Jeffrey H. Ruzal, Brian Steinbach
Jeffrey H. Ruzal, Senior Counsel, and Brian Steinbach, Senior Attorney, in the Employment, Labor, and Workforce Management practice, authored an article in Law360 titled “Best Practices for Resolving FLSA Violations and Disputes.” This article was originally published in Lexis Practice Advisor, a LexisNexis product. (Read the full version – subscription required.)
Following is an excerpt:
When a potential violation may result in considerable retroactive liability—such as misclassified employee(s) or improper tip pool administration—correcting the issue presents more difficulty.
One option is to reclassify (or modify tip pool participation) while ignoring the potential liability, and hope no claims arise. However, most employees likely will question an unexplained reclassification, which may lead to litigation. At the other extreme, the employer might admit the error and seek a resolution that makes whole the misclassified employees (or tip pool recipients), particularly if the potential back pay is small. Unfortunately, this action likely will publicize the issue to others. Thus, usually neither of these options satisfies the employer.
In most cases, it is best for the employer to give at least some explanation for the reclassification, such as by telling employees that the company is updating its practices to ensure compliance with the law or by making the change as part of a broader package of changes, such as a new compensation plan. The employer may also want to modify the job description to help justify the change.