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  • You don’t need to run a big business to be a target for litigation. Small businesses across the country are targets for potential lawsuits, especially when it comes to wage and overtime compliance.

    Wage and hour litigation has grown into a major hazard for employers. Employees can pursue litigation if they feel that they weren’t paid for their work. These types of claims can stem from a variety of factors – an employee worked overtime that wasn’t approved, someone clocked in early when they weren’t supposed to, etc. These claims can wreak havoc on your business, so it’s essential to protect your business from these disputes.

    Why is Wage and Hour Litigation a Growing Trend?

    While wage and hour lawsuits have been around for decades, they’ve become more prominent in the past few decades. Fair Labor Standards Act (FLSA) lawsuits increased by a staggering 417% between 1997 and 2017, and the stakes have grown even higher in recent years due to complicated labor regulations and the impact of COVID-19.

    The Department of Labor’s Wage and Hour Division (WHD) has dedicated more time in recent years to achieve compliance with labor standards. The WHD conducted more outreach events in 2020 than any other year in history, capping off a three-year stretch of increased efforts. More employees also reached out to the WHD, as evidenced by the following numbers.

    • The WHD received more than 9,000 phone calls per day, an 350% increase from their previous average.
    • The WHD website received more than 45 million views since the passage of the Families First Coronavirus Response Act (FFCRA).
    • The WHD collected an average of $706,000 in back wages for workers per day in 2020.
    • WHD investigations in 2020 found that employees were owed an average of $1,120 in back wages.

    COVID-19 also created some new challenges for wage and hour compliance. More businesses were forced to have employees work from home, making it difficult for some employers to diligently track hours and account for overtime as they would have before.

    How to Protect Your Business from Wage and Hour Litigation

    Simply put, employers need to be increasingly careful about wage and hour violations. Even a small timekeeping error or miscommunication can turn into a lengthy, costly dispute. 

    Here are some ways that you can protect your business against these lawsuits.

    Keep accurate employee payroll records

    Clean, accurate payroll documentation is a critical aspect of running a compliant business. The (FLSA) requires businesses to keep accurate payroll records for non-exempt employees, many of which can help you make your case if you ever face a wage and hour lawsuit. Some of those records include:

    • Time and day of week when employee’s workweek begins
    • Hours worked each day
    • Total hours worked each workweek
    • Basis on which employee’s wages are paid (e.g., “$9 per hour,” “$440 a week,” “piecework”)
    • Regular hourly pay rate
    • Total daily or weekly straight-time earnings
    • Total overtime earnings for the workweek

    It’s also important to maintain these records for extended periods of time. Payroll data should generally be stored for at least three years in case of future litigation or if the Department of Labor (DOL) ever wants to review your business.

    Audit your timekeeping practices and adjust policies as necessary

    One of the simplest ways to protect your business is to review your timekeeping practices. Maintaining outdated or poorly defined practices can lead to unpleasant surprises when it comes to wage and hour law. As such, you’ll want to audit your practices and make the necessary changes to help your business avoid any issues.

    A good place to start is to review the Society for Human Resource Management’s (SHRM) checklist for various timekeeping practices. This checklist highlights a few different issues that can clean up your practices and establish more definitive methods for timekeeping. Of course, there are some notable risk areas that you’ll need to address as well.

    Establish a timekeeping policy and communicate it to employees

    It’s essential to set some ground rules to makes sure everyone is on the same page about your timekeeping policy. Employees should have a clear understanding of how your timekeeping policy works and what they should do when it comes to recording time. For example, you may want to highlight the following policies.

    • Require employees to record and verify all time worked.
    • Break down what counts as hours worked (such as training and travel time).
    • Put controls in place to prevent employees from clocking in early without prior approval.
    • Prohibit off-the-clock work.
    • Clearly state that overtime must be pre-approved by a supervisor.

    You’ll also want to have your employees review and sign documentation that they acknowledge your practices. This measure will not only educate employees on your policies, but also serve as a key compliance document to defend your business against some off-the-clock claims.

    Avoid rounding for timekeeping if possible

    It’s not uncommon for employers to round hours during payroll, but that doesn’t mean it’s the safest approach. According to the DOL, “employee time from 1 to 7 minutes may be rounded down, and thus not counted as hours worked.” The problem with this approach is that it can still open your business up to legal grey areas. SHRM found that “courts have ruled in favor of employees where the employer’s rounding policy worked only to the employer’s advantage or failed to average out over time.” Some states also have their own rules for rounding time, adding an extra dimension of complexity to the issue. 

    This grey area is why pay to the punch is the gold standard for timekeeping. This approach will not only help your company identify exactly how long your employees worked, but also avoid these potential complications that can lead to wage and hour lawsuits.

    Invest in payroll technology

    These days, a manual timekeeping system is just going to hold you and your company back. Whether you use paper records or some other form of offline time tracking, these methods are inconsistent and time consuming. That combination is only going to make matters worse if your company is ever hit with a dispute.

    Payroll technology is designed to simplify timekeeping and keep your business compliant with wage and hour regulations. Cloud-based timekeeping tools like GMS Connect offer a variety of key advantages for small business owners. 

    For example, timekeeping software makes it easier to track exactly when employees clock in and out for work and avoid issues with rounding. Technology also helps you streamline payroll management, giving you real-time calculations of employees’ pay and allowing both you and your employees to access schedules, hours, and other details from anywhere with a secure connection.

    Work with payroll experts

    It’s not easy to manage payroll for a small business. A simple timekeeping mistake can lead to a serious compliance issue that turns into a lawsuit. That need for payroll expertise is exactly why small businesses shouldn’t face these threats alone.

    GMS partners with small businesses to help them take control of their payroll administration. We can provide your company with a comprehensive web-based payroll solution to not only keep your business compliant, but also save you both time and money. You’ll also have access to a dedicated GMS payroll processor and other experts who can answer your questions and help you stay on top of new regulations, state laws, and timekeeping trends.

    As a Professional Employer Organization, GMS is here to make your business simpler, safer, and stronger. Contact GMS today about how we can help you with payroll administration and other critical HR functions.

  • If you think bullying only affects children, guess again. According to a 2019 Monster.com survey, a whopping 94 percent of people said they were bullied in a workplace at some point. This trend has grown to the point where now states like Tennessee are implementing new statutes to combat the issue. Find out how Tennessee plans to tackle workplace bullying and what what you can do to protect your business.

    An employee being bullied at work.

    How Tennessee’s Anti-Bullying Statute Now Impacts Employers

    Tennessee’s efforts to have workplaces implement anti-bullying policies started back in 2014 with the adoption of the Healthy Workplace Act. This act incentivized employers to add these anti-bullying policies in exchange for some legal protection against potential litigation from bullied employees.

    The 2014 version of the statute only applied to state and local government agencies, but that changed on April 23, 2019 when Tennessee Gov. Bill Lee signed a bill that extended those protections to private employers in addition to government agencies. However, the statute doesn’t require employers to create an anti-bullying policy. Instead, it incentivizes them to do so for some legal protection.

    How does the statute protect Tennessee employers who add an anti-bullying policy? According the The National Law Review, “Employers that adopt a policy that complies with the act will be ‘immune from suit for any employee’s abusive conduct that results in negligent or intentional infliction of mental anguish.’”

    However, there are some stipulations for the adopted policy in order to gain the aforementioned legal protection, as the policy must meet one of two requirements. First, the employer can adopt the model policy published by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR). Second, the employer can create its own policy as long as it:

    • Assists employees in recognizing and responding to abusive conduct
    • Prevents retaliation against employees who report abusive conduct

    What Small Businesses Can Do to Protect Themselves and Their Employees from Bullying Cases

    While Tennessee’s changes to the Healthy Workplace Act give employers some optional protections against litigation, it isn’t the only state to do so. According to The Healthy Workplace Campaign, 30 states have adopted some form of healthy workplace bill. Regardless of whether your state has some optional protections or not, it’s important to take steps to address the situation for your company.

    Not only can bullying cause stress and anxiety for your employees, it can also open you up to potential litigation from victimized workers. Even if you personally didn’t bully the employee, that worker could argue that you ignored the issue or enabled it by creating an environment that fostered bullying. When the potential costs of a lawsuit could reach hundreds of thousands of dollars, it’s important that you protect your business from these potential dangers. Here are some steps you can to prepare for the future.

    Create your own anti-bullying policy

    A good anti-bullying policy can help your workplace even if your state doesn’t offer immunities from potential lawsuits like Tennessee. Having a policy in an updated employee handbook will not only help show that you made an effort to make your stance on bullying clear, it can also helps protect against both people claiming you’re partially responsible for bullying and any employees you need to discipline – or even terminate – for bullying.

    The specifics of your policy can depend on the laws in your specific state, but the Society for Human Resource Management provides a good template for an anti-bullying policy as a basis. It’s also important to involve your lawyer and an HR compliance expert to make sure you use the proper verbiage in your policy.

    Educate employees

    In addition to having a policy in your handbook, it’s also good to take a more active approach toward teaching your employees about anti-bullying practices. One such option would be a training and development program where an HR expert could come in and educate your employees about the steps you’ve put in place to talk about and prevent bullying. Not only will this increase awareness of your efforts to everyone in the company, it can also give them the means of reporting an issue in case one ever occurs.

    Get liability insurance

    While the steps above can help you limit the chances of bullying and show your company’s efforts to create an open, healthy workplace, there is still a chance that an employee may still file a liability lawsuit. Employment Practices Liability Insurance (EPLI) can help protect you against the financial ramifications of these lawsuits whether or not they’re warranted.

    Protect Your Business from Bullying and Other Threats

    Whether you’re dealing with bullying, a workplace injury, or some other issue, it’s important to make sure that your business is prepared for any trouble. However, that’s not so easy when you have to spend so much time and effort running your business. That’s where GMS can help.

    As a Professional Employer Organization, GMS provides comprehensive HR services for businesses of every size. Whether you need help handling payroll, risk management, or some other key function, our experts can help you prepare for the present and the future while you focus your efforts on growing your business. Contact our Tennessee office or one of our other locations today to talk to one of our experts about how GMS can help your business today.