Legal Blog

The Risks of Non-Compliance with Minimum Wage and Overtime Laws

overtime clockImagine the following scenario: You are the owner of a business.  You are investing time and money and dedicating your life to making this business successful.  You have been in business for a decade and have managed to make the business profitable, but the margins are relatively thin.  You have purchased insurance to guard against many of the things that can go wrong.  Then, a couple of unhappy former employees see a television commercial from a law firm advertising minimum wage and overtime lawsuits.  These former employees file a class action lawsuit on behalf of a class of employees alleging they were underpaid and seeking not just the unpaid wage, but triple that amount plus attorney’s fees.  You may have an insurance policy that defrays some of the costs associated with such a lawsuit, but, generally speaking, there are no policies that will cover the reimbursement of unpaid wages.  So, after pouring your heart and soul into your business, the entire operation may collapse under the pressure of a minimum wage/overtime lawsuit.

While we do not know all of the specifics, this is essentially the problem faced recently by two Baltimore restaurants.  Just after Christmas, Canton Dockside, which had been in business for twelve years, abruptly closed its doors.  Earlier in the month, a class action minimum wage and overtime lawsuit had been filed alleging that the restaurant failed to adequately pay minimum wage, even with a tip credit, and failed to pay overtime.  Similarly, the owners of the Speakeasy Saloon filed for bankruptcy after a jury awarded $468,435 to current and former employees and their lawyers in a minimum wage/overtime lawsuit.  Of course, this judgment does not include the costs incurred by the restaurant in unsuccessfully defending the case.

Given the increasing risk of minimum wage/overtime litigation, the additional damages that are available to employees in such lawsuits, and the costs associated with litigation generally, the best defense strategy is to avoid litigation altogether.  While there is no guaranteed method of avoiding litigation, employers can reduce their risks by revising policies to be compliant with all applicable laws and taking the steps necessary to ensure actual practices are consistent with compliant policies.  Given the extinction-level threats resulting from failure to maintain wage and hour compliance, it is critical for employers to understand their obligations and to install practices that minimize these risks.

If you want to learn more about how you can avoid wage/overtime litigation, contact me at rberger@offitkurman.com or 410-209-6449.

 

 

ABOUT RUSSELL BERGER

Russell Bergerrberger@offitkurman.com | 410.209.6449

Russell Berger is an accomplished labor and employment attorney who is well-versed in litigating in both state and federal courts, as well as providing counsel to employers on employee matters. He represents employers, businesses and professional clients in employment disputes throughout the country. Mr. Berger primarily focuses on litigating and counseling clients regarding matters of minimum wage and overtime under the Fair Labor Standards Act and state laws, wrongful termination, non-compete agreements, and employment and severance agreements. Mr. Berger’s practice also includes handling claims and providing counsel regarding retaliation, discrimination and harassment (under Title VII and state anti-discrimination laws), as well as under other federal statutes, such as the Family Medical Leave Act (FMLA), the Age Discrimination in Employment Act (ADEA), and American with Disabilities Act (ADA). He also handles other work related issues such as employment contracts and general contract claims, employment-related tort claims, and other business and professional tort claims.

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 135 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eleven offices serve individual and corporate clients in the Virginia, Washington, DC, Maryland, Delaware, Pennsylvania, New Jersey, and New York City. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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