Wage & Hour Issues Dominating Employment Laws

One of the management trends we previously identified for 2009 is the additional assault of wage & hour claims by employees.

It is clear that – in a down economy – terminated employees employment elsewhere (at least not quickly). With time on their hands, those former employees are talking to their friends and attorneys about the ‘abuse’ they had working for their former employer – you.

In the meantime, attorneys LOVE wage & hour claims. They are relatively easy to prove, are frequently not understood by employers, and the opportunity for a class action is available.

So – what do you do?

First, audit your operations.

Second, read this article by John Skousen of Fisher & Phillips – some excellent practical advice for all employers.

Who or What Is Lilly Ledbetter?

Lilly Ledbetter was an employee at an Alabama plant of The Goodyear Tire and Rubber Company, plant from 1979 until 1998. She filed a complaint with the Equal Employment Opportunity Commission in 1998, alleging her supervisors gave her poor performance evaluations because of her sex.

In 2007, by a 5-4 decision, the U.S. Supreme Court found in favor of Goodyear.

President Obama recently signed a law that overturned that ruling. The new law will make it possible for employees to assert claims of discrimination in compensation virtually without any time limit. Depending on how the statute is construed, it could affect other discrimination claims as well. As a result, employers not only will face increased discrimination claims, but also difficulty defending against them. (Even more ominous is the law backdates any claims to May 2007, when the Court made its ruling).

So now what?

  1. Review your pay practices. Conduct a pay/compensation audit for your entire company to ensure your procedures meet the criteria of the Ledbetter Pay Act. This includes reviewing your past pay practices as well.
  2. Train and educate your management team. Everyone who conducts performance reviews needs to understand the ramifications of this act.
  3. Review your records retention policies.

Management and Business Trends For 2009

2009 is shaping up to be a challenging year for small businesses with a world full of unknowns. The businesses that succeed will be those who can quickly adapt to change; embrace unknowns; and innovate.

Successful small business owners don’t look at this recession as a challenge – they look at it as an opportunity. Your competition is going to struggle, but that doesn’t mean you have to.

For the purposes of this article, we’re defining a small business as one who employs between 1 and 500 people. Here are our predicted employment trends for 2009, and ways you can use these trends to sustain and improve your business for the long term.

1. Employees have transformed from an ‘entitlement’ mentality into a ‘privilege’ mentality.

We’ve observed over the past several years that employees have generally viewed their employment as that of entitlement – they are owed by their employers for the work they do. With a robust, growing economy, that means they can pick up and leave for a better opportunity at the first sign of disappointment. It also means their attitude is generally not that of a team player – but as an individual who deserves promotion, salary increases and more attention. This is no longer the case. Everyone knows that layoffs have been pervasive, and they could be the next to go. This will result – if managed properly – in employees who will complain less, work harder, and become more appreciative of the job they have.

2. Adapting to change is key to success.

Change is one of the most misunderstood and feared actions in business. No one knows how to deal with it well. When things are going well, you don’t want change. When things are going badly, change can’t happen fast enough. To employees the fear relating to change is simply the fear of the unknown. People get into comfort levels and resist mightily when someone or something attempts to break that comfort zone.

Regardless of whether it’s good or bad change, it rests upon management’s shoulders to incorporate the changes with a minimum of difficultly. The first thing to do is find a way to make the change work for you and your employees. What can you do within your power to mitigate the negative aspects of the change? How can you emphasize the positive aspects of change, if any?

Next, realize that you’re a leader. You are on stage. Your team will know your nuances, so you’re not allowed to show frustration or weakness in front of them. Leaders lead – they say “here is the way I believe we need to go,” and then go. This is the attitude you must take when managing change.

Some people never accept change. They are the ones who have to leave or they become so jaded and negative they no longer are functioning members of your team. When change happens, it happens. End of story.

Virtually any change breeds opportunity – the key is finding the opportunity and acting on it. Focus on the positive.

3. Wage & Hour lawsuits will become even more prevalent.

Your house needs to be in order before you take action. Labor lawyers are changing their practices to focus solely on wage and hour lawsuits, which are easy to prove and violations are myriad in businesses throughout the United States.

Employees everywhere are reading about the huge sums of money ‘won’ by disgruntled ex-employees filing lawsuits against their employers. The major focus will be on exempt or non-exempt status, meal and break periods and whether an ‘independent contractor’ should properly have been classified as an employee.

Think it can’t happen to you? Or is your excuse that you’ve never had it happen to you before?

All it takes is one employee to talk to an attorney. Ask Wal-Mart, Starbucks, Electronic Arts, and the thousands of small businesses that have paid hundreds of millions of dollars in the past year. If you’re going to terminate or reduce an employee, they’re going to look for a way to get money – especially in a dismal job marketplace.

4. The opportunity is now to do more with less.

If you’re maximizing the people you have, you won’t need so many people. You can get more done with fewer people. How? By knowing what your people do best. Evaluate your talent. Carefully consider your need for every one of your employees. Most businesses are not maximizing each and every employee they have. There are techniques available to ensure talent maximization. Find your best performers. Decide you can best support you and your efforts both over the next year and the next few years.

5. Businesses that communicate effectively are those who will succeed.

There is fear in the marketplace. Employees are wondering if you’re going to cut staff, perquisites, and their free coffee. They’re wondering what you are doing to sustain your business this year. It is imperative that frequent and clear communication lead the way to your success. Your employees are heavily invested in the success of their business, and they have a right to know what you’re doing. Even saying, “I don’t know” is preferable to not communicating. And you need to do more than put out a memo or company-wide e-mail. Your managers and supervisors must be empowered to candidly talk with their staffs as well. The last thing you need is to lose a great employee simply because they didn’t know what was happening in your business.

Before you consider cuts, survey your employees: What benefits would you cut if we needed to? You will be surprised that the suggestions you get. The things you think employees hold dear are not necessarily the ones they believe are important.

6. Adversity breeds innovation.

Too many businesses over the past several years have become complacent. And that complacency (“we’ve always done it this way”) has failed both businesses and employees. When times become difficult is the exact moment to innovate. I never saw a successful manager who didn’t take a calculated risk now and again, or who was not considered an innovator. On the other hand, I’ve seen many average managers miss becoming great because they were afraid to make a mistake. Great leaders do not avoid or fear trouble: they embrace it.

Put together groups of your employees into focus sessions. Ask them what they would do if they were in your shoes. Encourage participation and never denigrate an idea. At this time – any idea is worthy of exploration.

Your competition will be inert this year. The best way to excel over your competitors is to honestly re-evaluate your business. Solicit the advice of your employees and make no pre-conceived notions of them.

For my book, I developed a list of hallmarks of great managers of people. Several years later, they are even more appropriate for business owners and leaders:

  • Vision. They know where they want to go and, equally important – they know how to get there.
  • Communication. They are world class communicators.
  • Equality. They treat employees the way they want to be treated and they are no more demanding of others than they are of themselves.
  • Decisiveness. They can make decisions quickly, are accountable for those decisions but are never so rigid they are wed to those decisions.
  • Leadership. People want to work for them. (There’s a big difference between liking someone and wanting to work for someone).
  • Knowledge. They know their position, their industry and what their employees do better than anyone else.
  • Accomplishment. They get things done.
  • Style. They are not so entrenched with their professional lives they forget that a quality personal life is the most important thing to most people.
  • Commitment. They are committed to the success of their business unit, of the people who work for him, and to the company they work for.
  • Temperament. Employees want to work for a person who has a great temperament – someone who isn’t moody or subject to numerous highs and lows, but one who has an understanding that he or she is always on stage, because employees are always looking at their leaders to set high standards of both temperament and judgment.

In 2009, the business owner and leader who has the ability to honestly evaluate talent, performance and make the decisions necessary to sustain the business not just in the short term, but for the long term, is the leader who will be highly successful both this year and beyond.

$185 Million For Wage & Hour Violations

Earlier this month, the EEOC announced that it has collected $185 million in unpaid wages on behalf of more than 228,000 workers nationwide. This was for their fiscal year 20087 alone, and represents an increase of 40% over 2001 numbers.

Violations enforced by the EEOC include minimum wage, overtime, and child labor provisions of the Fair Labor Standards Act.

What this number does not include are class-action lawsuits and other legal proceedings where the employee didn’t bother to go through the EEOC. And in states such as California, the state has their own enforcement department.

The biggest issue facing small businesses is compliance with the complex wage and hour issues. Ignorance is not an excuse.

Special Report – Management & Leadership Trends in 2009

2009 is shaping up to be a challenging year for small businesses with a world full of unknowns. The businesses that succeed will be those who can quickly adapt to change; embrace unknowns; and innovate.


Successful small business owners don’t look at this recession as a challenge – they look at it as an opportunity. Your competition is going to struggle, but that doesn’t mean you have to.

I just published a special report for our clients – “Management and Leadership Trends for 2009”.

It’s available free by clicking here.

Wal-Mart Settles A Wage & Hour Lawsuit

Over $54 million to settle a lawsuit to workers in just the state of Minnesota.

What did Wal-Mart do this time?

Allegedly, the cut their workers’ rest breaks and didn’t prevent workers from working ‘off-the-clock’ in a 10-year period ending last month.

Employees read articles like this and see an opportunity to win the lottery. It’s especially prevalent in bad economic times. (In good economic times, it tends to be only disgruntled employees who look to cause trouble).

If Wal-Mart, with a huge staff of human resource professionals, can have this happen – it most certainly can happen to you.

Review your Wage & Hour practices as part of a comprehensive employment audit of your operations.

Courtesy msnbc.com

Wage & Hour Issues Engulfs Tom Colicchio


Tom Colicchio, owner and chef at the Craft restaurant empire, is the latest in a never-ending line of employers who have been sued for wage and hour issues.

This time, it’s misappropriating employee tips and withholding overtime pay that’s alleged in a lawsuit filed by a former employee.

I cannot more highly recommend that any restaurant owner immediately contact an employment attorney or qualified human resources consultant to review tipping practices

Craftsteak Restaurant at the MGM Grand Las Vegas

and all wage and hour issues. It’s happening to restaurants like Craft to Starbucks, and it can happen to you.