As 2009 draws to a close, let’s reflect on developments in the area of wage and hour during the year just past, and look forward to what we can anticipate for 2010.

Trends in 2009

Of course, one of the biggest stories from 2009 was the economy. Specifically in the area of wage and hour, two major themes were stepped-up enforcement and continuing increases in litigation.

  • Stepped-up enforcement: In March, the Government Accountability Office released a critical report charging the U.S. Department of Labor with failing in its role to enforce labor laws. Responding to this report, newly-appointed Secretary of Labor Hilda Solis declared, “There’s a new sheriff in town.”

    By the end of the year, Ms. Solis reported the department had hired as many as 250 additional field investigators — an increase of about 33% — in the Wage and Hour Division alone. She has repeatedly pledged stronger enforcement efforts going forward and has announced plans for an active “outreach“ program in 2010 to make sure workers are aware of their rights under the law.

  • Increased litigation: For the past several years, the number of wage and hour lawsuits has been on the rise. This trend continued in 2009. In fact, the number of lawsuits alleging violations of the Fair Labor Standards Act has risen 77% since 2004.

  • The economy: As a result of the “economic meltdown,” furloughs, layoffs and hiring freezes were common in 2009. Employees and employers alike have been under stress to accomplish more with less.

    Wage and hour law is complex. It’s easy for even well-meaning employers to inadvertently make a mistake, especially when dealing with unfamiliar issues such as furloughs.

Preparing for 2010

While the economy appears to be recovering, most experts expect the recovery to be slow, and for employment issues to continue throughout 2010. We expect further increases in lawsuits filed, and even more stringent enforcement of wage and hour laws at both the federal and state levels. So what can you do to protect yourself?

  1. Classify your employees properly. We anticipate the Department of Labor will be taking an even closer look at employee classification in 2010. Remember, it’s not the employee’s job title, but what they actually do, that determines whether they’re considered exempt or non-exempt from overtime rules.

  2. Accurately record employee time and attendance. One of the strongest defenses against lawsuits and investigations is accurate time records. While handwritten timesheets are acceptable, machine-recorded time — such as from a traditional punch clock or computer-based time and attendance system — is considered more accurate and reliable.

    If you ask employees to work through their lunch or other breaks, make sure you aren’t automatically deducting normal break time from their pay. Do not allow or require employees to work “off the clock” at any time. Not only is this often bad for morale, it’s illegal.

  3. Pay your employees properly. Federal law requires all non-exempt employees to be paid time-and-a-half for all hours over 40 worked in any given work week. Some locales require time-and-a-half for all hours over eight in a single work day.

    Remember, even if overtime is unauthorized, you are still required to pay overtime for hours worked. (You can discipline the employee for working overtime without permission, but you still have to pay them for the hours they work.)

  4. Consult your employment law advisor. If you haven’t talked with an employment lawyer lately, now might be the time to have a consultation. You may even want to consider a full wage and hour audit. Money spent on this now can save you many times over that in penalties and judgments avoided down the line.

    Furloughs, compensatory time (especially if given in lieu of pay), alternative work arrangements such as flexible workweeks or telecommuting — these are all potential minefields waiting to blow up in the faces of well-meaning employers.

Don’t wait for the DOL or state labor board investigators to show up at your door, or to be served notice of a lawsuit. Make sure — now — that your policies and practices are acceptable under the law in your locale.

The past year was tough for many businesses. While the economy appears to be improving, 2010 promises to bring its share of challenges for employers and employees alike. By getting your time and attendance policies and practices in order now, you can save yourself a lot of headaches — and possibly a lot of money — in the coming year.

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