Most employers are familiar with the two primary provisions of the Fair Labor Standards Act: the obligations to pay minimum wage and to pay time-and-one-half to nonexempt employees for hours worked over 40 per work week. However, recent litigation including some that would be considered “frivolous” by many employers focuses not on the pay process, but on internal processes that unintentionally result in violations of the FLSA and liability.
In a recent case in Indiana, a convenience-store chain had a long-standing policy of “docking” employees’ wages for disciplinary events including cash-register shortages. The practice was fully disclosed and acknowledged in writing by each employee. In some instances, the pay deductions resulted in one or two weeks where an employee’s wages were 2 to 3 cents per hour under the minimum wage. The employees retained counsel and pursued the matter as a class action resulting in attorney fees of in excess of $400,000. The resulting payments to each class member was less than $18.
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