The U.S. Department of Labor's Wage and Hour Division (WHD) recently issued news releases announcing actions taken against five companies that were investigated for various violations of laws and regulations. The cases involve violations of wage, overtime, tip, meal break, recordkeeping, temporary visa and other rules.
An investigation by the WHD resulted in the recovery of $399,000 in unpaid overtime for 49 workers at a family-owned specialty grocery store in Illinois.
The law. Under the Fair Labor Standards Act (FLSA), employers are required to pay employees time and one-half for hours worked in excess of 40 hours per workweek unless otherwise exempt.
The WHD investigation found the grocery store paid workers their normal rate of pay for overtime hours in violation of the FLSA. Additionally, the business misclassified some workers as independent contractors, thereby denying those workers overtime pay. The store was also fined $734 for permitting a minor-aged employee to work beyond permitted hours.
The WHD recovered $106,248 in back wages and liquidated damages for 68 workers at a Florida health care benefits services company.
The law. A worker is entitled to minimum wage and overtime pay protections under the FLSA when there's an employment relationship between the worker and an employer and there's coverage under the FLSA. The WHD is responsible for determining whether an employee has been misclassified as an independent contractor and has been denied critical benefits and labor standards protections.
Under the Family and Medical Leave Act (FMLA), employees are entitled to take up to 12 weeks of unpaid leave per year for specified family and medical reasons. FMLA regulations require employers to provide various notices regarding leave.
In this investigation, the WHD found the health care company misclassified workers as independent contractors and paid the workers straight-time hours for all hours worked, including hours worked in excess of a 40-hour workweek. The company also failed to include earned commissions in the regular rate calculation for overtime purposes of some workers. Additionally, the WHD discovered the employer failed to provide notice of FMLA rights to the workers.
The WHD announced the recovery of $150,000 in back wages and an equal amount in liquidated damages for 492 workers at a coffee shop chain for violations of the minimum wage provisions of the FLSA.
The law. A tipped employee is one who customarily and regularly receives more than $30 per month in tips. An employer of tipped employees is required to pay $2.13 per hour in direct wages if that amount combined with the tips received is equal to or greater than the $7.25-per-hour federal minimum wage.
If an employee's tips combined with the employer's direct wages of at least $2.13 per hour doesn't equal the federal minimum wage, the employer must make up the difference. Many states, however, require higher direct wage amounts for tipped employees. The DOL has a webpage showing the minimum wages for tipped employees.
In 2020, the DOL announced a final rule protecting the tips of employees. The rule addresses an amendment made to the FLSA by a 2018 law. The amendment prohibits an employer from keeping tips received by employees, regardless of whether the employer takes a tip credit toward the minimum wage to employees covered by the FLSA. The rule also prohibits employers from allowing managers to keep any portion of employees' tips. Every covered employer must keep certain records for each non-exempt worker.
The WHD investigation of the coffee shop chain found the operator of a Kentucky location redistributed tips improperly and diverted workers' tips to managers. The shop also failed to keep records for tips, specifically pennies that it mandated be donated to a charity. This violated the minimum wage provisions of the FLSA.
The WHD recovered $60,254 in back wages for nurses who were underpaid as a result of an Indiana hospital's timekeeping practices that violated the FLSA.
The law. Covered employers must keep certain timekeeping records for non-exempt workers. These requirements include the time and day of week when an employee's workweek begins, the hours worked each day and the total hours worked each workweek. To record this time, employers may use any timekeeping method they choose. However, the records must be accurate.
The WHD's investigation determined the hospital violated the law by:
The WHD noted that automated timekeeping systems can save time for employers, but they can also cause errors in timekeeping that may result in FLSA violations for the employers. This is especially true in occupations like nursing, where emergencies can arise that prevent workers from taking scheduled breaks. Employers who use automated devices that are programmed to take automatic deductions for breaks need to verify that meal breaks were taken and employees are paid properly.
An investigation by the WHD found that a Florida resort violated federal temporary H-2B workers visa requirements, resulting in recovery of $151,598 in back wages, as well as a civil penalty of $49,401.
The law. H-2B visas are provided for individuals temporarily in the United States to perform certain nonagricultural jobs of a temporary or seasonal nature. The visa is for a limited period, and the work must meet certain requirements.
The investigation found the resort:
The resort appealed the penalties but ultimately entered into a consent agreement before the Office of Administrative Law Judges after it failed to provide sufficient documentation to challenge the WHD findings. The company has now paid all back wages and penalties.
In commenting on the decision, WHD District Director Nicolas Ratmiroff said that the law is designed to protect nonimmigrant workers and the resort violated the requirements. He added, "All workers, both U.S.and nonimmigrant workers, must be paid their lawful wages. Employers who reap the benefits of the H-2B program are obligated to make sure they understand and comply with program requirements."
These cases demonstrate different ways that employers can face payroll-related legal challenges. If you have questions about staying in compliance with wage and employment laws, consult with your payroll advisor or employment attorney.
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