It is not unusual for an employer in Pittsburgh to be hit by a Fair Labor Standards Act claim by a disgruntled employee claiming employee misclassification. Employers may be quick to invoke the good-faith defense. But is doing so always in your best interests?
What is the good-faith defense?
Under the FLSA an employer can avoid liability if they prove that the act or omission at issue was made in good faith in conformity with administrative regulations, orders, rulings, approval or interpretation. Under the FLSA employers can also be able to avoid liability for liquidated damages in claims where the employer is found liable for past wages by showing a reasonable, good-faith understanding that it was not in violation of the law. Also, if the employer’s actions were not willful, this reduces the statute of limitation for FLSA claims from three years to two years.
When can the good-faith defense be problematic?
The good-faith defense may seem too good to be true. However, it does have some drawbacks. For example, if the employer discussed the classification of employees with their attorney and then tried to invoke the good-faith defense this could constitute a waiver of the attorney-client privilege. This means that communications between the employer and their attorney could be subject to discovery.
Learn more about FLSA defenses
It is important for employers to understand the effectiveness of any FLSA defenses they wish to employ. This post is for educational purposes only and does not contain legal advice. Our firm’s webpage on FLSA for employers may be of use to those who want to learn more about this topic.