Employers are well aware that wage and hour claims are one of the most common legal issues they could face throughout their careers. These claims pose a risk particularly because employers must ensure they comply with federal, state and even local laws, all while monitoring pay practices carefully.
This risk is on employers’ radar, but a recent report indicates that these claims could become an even larger problem for employers in the future.
WAGE AND HOUR CASES ARE AN INCREASING RISK
According to the Society for Human Resource Management (SHRM), employers should be particularly conscious of their wage policies as they move forward. The report found that wage and hour class action cases were more common than any other employment claims in 2020. The rate of these cases was also the highest it has been in the last 20 years, and that this litigation trend will continue for the next few years.
EMPLOYERS MUST TAKE MITIGATING ACTION
To protect their businesses, business owners should ensure they minimize the potential causes of wage and hour lawsuits by:
- Staying on top of minimum wage laws to avoid claims of violations
- Updating the best practices to which managers must adhere
- Reviewing and auditing pay records to avoid different pay issues
- Affirming employees are classified correctly under California law
Even minor mistakes in this area can lead to serious issues for employers – as well as financial and legal penalties. Additionally, these cases, and the ensuing investigations, can be invasive and disruptive.
Most business owners strive to avoid these legal claims, especially after this past year when businesses of all sizes have faced complex financial challenges. That is why it is even more critical for employers to be diligent about their best practices regarding employee wages.