance so it's important to regularly update them, determine their accuracy, and conduct FLSA audits or evaluations to determine if a job is exempt or not. Job descriptions should accurately depict what an employee actually currently does in the position because they are the most crucial element to deciphering a position's FLSA status according to exemption tests.

FLSA is a difficult and complex law to administer in the workplace, and as a result workplace violations are easily made. Understanding the common pitfalls faced by other employers, however, can help your organization stay compliant with the law's many provisions.

Please note that by providing you with research information that may be contained in this article, ERC is not providing a qualified legal opinion. As such, research information that ERC provides to its members should not be relied upon or considered a substitute for legal advice. The information that we provide is for general employer use and not necessarily for individual application.