wage and hour violations

A Southern California logistics provider was ordered to pay $120,000 in overtime back wages to 388 employees and also must implement a timekeeping system to shore up compliance issues.

Following a recent finding of the Department of Labor affirmed by a federal court in California, an additional $2,000 penalty also was assessed to the employer, Global One Logistics, by the department’s Wage and Hour Division to address the employer’s willful violations of the Fair Labor Standards Act. Employees were told to record only eight hours of labor each day regardless of how many hours they actually worked, according to a May 24 Labor Department press release.

Maintain accurate timekeeping

The court ordered Global One Logistics, which provides warehousing and distribution services for the home fashion and apparel industry, to implement a reliable timekeeping system that allows each employee to accurately record their daily start and stop times, the Labor Department stated. The order also instructed the employer to not alter or manipulate time or payroll records to reduce the number of hours actually worked and not to encourage or pressure workers to underreport hours worked, the statement said.

Aimee Delaney, partner at law firm Hinshaw & Culbertson, said that while the timekeeping order is not unusual, the FLSA places an obligation on employers to maintain accurate time records for its employees. It does not dictate a specific method, but there must be accurate records maintained, she said.

“Digital time and attendance systems do deter manipulating time and payroll records, particularly if you are comparing to handwritten timesheets,” Delaney said.

‘Willful’ wage and hour violations

Investigators found the employer willfully failed to pay employees overtime at time-and-one-half their regular rates of pay when they worked more than 40 hours per week, according to the Labor Department. In addition to requiring employees to falsify the number of hours they worked each day, the employer also paid for the unrecorded hours in cash at workers’ straight-time rates, the Labor Department stated.

A “willful” violation under wage and hours laws has specific meaning and consequences, said Delaney. If a violation is found to be willful, the statute of limitations for the claim goes from two to three years and there are additional penalties, such as the $2,000 levied against the employer, she said.

Aimee Delaney, wage and hour violation — Aimee Delaney, partner at law firm Hinshaw & Culbertson.

“When used in the FLSA context, a violation is willful if the employer either knew or showed reckless disregard for whether its conduct was prohibited by the FLSA,” Delaney said.

Employers who purposefully manipulate payroll records in an attempt to avoid their legal obligations will be held accountable by the Labor Department, said Wage and Hour Division Assistant District Director Rafael Valles in West Covina, California.

“The outcome of this investigation serves as a reminder to all employers to review their pay practices to ensure they comply with the law and as a reminder to workers that they have the right to be paid for all of the hours that they work.”

Compliance is an organizational responsibility

Minimizing the risk of wage and hour and overtime violations falls on several departments and various roles within the organization. Managers in particular often are on the frontline with workers and should be familiar with compliance and timekeeping requirements.

“They know and are often the assigner and approver of overtime,” Delaney said. “Managers certainly bear a responsibility for knowing the state and federal requirements and not directing employees to do something out of compliance with those requirements.”

Human resources and payroll departments often have higher-level oversight and compliance responsibilities. HR may not always be aware of specific timekeeping violations occurring day to day but can ensure that managers are properly trained.

Also read: Using software to simplify payroll and overtime

“HR should also be aware if unusual or significant hours are being worked, which may prompt a review or audit to ensure employees working the additional hours are properly paid,” Delaney said. “Payroll is often simply a function of processing pay for what is reported on the time records. However, payroll certainly has a role to play in ensuring that all reported hours are paid correctly, including the correct overtime premiums.”

Labor Department enforcement

Delaney also pointed out that “off the clock” violations are among the clearest abuses of state and federal wage and hour laws.

“It literally means you are requiring the employees to work while not recording their time, which means they will not be paid,” she said. “Under the FLSA, non-exempt employees must be paid for all hours worked. Employers also have an obligation to maintain accurate time records.”

She added that this case isn’t necessarily a predictor of tougher Labor Department enforcement of wage and hour laws. The violations presented in the facts were blatant violations of fairly established wage and hour rules, she said.

“Once violations are found, the Labor Department is always going to ensure enforcement to get the employees paid the wages owed,” she said.

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Employee meetings are typically meant to discuss policies, reinforce training and build organizational transparency.

Two companies discovered the hard way that if not properly monitored, such gatherings can violate wage and hour and overtime laws, leading to the Fair Labor Standards Act violations and steep financial penalties.

Investigations by the Department of Labor Wage and Hour Division determined that Keystone Adolescent Center Inc. owed workers $44,858 in back wages for time spent in meetings, while Maggiano’s Little Italy restaurant in Philadelphia owed 82 employees $116,308 in back wages for minimum wage and overtime violations stemming from pre-shift meetings.

According to investigators, supervisors and behavior specialists gathered every two weeks at Keystone Adolescent Center’s five Greenville, Pennsylvania, facilities where they discussed policy changes, completed required training and reviewed safety procedures to help the at-risk youth they serve.

Also read: Labor Department reopens the floodgate to liquidated damages in wage and hour investigations

Keystone also used the meetings to distribute paychecks, yet failed to pay 80 workers who attended these meetings and required training outside of their regular shifts for the time they spent at them. The investigation determined that — by excluding this work time from employees’ pay — Keystone Adolescent violated the FLSA, leading to the recovery of back wages for the workers.

Wage and hour violations during staff meetings

According to an April 5 Labor Department press statement, investigators found that Keystone paid employees for time spent at staff meetings and required training only if those meetings and training occurred during their scheduled shifts.

The employer failed to pay workers attending outside of their normal work hours for time they spent in those meetings and required training. Failing to record and pay for this time violated FLSA overtime and recordkeeping requirements, according to the statement.

“Employers must pay employees all the wages they legally earn, which includes paying them for any hours they work outside of their scheduled shifts,” said Wage and Hour Division District Director John DuMont in Pittsburgh.

Complying with federal, state laws

Aimee Delaney, a labor and employment law expert at law firm Hinshaw & Culbertson in Chicago, said that any time an employer requires a non-exempt employee’s attendance at a meeting, training or other mandatory event, the employer needs to realize that this time is considered hours worked and is compensable under state and federal law. This also means that if the time spent at the mandatory meeting puts the employee over 40 hours for the week, the employee is entitled to overtime for any time over 40 hours.

The employer also needs to understand that state law may require overtime at different thresholds.

“One easy question an employer can ask itself when trying to determine if the time is compensable is whether the meeting or other event was mandatory, as that is usually a sign that the time must be paid,” Delaney said.

Compensation for pre-shift meetings

Oftentimes restaurant managers hold pre-shift meetings to motivate their employees, reinforce training or update the day’s menu. It is time for which employers typically should also be paying their workers, which is the lesson Maggiano’s Little Italy restaurant learned the hard way after a Labor Department investigation.

Investigators found minimum wage and overtime violations of the FLSA. In addition to the $116,308 in back wages, the Wage and Hour Division assessed a civil money penalty of $68,060 as investigators deemed the violations as willful, according to an April 12 Labor Department press statement.

The division determined that by failing to pay workers for time they spent attending pre-shift meetings, the restaurant failed to pay the required federal minimum wage. Maggiano’s Little Italy required dining room servers to attend 15- to 30-minute meetings before the start of their scheduled shifts. When employees worked more than 40 hours in a workweek, this unpaid time triggered overtime violations, according to the Labor Department.

“Restaurant workers are often among the nation’s lowest paid, and most vulnerable, particularly during the coronavirus pandemic,” said Wage and Hour District Director James Cain in Philadelphia. “When employers fail to account for all hours employees work, they deprive workers of their hard-earned wages. Other employers should use the outcome of this investigation as an opportunity to review their own pay practices, and ensure they comply with the law.”

Delaney noted that the Labor Department has a number of resources that explain the law and regulations on this topic specifically and there are specific rules on when activities by a non-exempt employee outside of work hours must be considered hours worked and/or compensable.

She also pointed out that vigorous enforcement of wage and hour and overtime laws is nothing new.

“While there may be a number of areas that employers can expect stricter compliance enforcement on with the new administration, this is a fairly settled area of the law and violations of this nature have been and will continue to be enforced regardless of a change in administration at the top,” she said.

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Tag: wage and hour violations

Logistics company ordered to pay $120K for wage and hour violations, must implement timekeeping system

Wage and hour violations during staff gatherings lead to substantial Labor Department fines