Claims filed for unpaid wages, also known as “Wage and Hour” cases, are on the rise. Employers must pay attention to and comply with these regulations since the laws are complex and provide for significant penalties for any violations both through government actions and private lawsuits.
Under the Maryland wage/hour laws, and those of D.C. and the FLSA, employers must keep time records; this is not the individual employee’s responsibility. Records must identify the employee by name and offer precise details as to the hours and days worked. If the employer fails to keep records, the court will often award unpaid wages and additional damages based solely on the employee’s recollection of the hours worked.
Wage/hour laws in Maryland, D.C. and Virginia, as well as the FLSA, do limit the window of time within which an employee, or former employee, can assert a claim for unpaid wages. In Maryland and D.C., a person has three years from the date the wages were not paid to file a lawsuit. The FLSA provides a limit of two years; however, if a court finds that an employer’s conduct was willful, an employee can collect up to three years of wages owed. Many employers erroneously believe the clock starts ticking on the two- or three-year statute of limitations on the date a former employee quit or was fired. In reality, the statute of limitations involves a rolling calculation based on the date the wages were due. For example, if an employee is paid every two weeks, a wage/hour claim for a particular pay period starts on the day a payment is not made, or is made incorrectly, for the hours worked in that pay period.
Employers who fail to comply with the above laws face stiff penalties. Under the MWPCL, a court can award up to three times an employee’s unpaid wages as liquidated damages for failure to pay either the required minimum wage or overtime under the law. Furthermore, a court must award a prevailing employee their attorneys’ fees and costs. While the amount of an attorneys’ fees award is subject to discretion by the court, such fees can and usually do exceed the actual wages in dispute. The DCWPCL also provides for three times an employee’s unpaid wages as liquidated damages and attorneys’ fees. The FLSA provides up to double the wages owed to an employee plus attorneys’ fees as penalties for violations.
Maryland, D.C., Virginia and federal laws all provide that any agreement made by the employer and employee to circumvent the laws regarding wages owed is void. The only way that a claim can be resolved is by approval from the Department of Labor or a court decision. This also applies to severance or exit agreements. For example, if a company pays severance to an employee and has that employee sign a written release of liability for any future wage claims, such a release generally will not hold up under scrutiny from the Department of Labor or the courts.
In conclusion, overtime pay laws are complicated and can be confusing for employers and employees alike. Regular review of company pay practices with counsel from an experienced employment law attorney may help to avoid the far greater expenses of defending wage/hour lawsuits. If wage/hour claims do arise, seeking advice from a seasoned employment lawyer is all the more essential.