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Attorney Michael Starvaggi Breaks Down Complicated FLSA Law
By Michael Starvaggi
The RCBJ recently reported on a pending lawsuit against Luigi O’Grady’s deli in Pearl River. The claims in that case are standard ones seen in most wage and hour litigation, namely failure to provide notices, violation of minimum wage standards, and failure to pay appropriate overtime. The law surrounding these claims bears careful attention by every employer, as the stakes in these cases can be quite high.
The first category of claims allege failure to provide wage theft notices and rate of pay notices required by state and federal law. The maximum liability for these violations is capped, so these are typically “ride-alongs” to the essential claims of minimum wage and overtime violations.
Minimum wage claims simply allege that the employer paid less than the minimum wage set by the New York State Labor Law. Although these claims sound easy enough to defend, difficulty arises when there is a factual dispute about how many hours an employee worked during a particular time period. For example, if an employer paid an employee gross wages of $450 for a given week and claims that the employee worked thirty hours that week, the resulting hourly rate of $15 would be legally sufficient. However, if the employee claims to have worked 38 hours that week, the resulting rate would be below the current minimum. The general minimum wage in Rockland County in 2022 is $13.20/hour (but $15.00/hour for fast food workers in all of NYS).
Factual disputes are often at the heart of overtime claims as well. The legal issue as to overtime is whether the employee worked over forty hours in any given week. If so, the rate of pay for those hours must be one and one half times the regular hourly rate. As with minimum wage claims, the proof involves poring through time sheets, which are often incomplete, inaccurate or simply non-existent.
Therefore, the key to both overtime and minimum wage claims is the clarity of the evidence. If an employer does not have a good attendance system and time sheets signed by the employee, the risks in litigation are high, particularly because the deck is stacked against the employer in these types of cases.
Exposure to the Employer
The applicable federal law, the Fair Labor Standards Act (“FLSA”)[i] contains two provisions that make wage and hour claims particularly treacherous for employers. First, if it is determined at trial that the employer did not pay the appropriate rate (minimum wage or time and a half for overtime), the employee is entitled to a judgment for double the amount of the underpaid wages. Second, if found liable for any damages, the employer must pay the employee’s attorney’s fees as well as their own. These factors put the employer at a major disadvantage during settlement negotiations. If there is any deficiency in the employer’s records, the danger of exposure to double damages and attorney’s fees makes the potential of exposure at trial much higher for the employer than in an ordinary case and often results in an offer of settlement by the employer. Therefore, there is a direct correlation between the sufficiency and accuracy of time sheets and attendance records maintained by an employer and its potential for a lack of settlement leverage in the event of wage and hour litigation.
Of course, minimum wage and overtime laws do not apply to every employee and a multitude of defenses are available to the employer in this type of litigation. Most importantly, if the employee’s duties fall under the FLSA’s executive, administrative, professional, or outside sales classification, he or she is exempt from wage and hour legal requirements. The duties assigned to an employee that would bring them under any one of these exemptions should be documented clearly at the onset of employment or change in responsibilities.
Wage and hour litigation often becomes a quagmire of conflicting evidence regarding the actual time worked by an employee and the amount paid. And once a claim has been filed, the employer is at a disadvantage due to the possibility of liability for extra damages and attorney’s fees. For that reason, meticulous record-keeping should be a high priority for any employer of non-exempt workers.
This article is intended for general informational purposes only and shall not be deemed to give individual legal advice.
[i] The FLSA applies only to businesses that have an annual gross volume of sales made or business done of $500,000 or more, however New York State has its own wage and hour laws which apply to smaller businesses as well. The differences between the federal and state laws are beyond the scope of this article.
Michael Starvaggi is a Nyack-based attorney. firstname.lastname@example.org