If you haven't already heard of "wage-and-hour" lawsuits, chances are you soon will. They have surpassed employee discrimination suits, both in terms of number of filings and size of settlements, according to a recent Advisen study. A January report in Human Resource Executive Online shows wage-and-hour settlements increased 44 percent in 2009, compared with 2008. Class action lawsuits against large employers like Wal-Mart tend to attract the most attention, but small and midsized companies have seen the most significant increase in claims, according to Monitor Liability Managers, LLC. In fact, the Department of Labor estimates that 80 percent of employers are not in compliance with applicable wage-and-hour laws, as Advisen reports. While wage-and-hour claims may not directly involve E&O issues, they certainly pose risk management concerns, of which every employer needs to be aware.

The term "wage-and-hour" is the general description for cases concerning alleged non-payment of full and timely wages. Such cases often involve the Fair Labor Standards Act (FLSA), a federal law that focuses mainly on overtime rules and work week definitions. Under the FLSA, employees who work more than 40 hours per week are entitled to overtime pay unless they fall within one of the FLSA's categories of "exempt" employees.

It is a common misconception that employees who are paid by the hour are automatically nonexempt (and thus entitled to overtime), and that salaried employees are exempt. In reality, however, an employee's status depends on job duties, not payroll titles or method of payment. Consequently, many salaried employees are nonexempt and therefore entitled to overtime pay.