DOL Takes Action Against 5 Employers for Federal Labor Violations

The U.S. Department of Labor's Wage and Hour Division (WHD) recently issued news releases announcing actions against five companies investigated for various violations of laws and regulations. Here are the details.

Case 1: Investigation Results in Penalties for Failing to Pay Security Personnel Overtime

An investigation by the WHD disclosed that a Hawaiian company that provides security officers to public and private facilities failed to pay appropriate overtime to employees. The company will pay $1,539,773 in back wages and liquidated damages to 171 guards, and civil penalties.

The WHD found the company offered a "voluntary program" that offered guards more work hours if they waived their right to overtime and accepted straight-time pay for all hours worked. The WHD found that program intentionally violated overtime laws under the Fair Labor Standard Act (FLSA), which require that most employees be paid overtime pay when they work more than 40 hours in a workweek.

Jessica Looman, acting administrator of the WHD, stated that the business "devised a scheme that denied overtime to guards who worked more than 40 hours in a workweek, cheated other guards out of a fair share of work hours and gained an unfair competitive advantage over others in their industry that abide by the law."

Case 2: Fine of $154,033 is Imposed Against Restaurant for Keeping Workers' Tips

An investigation by the WHD disclosed that a South Carolina business, which includes a grocery store and restaurant, wrongfully kept all tips left by restaurant customers. The business also failed to pay employees overtime as required when they worked over 40 hours in a workweek. Both keeping tips and failure to pay overtime are violations of the FLSA. The restaurant was fined $154,033 in back wages and liquidated damages for 10 employees.

WHD Director, Jamie Benefiel, stated that: "Tipped employees work hard to deliver good service and earn every tip they receive. When employers keep the tips for themselves and fail to pay the overtime when due, they not only violate federal labor laws but they also deny the workers the respect they are due."

The announcement also reminds restaurant owners that a Restaurant Compliance Toolkit  is available for employers seeking additional compliance resources.

Case 3: Horse Trainer Must Pay $132K for Wage and Hour Violations

Following an investigation by the WHD, a federal court found that a New York thoroughbred horse racing stable failed to pay workers the overtime wages they earned. The court ordered the stable and its owner to pay a total of $132,631 in back wages and liquidated damages to 52 grooms and hot walkers.

The investigation revealed that the business paid certain employees at the racetracks stables, and other locations, a fee per horse handled and not per hour as stated in their payroll records. In addition to shortchanging workers' hours and unlawfully denying them overtime when they worked more than 40 hours in a workweek, the WHD determined that the owner falsified payroll records to give the appearance that employees were paid by the hour when they weren't. The court affirmed the government's assessment of $37,368 in civil money penalties for willful wage theft and for falsifying records in violation of the FLSA.

The judgment requires the defendants to pay $66,315 in back wages and an equal amount in liquidated damages to the affected workers. The judgment also requires the defendants to:

• Hire, at their own expense, a qualified compliance monitor to review the payroll and record keeping practices to ensure FLSA compliance, recommend changes to any noncompliant practices and consult on any changes to their time or recordkeeping practices.
• Implement and use an electronic timekeeping system to ensure accurate recording of employees' work hours.
• Train employees, in languages they understand, on the proper use of the timekeeping system and pay them for that training time.
• Post and provide employees with information and documents in English and Spanish about the law's requirements and their FLSA rights.

The defendants are also permanently enjoined from inaccurately editing or altering employees' work hours, having employees work "off the books," retaliating or discriminating against employees who engage in FLSA protected activity and requiring or asking employees to "kick back" wages.

Case 4: DOL Recovers $105K in Back Wages for 92 Workers Not Paid Overtime

An investigation by the WHD disclosed that a health care benefits company failed to pay employees for time spent setting up their computers and logging in to software applications before the start of their shifts. Additionally, the employer failed to include bonuses in the calculation of overtime pay, which led to underpayment of overtime.

The WHD recovered $105,200 in back wages for 92 employees. The company also agreed to correct its pay practices companywide to avoid future violations of the FLSA.

WHD District Director, Nicolas Ratmiroff, stated that: "Failure to count and properly pay for pre-shift work is a common violation of federal labor laws. These unpaid minutes add up and can lead to minimum wage or overtime violations. The law requires that workers be paid every cent they are due for the work they perform."

Case 5: Retaliation Lawsuit Filed for Paying Final Wages in Oil-Covered Pennies

Following an investigation, the U.S. Department of Labor has filed a complaint in the federal district court in Georgia against an auto repair shop and its owner. The complaint alleges retaliation, overtime and recordkeeping violations of the FLSA, and seeks $36,971 in back wages and liquidated damages.

The WHD investigated the owner and found he retaliated against an employee who contacted the agency after he resigned, and the employer failed to pay his final wages.

The government's complaint claims the owner paid the former employee's final wages of $915 by delivering about 91,500 oil-covered pennies and a pay stub marked with an expletive to the worker's home. The pennies were dumped in the employee's driveway. They blocked and stained the driveway and required nearly seven hours of cleanup. The owner also published defamatory statements about the former employee on the company's website.

The WHD also determined the owner violated the FLSA's overtime provisions by paying other employees straight time for all hours worked, failing to pay legally required overtime rates when they worked over 40 hours in a workweek. In addition, the defendant also failed to keep adequate and accurate records of employees' pay rates and work hours. The department seeks to enjoin the defendant permanently from future FLSA retaliation, overtime and recordkeeping violations.

Stay in Compliance

If you have questions about staying in compliance with wage and employment laws, consult with your payroll advisor or employment attorney.