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How To Handle Wage And Hour Claims: A Legal Perspective For Employers

Wage and hour claims can result in stiff federal penalties if a business is found to be out of compliance with the applicable laws. These penalties are assessed independently from any damages a court may award if an employee who feels they received less than their due in overtime pay or minimum wages attempts to recover those sums through a civil lawsuit. Understanding the nature of the most common wage and hour claims, as well as initial steps for addressing them, can help position you to protect your business against unnecessary risk exposure for wage and hour compliance. Given the complexities of wage and hour claims and their intersections with employer obligations in New York State, however, you may also wish to speak with an attorney. At Schwab & Gasparini we offer preventive advising to help our clients establish sound internal protocols for compliance, and we also provide legal counsel and support for investigation of wage and hour claims and for litigation through the civil courts, if needed. Contact any of our New York offices to schedule a consultation: Syracuse, (315) 422-1333; Albany (518) 591-4664; White Plains and Hudson Valley, (914) 304-4353.

What Are Wage and Hour Claims?

The Fair Labor Standards Act (FLSA) sets federal requirements for two main categories of employment law under which workers may bring claims:

1. Minimum wages
2. Overtime pay calculations

Workers who believe that their employers are violating, or have violated, provisions related to either minimum hourly rate of pay or the calculations for overtime due to employees can file complaints with the Department of Labor (DOL), whose Wage and Hour Division (WHD) oversees FLSA compliance.

Confidentiality of WHD Complaints

The WHD treats wage and hour complaints as confidential, even to the point of declining to confirm or deny whether a complaint exists. Since the WHD oversees compliance with several other federal laws in addition to those pertaining to wage and hour claims, this means that an employer cannot assume that a DOL investigation necessarily means the business is under review as a result of an employee’s wage and hour claims.

Employers are legally prohibited from retaliating against workers who file complaints with the Department of Labor. The strict confidentiality protocols followed by the WHD in undertaking any investigation are intended both to protect workers and to help ensure that employees are not discouraged from reporting wage and hour violations due to fear of illegal retaliation. Unfortunately, workers who already believe (rightly or wrongly) that their employers are violating federal laws in order to shortchange their employees’ compensation are often skeptical of these employers’ adherence to anti-retaliation rules. They may also fear that the nature of information sought by the WHD during the course of an investigation may make it obvious what the investigation concerns, and – especially in smaller organizations – they may have concerns that their employers will have no difficulty in guessing who might have filed a complaint.

Claims Filed in Court

The culmination of these worries can sometimes mean that a company’s leadership may not become aware of disputed wages or overtime pay calculations until after an employee has left the company. Sometimes they may not become aware of the issue until they receive service of process notifying them that a claim has been filed in the civil courts, separate from any complaint brought to the DOL. While technically these wage and hour claims could be brought by current employees, in many cases they are brought by workers who have moved on, often after securing alternative employment, and are now seeking redress for alleged wage and hour violations they claim entitle them to compensation.

Partly because disputes over the appropriate calculation of wages are usually easier to resolve in working environments with strong rapport and mutual trust between those managing workload and those carrying out the work, but more difficult in the context of adversarial workplace relationships, it is not unusual for wage and hour claims filed in this way to be part of a larger employment lawsuit that also alleges other types of misconduct. An employment lawyer with substantial experience in wage and hour claims may be able to help you disentangle the various factors involved, if your company finds itself in this position.

Recognizing Wage and Hour Violations

Usually you will want one of your first steps in responding to wage and hour claims to be conducting an internal investigation. For this internal review to be effective, however, you will first need to understand the compliance rules that apply. Those who have substantial business experience will likely be familiar with wage and hour basics already. However, a brief review of the most common wage and hour claims can help to set them in context for evaluating your company’s next steps.

Minimum Wage Laws

Most employers operating in New York are likely aware that minimum wage requirements differ based on location within the state. The New York City and Long Island areas, in particular, are subject to hourly minimums that are slightly elevated compared to the rest of the state. Keep in mind, however, that all minimum wage laws throughout New York are subject to the same state-level enforcement – and, as the New York State Department of Labor (NYSDOL) points out, wage theft is counted as a form of larceny and charged as a crime under the state’s Penal Laws. As of 2025, even the lowest minimum wage set by New York State laws is more than twice the minimum wage set by the federal government, so there are two important points for employers to keep in mind:

• The higher wage always prevails, regardless of whether enforcement is carried about by the NYSDOL or the federal WHD.
• The location where the employee works, not the location where the employer is headquartered, determines the applicable minimum wage requirement.

New York employers often consider their wage and hour compliance together with their internal measures for ensuring compliance with the state’s “spread of hour” rules. These rules may entitle employees to an extra hour of compensation at the applicable minimum wage rate under certain circumstances. A New York business law attorney with Schwab & Gasparini may be able to help you assess your spread of hours compliance as you are reviewing any wage and hour claims.

Wage and Hour Claims: Overtime Pay Calculations

The other main category of wage and hour claims involves overtime pay calculations. The FLSA requires that covered employers provide all non-exempt employees with compensation equal to no less than one and a half times each employee’s “regular rate of pay” for each hour worked beyond a 40-hour threshold in any federally defined workweek. According to the DOL, the FLSA workweek definition is seven consecutive 24-hour periods. For the purpose of computing an employee’s overtime pay, it does not matter whether the 40 hours are concentrated into four 10-hour days spread across the five eight-hour days of a “traditional” American workweek, or staggered across all seven days in a calendar week. The FLSA similarly does not impose requirements for weekends or rest days, and employers are under no obligation to start all employees’ workweeks on the same day in each week.

Employers may not, however, change the starting or ending days of an employee’s workweek in order to avoid having more than 40 hours falling in the same working week. They also may not improperly classify employees as “exempt” in order to avoid potential overtime pay obligations. Contrary to popular belief, overtime pay requirements apply to salaried employees as well as to those whose pay is regularly tallied on a per-hour basis. Although some industries have limited exceptions – especially for the threshold that triggers overtime wages in seasonal work – overtime pay calculations also apply to workers who are paid by item completed, although not to the independent contractors who sometimes charge on a per-item basis.

Wage and Hour Claims: Employee Misclassification

Some of the most troubling wage and hour claims are allegations that a business has misclassified employees as independent contractors. The reason these claims can be especially concerning is that they bring with them another potential legal issue, this time with the Internal Revenue Service (IRS). Independent contractors, who are self-employed parties even when they maintain longstanding relationships with other businesses, are disregarded not only from overtime pay calculations, but also from workers’ compensation, and they are responsible for the full burden of their employment tax, which for employees is shared instead with the employer.

The lesser obligations a business has toward independent contractors compared to employees can make working with these individuals a highly attractive option in many cases, and the independent contractors often enjoy the comparatively greater autonomy and the chance to work with a diverse client base rather than being limited to a single employer. However, when a business attempts to treat a worker who answers to the company, works prescribed hours, and performs work integral to the business according to standards and methods set by the business, then there is a high likelihood that both the DOL and the IRS may find the arrangement to be a misclassification. In that case, the business may be penalized for both wage and hour claims and tax code violations arising from the same incident.

Wage and Hour Claims: Exempt vs. Non-Exempt Employees

Just as employers may sometimes be tempted to avoid overtime pay calculations and reduce their tax burden by misclassifying workers as independent contractors rather than as employees, sometimes they may – deliberately or through honest error – improperly treat employees as exempt, even though the employees do not meet the regulatory criteria for exempt status. This is where widespread, but mistaken, assumptions that overtime pay applies primarily to hourly workers can cause serious difficulties. In fact, although several distinct categories of employees may be considered exempt from overtime pay calculations, this exempt status is subject to specific federal guidance regarding the employee’s base salary and the type of work he or she performs.

Employees who try to save money with “lean” staffing can therefore find themselves eating into the money they have saved or hiring additional workers if they regularly need to pay those on the job overtime to ensure that fewer employees can keep up with the same amount of work. Even the salary costs of overtime at 150% of each employee’s regular rate of pay may still pale in comparison to the financial penalties a business may face for wage and hour claims related to improper designation of covered employees as exempt.

Wage and Hour Claims: Recordkeeping

Perhaps the most straightforward wage and hour claims are prompted by complaints of faulty recordkeeping. Because all overtime pay calculations, and to a large extent minimum wage requirements as well, require knowing how many hours each employee worked, and when, recordkeeping failures can have far-reaching consequences for wage and hour compliance.

Initial Steps to Addressing Wage and Hour Claims

A company’s strategy for dealing with wage and hour claims will depend to some extent on whether the business is going through a DOL investigation, defending against a civil lawsuit, or (in some instances) both. Leadership may or may not suspect at the outset that a WHD investigation is prompted by a wage and hour complaint, so if an investigation is the only cause you have for concern, you may wish to consult an attorney to seek assistance in performing your own internal compliance audit.

If the business has been named as the defendant in a civil case seeking compensation for wage and hour claims, on the other hand, company leadership will generally have much greater specificity regarding the claims themselves. In either case, you may wish to review your situation with a New York business attorney who can evaluate your circumstances and help you plan a course of action.

Internal Investigation

To the extent that you know or suspect wage and hour claims to be a piece of the puzzle, one of your first steps should usually be organizing an internal investigation to determine whether a wage and hour claim appears credible. After all, if your company has acted wrongly – intentionally or carelessly – and you can see that the business has acted wrongly, then there is usually no need to go to court to get a judge to agree that you are in the wrong and should make amends to the employee (or former employee) who has brought the claim.

On the other hand, if your business has not actually violated any wage and hour rules, then you will likely want to vigorously contest any wage and hour claims. If the business is being sued in court, you may also want to discuss with a business attorney whether you have grounds for a countersuit based on the nature of the allegations.

Preparing To Negotiate With the DOL

If there is no court case and the business is instead under review by the DOL, then how the organization responds to evidence of internal compliance failures can still play a role in determining how penalties are assessed and how your business is scrutinized going forward. An attorney with experience in WHD compliance may be able to guide your team toward a resolution that minimizes potential penalties.

Consult With a New York Business Law Attorney

Wage and hour claims can pose a serious threat to a company’s long-term financial health. Even if an organization is ultimately exonerated, investigations over wage and hour claims often require significant staffing hours and administrative overhead to comply with DOL records requests and other procedures. Wage and hour claims that eventually result in litigation can create additional expenses. Keeping clear, accurate records of each employer’s working hours is your first step to both avoiding wage and hour claims and resolving them swiftly, should they arise. Schedule a consultation with Schwab & Gasparini to review your organization’s wage and hour compliance or prepare a strategy for handling wage and hour claims. You can reach us in Hudson Valley and White Plains by calling (914) 304-4353, find us in Syracuse at (315) 422-1333, or contact our Albany location by dialing (518) 591-4664.

Mon Sep 8 2025, 12:00am