The Pitfalls of Poor Workplace Poster compliance and Employee Lawsuits
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The Pitfalls of Poor Workplace Poster Compliance and Employee Lawsuits

5/9/2017
According to a 2016 national survey, labor and employment matters were the most frequent source of lawsuits filed against businesses, highlighting the importance of workplace posting compliance.

Labor law posters are designed to inform workers of their rights, but if an employer doesn’t display current postings, does it really matter?

If a lawsuit is filed, it can matter a lot. Money damages can be inflated, and the statute of limitations can be extended if a court decides an employee wasn’t properly informed of his or her rights. And that’s in addition to any fines related to displaying outdated posters or none at all.

According to a national survey, labor and employment matters were the most frequent source of lawsuits filed against businesses in 2016, highlighting the importance of posting compliance. It’s serious business.

Are There Really Posting Police?

Well, the short answer is no. The federal government rarely sends agents to enforce posting laws, but if the government finds a posting discrepancy while investigating a complaint, all bets are off.

Posting compliance is typically checked during an on-site investigation. In civil proceedings, plaintiffs’ attorneys usually inquire about it during discovery. And it also comes up during witness interviews, depositions and serving subpoenas.

Unrelated Employee Investigations Can Become Compliance Nightmares

So how do penalties happen?

Let’s say an employee files a complaint with the Department of Labor (DOL), claiming an employer has repeatedly cheated them out of overtime. The DOL’s Wage and Hour Division (WHD) sends an investigator to check it out.

During a visit to review time records, the investigator checks for labor law postings, and discovers that none is displayed anywhere on the premises.

The business is fined for noncompliance and, if the case lands in court, a judge could extend the statute of limitations because there’s a question of notification. In other words, you didn’t post the employee’s rights and responsibilities. So the attorney can argue that the employee didn’t know the timeframe for filing a claim.

Noncompliance and the Statute of Limitations

Under the law, a Fair Labor Standards Act (FLSA) overtime case has to be filed within two years of the violation. Therefore, an employer can request that any claims outside that time period be dismissed. But if an investigator discovers a posting violation during the course of the fact-finding mission, those dynamics change.

If a judge decides the employee wasn’t properly notified of his or her rights because of missing or outdated posters, the judge can extend the statue of limitations. That means the case can move forward, even if it’s too old by government standards, extending the time period for collecting money damages.

The results can be devastating for businesses defending employment claims, for several reasons:

  1. A case that would otherwise be barred is allowed to proceed if the statute of limitations is extended.
  2. An employer’s ability to defend an older claim is compromised because evidence may be missing; witnesses may be hard to find, and documents may have been destroyed.
  3. Employees can recover money damages for additional years of violations.

“Good Faith” vs. “Bad Faith”

Posting compliance is considered proof of “good faith” because it demonstrates that a business takes employment law seriously, and it made efforts to comply with the law. A determination of good faith is based on a review of all the evidence surrounding an employer’s violation. If the business’s labor law postings aren’t compliant, there likely will be trouble.

A judge could rule that a business acted in “bad faith” by not fulfilling its legal obligations to display labor law posters. Penalties can be heightened for punitive damages, liquidated damages, and increased sanctions associated with “willfulness.”

It’s a scenario that can have a catastrophic effect if the employer is accused of violating laws such as the Family and Medical Leave Act (FMLA), the FLSA, the Equal Pay Act (EPA), the Age Discrimination in Employment Act (ADEA) or the Uniformed Services Employment and Reemployment Right Act (USERRA).

An employer who violates any of the above-listed laws is liable for the actual lost compensation and an additional equal amount known as “liquidated” or “double” damages. Evidence of “good faith” — such as displaying up-to-date labor law posters — can reduce or eliminate the double damages.

Courts have specifically recognized compliance with labor law posting requirements as proof of “good faith.” But no posters can mean much more severe damages.

Here’s a worst-case scenario: In a class-action lawsuit of 100 workers, each plaintiff is owed $3,000 in unpaid wages for one year, for a total of $300,000 in damages. Under the FLSA’s two-year statute of limitations, the maximum damages would total $600,000 excluding attorneys’ fees, costs and liquidated damages. But if the statute of limitations were extended due to posting compliance issues, the employer’s exposure would jump to $1.8 million. Liquidated damages based on a lack of “good faith” would increase the judgment to $3.6 million with additional damages to cover the plaintiff’s legal fees and costs.

Avoiding Heightened Penalties

Posting compliance comes into play in almost every employment dispute involving laws and issues covered by the mandatory federal postings. And whether it’s a private lawsuit or a government investigation, it’s an employer’s duty to prove labor law compliance. The disastrous possibilities associated with noncompliance are just not worth the risk.

  • Posting compliance can become a central issue in an employee dispute.
  • Penalties can be enhanced if workplace-posting requirements are ignored.
  • Employment litigation is on the rise, with an emphasis on posting laws.
  • Employees are increasingly aware of their rights and more likely to file suit.
  • Legal exposure associated with noncompliance can be devastating.

Year-Round Poster Compliance Can Be Easy

Posting compliance is more complicated than ever! In a single year, it’s not unusual for the Poster Guard® Compliance Protection legal team to identify and track hundreds of state and local posting changes (including minimum wage increases). Be aware that changes can be complex and require vigilance when it comes to employer posting requirements. To remain compliant, you must display state, local and federal postings, even if they conflict. You’re required to honor the most generous benefits and the highest hourly rate of pay.

With the dedicated service of Poster Guard® Compliance Protection, you’re guaranteed 365 days of hassle-free labor law posting compliance. You’ll receive an up-to-date federal, state and local poster set, along with automatic poster replacements every time a mandatory change occurs. Best of all, you’re guaranteed 100% compliance.