Avoiding these wage and hour blunders could save your company over a hundred thousand dollars

Last night on the U.S. Department of Labor’s website, I spent some time checking out some of the latest news releases from the Wage and Hour Division.

Oh, hold on one second. I need to take this call.

“Yes?”

“Eric, it’s ‘1996 Eric.'”

“Who?”

“It’s you, err, me, from like 25 years ago.”

“I’m having trouble hearing you. Could you turn down the — is that Snoop Dogg?”

“Fo shizzle. Hey, future Eric? When did you become such a loser?”

“What did you mean? Are you saying that it’s not hella-cool to spend a Tuesday night reading news releases from the Department of Labor?”

“No, that’s fly. Not! I’m guessing most people don’t still say “hella” in 2022. (Sigh…) I’m never going to have relations with a woman, am I? Awesome. At least tell me that I have something to live for.”

“You do get married and have kids; Philly does get a few parades down Broad Street, while the Dallas Cowboys won’t win any more Super Bowls and become the laughingstock of the National Football League.”

“Yo, that’s da bomb!”

“Yeah, ok, gotta go and knock out this blog post.”

“What’s a blog post?”

Anyway, where was I? Ah, yes, I wanted to help you avoid stupid wage and hour mistakes.

Mistake #1 – Salaried Exempt

“Employers cannot avoid paying overtime by simply putting employees on a salary.”

A rental company just learned this lesson the hard way from the U.S. Department of Labor. An audit by the Department’s Wage and Hour Division revealed that the company paid flat salaries to certain employees, regardless of the number of hours they worked. It’s not clear from the press release how much the employees received in salary each week. The minimum salary for an exemption is $684 per week. But salary is just one component of an overtime exemption under the Fair Labor Standards Act. Unless an employer can establish that the employee meets all criteria for an exemption, it must pay that employee overtime when s/he works more than 40 hours in a workweek. Apparently, that didn’t happen here.

The employer had to pay $122K in back wages and liquidated damages to 22 employees it misclassified as exempt.

Mistake #2 – Paying off the books

Yesterday, the Department announced that a federal court had approved a consent judgment ordering a landscaping company and its owner to pay $150,000 in back wages and penalties after a Department investigation found the employer willfully denied overtime pay to its workers.

A Wage and Hour Division investigation determined that the company and its owner failed to pay employees time-and-a-half for hours worked over 40 in a workweek for almost three years. Instead, the employer paid straight-time rates off the books for overtime hours, a Fair Labor Standards Act violation.

The court ordered the company and its owner to pay a total of $61,124 in overtime back wages and an equal amount in liquidated damages to the affected workers. The court also ordered them to pay $27,751 in civil money penalties for their willful violations.

Mistake #3 – Contracts to forego overtime

I was just discussing this recently with a client, which in its defense, was a foreign employer with no knowledge of U.S. wage and hour law.

The domestic employer mentioned in this recent Department press release has no such excuse.

A federal investigation recovered $315,536 in back wages for 158 home care agency workers. The owner and CEO unlawfully required hourly employees who earned significant overtime to sign an agreement to be paid straight time for up to 160 hours per pay period.

Not paying time-and-a-half to nonexempt employees for overtime violates the FLSA. So does forcing them to defer their overtime wages.