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As a landscaping employer, this is what you need to start thinking about:
The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers. Under the FLSA, employees are entitled to an hourly minimum wage of $7.25 an hour and an overtime rate of not less than one and one-half times the regular rate of pay after working 40 hours in a workweek. In Illinois, however, employees are entitled to $8.25 an hour and the Illinois Minimum Wage Act (IMWA) provides similar protections as the FLSA. Additionally, there are specific rules regarding what wage deductions you are allowed to take, how you are allowed to take the deductions, and what needs to be paid out when an employee quits or is terminated. If employers do not comply with the FLSA or IMWA, employees may be entitled to recover up to three years of unpaid wages, and liquidated and/or statutory damages (which can equate to double the amount of unpaid wages, court costs and payment of your own and the plaintiffs’ attorney’s fees).
These cases can be extremely dangerous for you, as an employer, because employees can recover damages even if the inaccurate payment was unintentional. For example, in the landscaping arena, many of these cases are based on improper rounding of hours, uncompensated time loading and unloading vehicles before and after work, improper work during lunch, and improper deductions from pay checks, like the cost of a uniform. Though these improper practices may be ground on innocent actions or insignificant policies, the penalties are no less severe. Further compounding the potential for penalty is that the FLSA allows for liquidated damages which automatically double the amount underpaid as well as interest. If Illinois state law claims are also filed, an employer of a small landscaping company will also be on the hook for an additional statutory penalty. Finally, and perhaps what should be most concerning to employers, is that the FLSA allows for class action litigation. Even one case be dangerous, but imagine the potential exposure of a class action for all of your aggrieved employees from a three year period. The litigation costs of defending even a baseless claim could be crippling and potentially fatal to your business.
The courts are not making the defense of these claims any easier as evidenced by the Supreme Court’s recent ruling in Campbell-Ewald v. Gomez. Previously, employers facing purported class actions were able to make an offer of judgment to the named Plaintiff in an attempt to resolve the claim and moot the entire action regardless of whether the Plaintiff accepted the offer or not. However, this is no longer the case. The Supreme Court ruled that an unaccepted settlement offer or offer judgment is a legal nullity and cannot moot a case. Employers will likely now find themselves having to defend more class actions instead of resolving them prior to the class creation.
What should you do?
Every employer, especially those in the landscaping business in Illinois, needs to review its current policies and practices to ensure complete compliance with state and federal wage laws. Employers should also review their current insurance policies to ensure they are adequately covered in the event they are sued. If anything seems amiss, employers should seek counsel to update their policies and practices to prevent future claims and potential class actions.