Don't be like this fellow.
Don’t be like this fellow.

Co-author Michael Kelsheimer

It’s common knowledge: Fair Labor Standards Act audits from the U. S. Department of Labor and lawsuits from workers for overtime violations are coming faster than a blitzing safety on a third and long.

Native Oilfield Services is the latest target.  Dispatchers and truck drivers brought suit against Native alleging they were not paid for overtime hours.  The company settled with the dispatchers for an undisclosed amount, but Native elected to fight the drivers’ claims.

Neither the jury nor the federal judge accepted Native’s arguments that: (1) the drivers are exempt from overtime, and (2) time waiting for new loads should not be compensated.

With prices in the tank and layoffs prevalent, former employees are eager plaintiffs. One laid-off employee trying to feed the family can lead to a “collective action” on behalf of that employee and everyone else in that job category, past and present. Native had 104 drivers against it.

You don’t have to be worried about one settlement for a few overtime hours a week involving one job position going back two or three years. There’s more. Be concerned about every person who holds and has held that position for the last several years coming back against them.  Plus, the employees could recover statutory damages and attorneys fees.

What should I do?

  • Talk to an employment lawyer.  As good as payroll companies are for many things, do not rely on them for legal advice. Same goes for your CPA. One other reason: Your conversations with your lawyer are privileged from discovery, not so with your payroll company and your CPA.
  • Determine if the employees who are not paid overtime are actually exempt. They might be.
  • Learn if your independent contractors actually fit the legal definition.
  • Check to see if you are correctly paying travel time, wait time, and on-call time.
  • Make adjustments if necessary.
  • Settle potential claims with employees directly to avoid a lawsuit with double overtime payments and fees – for your lawyer and theirs.
  • Remember, it’s cheaper to be proactive than to stick your head in the sand over these claims.
  • If you elect to go ostrich, at least require employees to keep track of their hours. If you don’t think you owe overtime you are unlikely to keep track of employee hours. The result: The employees will estimate the number of hours they worked over 40 each week during the period in question. Do you think the estimate will be high or low?  Employers are hard-pressed to defend the number because they weren’t there to observe and have no contemporaneous records.  If you keep the records, you will have an honest assessment of what you might owe.

Feeling paranoid? You’re in good company. See what happened to Halliburton.

Here’s one for the workers.