Wage and hour claims are increasing quickly, which can be costly to operations that are unaware of the often confusing requirements. Fair Labor Standards Act (FLSA) claims by groups of employees are rising at an alarming rate and quickly surpassing other types of employment class actions. In fact, the number of FLSA collective actions for wage and hour law violations now exceeds all other types of employment class actions combined.

The Department of Labor (DOL) has estimated that at least 70% of employers are not in compliance and has subsequently increased its efforts to enforce the FLSA, and many state agencies have also done so under state wage and hour laws. One of the most scrutinized issues is whether employees are correctly classified as exempt vs. nonexempt.

Employers often think that just by paying someone a salary, you can make that person exempt from overtime and avoid paying for hours worked beyond 40 a week. Paying a salary, according to the FLSA, is just one part of the equation in granting an employee an overtime exemption. First, the employee must be paid a minimum salary of $455 per week. Then, the employee must pass a somewhat stringent "duties" test in prescribed executive, administrative, professional, and outside sales classifications. As industries, technology and job descriptions change exempt positions must be periodically reviewed in relations to these tests to determine if the exemption remains valid. Misclassification can be costly.

The DOL is cracking down on all wage and hour violations and has been provided an increased budget to enable it to add investigators to enforce the FLSA provisions. Thus this is no time to be lax and approach compensation issues from a "commonsense" viewpoint. It's time to learn all the requirements of the FLSA and apply them to both the classification and the compensation of your employees.

To avoid potential adverse legal actions and ensure standards are met, employers should consider the following proactive measures:

• Make sure workers' classifications are reviewed, updated and documented regularly.
• All pay practices need to be audited in relation to FLSA and state requirements.
• Handbook policies need to be beefed-up addressing wage and hour topics.
• Supervisors, reviewing time sheets, need to be trained on common pitfalls.
• Employers also should make sure they have workplace due process procedures in place so workers can bring their pay discrepancies to the attention of management. Employers should promptly examine and respond to all pay discrepancies because that can generally help ward off further action.