Houston FLSA Defense Attorneys
Defense Against FLSA Claims
Plaintiff attorneys in Texas and throughout the country regularly and actively solicit employees to sue their employers for alleged wage-and-hour violations. Should your business find itself the target of an individual claim or collective action alleging FLSA violations, the labor and employment attorneys at Hendershot Cowart P.C. can help. We will review the facts of your case and prepare an aggressive defense strategy to help you fend off frivolous or meritless FLSA complaints.
On This Page
- What Is the Fair Labor Standards Act?
- Which Employers Are Covered by FLSA?
- Exempt vs. Nonexempt Employees
- Common Examples of FLSA Claims Against Businesses
- Common Defense Strategies for FLSA Lawsuits
- Protect Your Business
The Fair Labor Standards Act is a federal guideline that establishes minimum wage and overtime requirements for employers as well as child labor protections. Employers are required to adhere to these rules or face civil or criminal penalties enforced by the U.S. Department of Labor’s Wage and Hour Division.
The FLSA also gives employees a private cause of action to sue their employer for unpaid wages and overtime pay, plus damages and attorneys’ fees. Employees who are “similarly situated” – i.e., they perform similar duties and are paid using the same formula – may opt-in to join a collective action against employers.
There are four primary elements of the Fair Labor Standards Act including:
The federal minimum wage is $7.25 per hour* which means employers are required to compensate their employees accordingly. For tipped employees (those who regularly receive more than $30 a month in tips), base pay must be at least $2.13* per hour, but total compensation including gratuity should equal the federal minimum wage. If the employee’s tips combined with direct wages do not equal minimum wage, the employer could face penalties.
Overtime is defined as any amount worked over 40 hours per workweek. Compensation for overtime is typically time and a half so, for example, a person earning $10.50 per hour would make $15.25 per each hour worked over 40 hours in one week.
Recordkeeping is an essential element to fair employment. The FLSA requires employers to keep payroll records for each non-exempt worker, including occupation, hours worked each day, total hours worked each workweek, the basis on which employees’ wages are paid, pay rate, pay periods, and pay dates, etc. Payroll records must be preserved for three years. Records on which wage computations are based, such as time sheets and schedules, must be retained for two years. Employers must also display an official poster outlining the provisions of the FLSA.
In addition to wages and recordkeeping, child labor standards set rules and occupational standards for minors. Children ages 16 or 17 may work unlimited hours but may not work under hazardous conditions. Minors 14- and 15-years old may only work outside school hours, for limited hours, and under other specific conditions. Children under 14 are not allowed to work, with limited exceptions.
The FLSA applies to nearly all workplaces. Specifically, employers who meet these criteria are covered by the Act:
- Those with total annual sales of $500,000 or more; or
- Those engaged in interstate commerce.
The Texas Young Lawyers Association offers this rule of thumb: “If it affects commerce, the FLSA applies.” This is because the courts have interpreted the term “interstate commerce” broadly, ruling that regular usage of U.S. mail to send or receive out-of-state letters – and even using the internet – qualifies as interstate commerce.
Some employees are exempt from both minimum wage and overtime pay provisions of the FLSA and some are exempt from overtime pay only. Exempt status is generally defined by the work performed and not the amount of compensation.
Some common examples of occupation exemptions for both minimum wage and overtime include:
- Executive exemption. To qualify, the employee must be paid on a salary basis at a rate of not less than $684 per week*, have responsibility for management of the enterprise, and regularly direct the work of two or more employees with authority to hire or fire other employees.
- Administrative exemption. Compensated on a salary or fee basis at a rate of not less than $684 per week* whose primary duty is the performance of office or non-manual work directly related to the management or general operations of the business requiring discretion and independent judgment. This exemption does not apply to clerical or secretarial work, recording or tabulating data, or performing other mechanical, repetitive, recurrent, or routine work.
- Professional exemption. To qualify for the learned or creative professional exemption, the employee must be compensated on a salary or fee basis at a rate of not less than $684 per week* (teaching professionals excepted) and perform work that requires advanced knowledge in a field of science or learning customarily acquired by prolonged study; or requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor. This exemption includes the traditional professions of law, medicine, theology, accounting, actuarial computation, engineering, architecture, teaching, science, pharmacy, and other similar professional occupations. It also includes creative professionals, such as actors, musicians, composers, painters, essayists, and writers.
- Highly compensated professionals exemption. Employees performing office or non-manual work and paid total annual compensation of $107,432* or more may be exempt if they regularly perform at least one of the duties of an exempt executive, administrative, or professional employee.
- Computer-related industry exemption. Applies to skilled employees in the computer field who meet certain tests regarding their job duties and who are paid at least $684 per week on a salary basis or not less than $27.63 an hour on an hourly basis.*
- Outside sales exemption. An employee qualifies for this exemption if their primary duty is making sales or obtaining orders or contracts for services, and who is regularly working away from the employer’s place of business. This exemption does not include sales made by phone, mail, or the internet.
It is important to note that many FLSA claims are brought through collective action which is a claim brought on behalf of similarly situated individuals. In other words, a group of employees may file a claim together, multiplying potential penalties and damages.
Examples of FLSA claims include:
- Not paying for required pre- or post-shift activities, such as donning and doffing PPE, cleaning and maintenance duties, or travel to and from worksites (this does not include regular home-to-work travel)
- Paying employees on a piece-rate basis without consideration of hours worked
- “Gap time” claims alleging straight-time pay was calculated at different hourly rate and hours worked than used to calculate the overtime rate
- Failure to include production bonuses in determining the regular rate for calculating overtime compensation
- Misclassification of non-exempt employees as exempt, e.g., classifying an employee as exempt but paying her on a daily rate instead of a salary basis, or classifying an employee as executive who fails to meet the supervisory requirements
- Misclassifying employees as independent contractors
- Failure to maintain complete and accurate time and pay records
- Failure to comply with tip credit requirements (tips must be retained by the employee)
- Illegal deductions, such as deducting the cost of a required uniform or any deduction that reduces earnings below the minimum wage
- Failure to pay for time in meetings, lectures, or training
- Failure to pay for on-call time if the employee must stay on premises or nearby
- Docking salaried employees for sick days with no formal sick leave policy in place
- Improperly paying tipped employees time-and-a-half of their base pay for hours worked over 40 in a workweek
An employer found guilty of violating FLSA provisions could be required to pay back wages or overtime payments and be subject to financial penalties, injunctions, and damages. Employers found to be willfully violating the law are subject to criminal penalties, including fines and incarceration.
It is crucial that employers facing an FLSA complaint or collective action enlist the help of a legal professional. Your attorney will use every available defense strategy to reduce or eliminate your liability.
Common employer defenses against FLSA actions include:
- Challenging whether individual employee claims qualify for the collective action
- Challenging allegations that the purported collective action members are similarly situated
- Legal and factual challenges to the alleged FLSA violation, including presenting evidence that the employee was compensated fairly
- Employer may avoid liability for an FLSA violation by proving that it acted in conformity with and in reliance on any written regulation, order, ruling, approval, interpretation, or opinion of the Department of Labor, Wage and Hour Division (even if the ruling was later rescinded)..
- Presenting evidence that employer’s actions were not willful thus reducing the statute of limitations from three years to two
Each of these defenses are heavily reliant on complete and accurate recordkeeping. Document the hours worked and the wages earned for every non-exempt worker to safeguard your business.
Employers may avoid the expenses and legal risk of FLSA litigation by consulting a labor and employment attorney to ensure that employees are classified correctly and properly paid for all time worked, and that complete and accurate records are kept.
If you are already facing an FLSA claim, entrust your case to the experienced labor and employment team at Hendershot Cowart P.C. We have extensive knowledge of the Fair Labor Standards Act and regularly help employers aggressively respond to FLSA claims brought by employees, including collective actions.
* As of September 29, 2022.
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