A: Hire an employment lawyer to conduct a wage and hour audit.
Case in point: Hendricks v. Total Quality Logistics.
After 13(!) years of litigation, a federal judge recently ruled that TQL violated the Fair Labor Standards Act and must pay unpaid overtime to thousands of misclassified employees.
The judge also ruled that TQL must pay statutory liquidated damages under the FLSA in an amount to the unpaid overtime because TQL did not establish that it acted in good faith in (mis)classifying its employees.
The FLSA provides for liquidated damages in an amount equal to the actual damages, but a court may in its discretion refuse to award those liquidated damages "if the employer demonstrates good faith and reasonable grounds for believing it was not in violation." To prove that it acted in "good faith," an employer must show that it took affirmative steps to comply with FLSA but nevertheless violated its provisions.
TQL argued that it took the following affirmative steps to establish its good faith to comply with the FLSA:
1.) It performed an internal review of employee FLSA classifications;
2.) It consulted with a trade association;
3.) It asked other freight brokers how they classified employees; and
4.) It hired an experienced third-party HR consultant to conduct an analysis of its job positions and their exempt status under the FLSA.
None of those steps, however, persuaded the district court judge that TQL had the requisite "good faith" to escape an award of liquidated damages. Instead, the court held that TQL didn't meet its burden to establish "good faith" because it failed to have any "discussions with attorneys or government officials."
In other words, if you hope to cut your potential FLSA liability in half and avoid an award of liquidated damages under the FLSA, you better be able to show the judge an opinion of a lawyer or of a DOL official to support your decision. And because I'm wary of inviting a government investigator into a business, I'm choosing the employment lawyer as the opinion-giver 10 times out of 10.
If you haven't had your company's employment lawyer conduct a wage and hour audit recently (or ever), this case offers a great reason to do so ASAP. And if you don't know any employment lawyers, I can point you in the right direction.