Image by Jo_Johnston from Pixabay
About a month ago, a hairstylist filed a COVID-19 class-action lawsuit in New Jersey. Her claims were the prototypical lowest-hanging fruit.
That is, the plaintiffs allege that the employer withheld pay from employees once it abruptly closed its doors to the public due to the coronavirus.
Sadly, the companies filed for bankruptcy.
Before I continue this story, considering registering for Friday’s live chat on Zoom at Noon EDT. This week, my special guest is Jeff Nowak. Jeff is a shareholder at Littler, publisher of the world-famous FMLA Insights blog, and all-around Mr. FMLA. I mean, the dude eats, sleeps, and dreams it. So, I thought that the two of us would spend an hour or so addressing the role that the “Classic’ FMLA will have when employees return to work as non-essential businesses re-open, such as:
- Overlap with FFCRA and PPP (if there is such a thing)
- ADA/FMLA interplay
- Mental health issues
- Ways to stop FMLA fraud
- Q&A (click here to ask your question beforehand)
If you’d like to join us on Friday, May 15, 2020 at Noon EDT, you can do so by pre-registering here:
So, where was I with the lawsuit? Oh yeah, a bankruptcy…
But, that didn’t stop the Department of Labor from stepping in to enforce the rights of the employees. Specifically, the DOL announced yesterday that it went into bankruptcy court and obtained an order requiring the operator of unisex hair salons in 15 states and the District of Columbia – to pay $1,149,965 in back wages to more than 7,500 employees.
You see, by failing to pay the employees their final paychecks, the employer violated the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA). The FLSA requires that covered nonexempt employees get paid at least minimum wage ($7.25 per hour) plus overtime pay for hours worked over 40 per workweek (any fixed and regularly recurring period of 168 hours – seven consecutive 24-hour periods) at a rate not less than one and one-half times the regular rate of pay.
There is no hardship exception under the FLSA, reminds the DOL:
“While the employer’s violations were not found to be willful, its employees are among the thousands of personal service workers in America whose livelihoods have been dramatically affected by the coronavirus pandemic,” said Cheryl Stanton, Wage and Hour Division Administrator. “Like many workers, these employees depend on their paychecks to meet their basic living expenses. Even in these unprecedented times, the U.S. Department of Labor’s Wage and Hour Division is committed to ensuring that workers receive their hard-earned wages.”
Plus, most states have comparable wage and hour laws, as well as wage payment laws to enforce employee rights to be paid their normal wages as they come due. The DOL press release notes that “in addition to the back wages, the court ordered Creative Hairdressers Inc. to pay an approximate total of $3,100,000 to satisfy state minimum wages, 401(k) contributions, bonus program payments and applicable employment-related taxes.”
The other hammer is that both the FLSA and most state-equivalent laws have personal liability for decisionmakers. Plus, violators of some, like the Pennsylvania Wage Payment and Collection Law, for example, can face criminal penalties too.
There are situations in which you can’t get blood from a turnip. And, hopefully, your business never reaches that point. But, when storm clouds appear on the horizon, please enlist the help of an employment attorney to mitigate the potential risk and exposure.