The U.S. Department of Labor’s Wage and Hour Division announced a contest yesterday to individuals interested in developing an app that would integrate the Department’s public enforcement data along with consumer rating websites, geo-positioning tools and other data. The purpose of the app is to allow consumers and job seekers to see if a business they want to frequent is in compliance with federal labor laws. It would also allow individuals to get in touch with the Labor Department if they have questions.

Really, an app contest? It sounds to me like the Doritos Crash The Super Bowl contest in search of a funny commercial, but this time it is actually the government trying to encourage compliance with the FLSA and to keep the public informed.

The contest ends on October, 11, 2013, and the winner will be announced around November 2. Information on the contest is available on the Department of Labor’s website.

Business owners should pay attention to this contest and potential app. Consumers, employees, or prospective employees will soon have easier access to compliance information about your business. Most businesses don’t intentionally try to violate the Federal Fair Labor Standards Act, and this new app will have the potential to make non-compliance information a viral nightmare. It may be a good time for businesses to do a wage and hour audit to ensure compliance with the FLSA.

SUBWAY Restaurants “Eat Fresh!” slogan may need to be changed to “Pay Right.” This week the U.S. DOL – Wage and Hour Division announced it is partnering with the national SUBWAY headquarters for the purpose of increasing compliance with federal labor laws at SUBWAY franchises throughout the country. This is a voluntary action by SUBWAY headquarters, and is not tied to any claims. SUBWAY headquarters has indicated they are committed to assisting the Wage and Hour division in educating franchisees on wage and hour laws, and are taking a proactive approach to assist their goal:

(1) By placing a link to the Wage & Hour Division’s website on their intranet site for restaurant owners to use for reference purposes;
(2) By inviting Wage and Hour division staff to present at its annual meetings; and
(3) Publishing articles outlining federal minimum wage and overtime requirements under the Fair Labor Standards Act in its weekly electronic newsletters.

This is a good business practice by SUBWAY, because employers found in violation of the FLSA can be subject to claims for back wages, damages, and penalties. Other national franchisors should take a hint from SUBWAY, and contact the Wage and Hour Division to ask for assistance in training their franchisees on federal labor laws. Being proactive can save time and money in the long run.
 

This isn’t the first time I’ve blogged about the importance of making sure your employees are properly compensated under the Fair Labor Standards Act (FLSA), you can find those stories here, here, and here.  Now, it seems that restaurants are on the Department of Labor’s hot seat. 

The Minneapolis District Office for the Wage and Hour Division of the Department of Labor has resolved an investigation involving the Wisconsin Meyer’s Family Restaurant. The Meyer’s Family Restaurant has agreed to pay over $116,000 in back wages to 38 employees. The company was cited for failing to record all hours worked by employees, failing to pay overtime compensation, paying cash for some hours of work and keeping no record of the hours worked or the cash payments made, and keeping no record of tips received.

The FLSA has established a federal minimum wage of $7.25/hour for all hours worked, plus time and one-half for hours worked beyond 40 hours per week. However, an employer of a tipped employee is only required to pay $2.13/hour in direct wages, provided the amount the employee receives in tips equals the federal minimum wage. If the employee’s tips combined with the employer’s direct wages do not equal the minimum wage of $7.25/hour, the employer is require to make up the difference.

On the east coast, 15 Boston-area restaurants and their owners have agreed to pay a total of $424,000 in back wages and liquidated damages to 409 employees, to resolve alleged violations of the FLSA. Most of the employees affected were paid by a separate company, Superbrite Professional Cleaning (later known as Excel Management). George Rioux, the district director for the Boston – Wage & Hour Division stated, “Utilizing contract labor providers does not absolve employers from their responsibility of complying with the FLSA and paying workers the wages they are legally due.” Generally, the use of contract labor through an employment agency does not generate a FLSA problem as long as the agency is properly compensating the contract labor.

If you are in the restaurant industry, make sure you keep complete and accurate records. Appropriate record keeping is crucial in order to establish employees are properly compensated. Additionally, any Employers out there who use contract labor should confirm the workers are being properly compensated, so you don’t get punished with liquidated damages.

The U.S. Department of Labor has been busy this year investigating violations of the Federal Fair Labor Standards Act (FLSA), and has filed lawsuits in both Texas and Massachusetts seeking back wages and liquidated damages on behalf of employees.

In Texas, the suit is against The Christmas Light Co. Inc. to recover almost $250,000 in back wages, liquidated damages, and an injunction to prevent future violations of the FLSA, on behalf of 233 employees who installed and removed Christmas lights for the company. The suit arose following an investigation which revealed The Christmas Light Co. Inc. paid employees a flat rate for installing and removing Christmas lights, without regard to the number of hours the employees actually worked. Additionally, employees were paid “straight time” instead of overtime at time and one-half, for hours worked in excess of 40 in a week. The Christmas Light Co. Inc. also ran into problems for failing to maintain accurate time and payroll records as required by the FLSA.

In Massachusetts, the DOL is seeking at least $500,000 in back wages and liquidated damages from Boston Hides & Furs Ltd. The investigation of Boston Hides & Furs Ltd. determined the company committed willful and repeated violations of the FLSA, specifically not paying minimum wage, not paying overtime and not keeping appropriate records. The company had at least 14 employees who worked approximately 10 hours per day, six days a week, and were paid between $50-$70 per day.

As the year comes to a close, now is a good time to conduct an FLSA audit and make sure you are paying your employees correctly and maintaining the required documentation.

Earlier this week, a proposed class action was filed against Wal-Mart in a federal district court in Chicago. The lawsuit accuses Wal-Mart Stores, Inc. and two staffing agencies of requiring temporary employees to arrive at work early, stay late, and work through their lunch. The lawsuit alleges violations of the minimum wage and overtime laws.

In addition to the lawsuit, Wal-Mart has faced protests in numerous cities by a group called “OUR Walmart” which is trying to speak out about working conditions at Wal-Mart. There is even talk that some workers are planning on walking off the job on Black Friday, the biggest shopping day of the year.

This isn’t the first time Wal-Mart has had legal trouble for improperly compensating its employees. Earlier this year, I blogged about a case out of Pennsylvania where Wal-Mart was required to pay over $187 million in back wages and fines because language in its employee handbook required paid breaks, and they had not provided the benefit to employees.

As the holiday season begins to gear up and more people are out shopping, I hope all retail employers will make an effort to audit their wage and hour practices. If mega-employer Wal-Mart is getting it wrong, it is worth the effort to check and insure your business is complying with the law.

There are a lot of ways to violate the Fair Labor Standards Act, and the U.S. Department of Labor is taking notice and holding employers accountable. Misclassifying employees as exempt, not paying employees who work through breaks or from home, and not paying employees for hours worked over 40 in a week, are just a few of the types of violations in the news.

The U.S. Department of Labor and Wal-Mart have finally reached a settlement as a result of Wal-Mart’s misclassification of vision center managers and asset protection coordinators as exempt. It was determined these Wal-Mart employees were misclassified back in 2007, at which time Wal-Mart corrected the misclassification. However, it has taken until now to resolve the issue of back wages and damages. Wal-Mart has agreed to pay all back wages and liquidated damages owed to more than 4,500 employees, totaling $4.83 million. It will also pay more than $400,000 in penalties to the Department of Labor.

Here in Minnesota, a local landscaping business has agreed to pay almost $500,000 in back wages and damages to 57 workers who were misclassified as independent contractors, instead of employees. The company and its owners will also pay $22,000 in civil penalties.

The Fair Labor Standards Act is a complicated law with lots of room for errors. Businesses would do themselves a favor by conducting a self-audit of employees to make sure everyone is properly classified, and properly compensated. The expense in the short-term will definitely pay off in the long run. Self-audits are less costly than an audit conducted by the Department of Labor after a charge has been filed.

My long-time friend and recruitment advertising guru, Chris Bacon, sent me an interesting article she ran across and asked my legal opinion, “Would you fire someone for working through lunch?” The online article she forwarded to me outlined an absurd set of facts.

Sharon Smiley, a receptionist/office assistant with a Chicago real estate company opted to not eat lunch, and instead she worked at her desk, answering phones and working on a spread sheet for her employer. When her manager observed her working during her lunch break, she was told to go and speak with the HR manager, who promptly terminated her employment for violation of the lunch policy and insubordination. A two-year court battle over unemployment benefits followed. Last month, a Cook County judge ruled Smiley’s conduct did not rise to the level of misconduct, and awarded her unemployment benefits.

I understand the concept of workplace policies and the concern employers have about employees working “off the clock,” creating overtime problems under the FLSA. But really…… terminating an employee for working through lunch! What about common sense, communication, and simply correcting an employee’s misstep?

While Sharon Smiley represented herself throughout the two year legal battle over unemployment benefits, you can bet her employer did not. They no doubt spent a handsome price on legal fees arguing that a ten year employee who opted to work through lunch had committed gross misconduct, warranting the denial of unemployment benefits.

The short answer to my friend Chris is “NO!” I would not advise any client of mine to terminate an employee who works through their half- hour lunch break. I would advise the employer to speak to Ms. Smiley and explain why working through lunch is not acceptable. Since the “work” had already been performed, the employer should also check to see if Smiley was entitled to overtime for the one instance. The matter should be documented and Ms. Smiley provided a copy of the written documentation. The documentation should include a warning to Ms. Smiley that she could be disciplined if she works through lunch again in the future. In all reality though, Ms. Smiley seems bright enough that simply advising her she can’t work through lunch and why might have been enough to deter the behavior from happening again. Oh, and let’s not forget, a shake-up in HR might be warranted too. 
 

Every day more and more applications become available for smartphone users some are for fun and some are useful. I personally have a barcode scanner app, The Weather Channel app and a stopwatch app on my smartphone. The federal government has gotten into the app business and created an application which will help employees track the hours they work and determine the wages they are owed. At this time, the Department of Labor app is available in either English or Spanish, but only for the iPhone and iPod Touch. The Department of Labor timesheet app does not handle tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest.

Secretary of Labor Hilda Solis remarked, "I am pleased that my department is able to leverage increasingly popular and available technology to ensure that workers receive the wages to which they are entitled. This app will help empower workers to understand and stand up for their rights when employers have denied their hard-earned pay."

I’ve blogged several times about employers who have been fined for not properly paying their employees under the Fair Labor Standards Act, including Levi Strauss & Company and Walt Disney Parks & Resorts in Orlando, Florida. Now, employees have technology in their favor. In the past, if the Department of Labor received a complaint and the Wage and Hour Division conducted an investigation, the only party with any evidence was the Employer. Through this new app the employee can now provide verification of their tracked work hours to the Wage and Hour Division. The Department of Labor states, such information could prove invaluable during an investigation when an employer has failed to maintain accurate employment records.

Employers make sure you are correctly tracking your employees’ hours of work, and make sure employees are properly compensated under the FLSA. You don’t want your business subjected to an investigation by the Wage and Hour Division and then have to rely on the evidence provided by an employee through a smartphone app, because you don’t accurately track an employee’s work hours.
 

 I’ve blogged in the past about other businesses found to have violated the Federal Fair Labor Standards Act (FLSA), including Walt Disney Parks & Resorts in Orlando, Florida and Umatilla Chemical Depot plant in Oregon. Now, Levi Stauss & Company, the first business to manufacture blue jeans, joins this notable list. The San Francisco District Office of the U.S. Department of Labor’s Wage and Hour Division conducted an investigation and determined Levi Strauss had misclassified several groups of workers, including assistant store managers of newly acquired stores, as exempt from overtime. Additionally, the company failed to record all hours employees worked in its payroll system. Levi Strauss has agreed to pay $1,011,413.00 in overtime back wages to 596 employees nationwide, and upgrade its time and attendance system. 

Very few businesses are immune from following the Federal Fair Labor Standards Act (FLSA). It applies to all employees of certain “enterprises" regardless of the work they perform. Even if your business does not meet one of the definitions of a "covered enterprise", your employees may still be covered if their work duties meet certain interstate commerce requirements, such as the production of goods for interstate or foreign commerce, including any closely related process of occupation directly essential to such production. For example, an office worker who uses the telephone, fax, U.S. mail or e-mail to communicate with persons in another state is engaged in interstate commerce.

It is important to make sure your employees are properly classified under the FLSA, because the likelihood your business is required to comply with the FLSA is almost 100%. Don’t let your business be penalized like Walt Disney & Levi Strauss.

 Earlier this week the United States Supreme Court issued a decision in Kasten v. Saint-Gobain Performance Plastics Corp. holding, ‘[t]he scope of the statutory term “filed any complaint” includes oral, as well as written complaints.’

This case arose when Mr. Kasten was fired, he alleges, for complaining to his supervisors and human resources about the unlawful location of the time clocks at the Saint-Gobain facility. After his termination, he filed an anti-retaliation lawsuit claiming violations of the Fair Labor Standards Act of 1938. The Supreme Court did an extensive analysis of the phrase, “filed any complaint”, before holding in favor of Mr. Kasten and remanding the case for further proceedings.

Saint-Gobain argued, if oral complaints would suffice, then employers will be left in a state of uncertainty about whether an employee is making an actual complaint or perhaps just blowing off steam. The Court agreed with Saint-Gobain and stated, “the phrase “filed any complaint” contemplates some degree of formality, certainly to the point where the recipient has been given fair notice that a grievance has been lodged and does, or should, reasonably understand the matter as part of its business concerns.” But, the Court proceeded to side with Mr. Kasten.

Given how long the Fair Labor Standards Act has been in effect, it is surprising this type of case hasn’t come before the Court earlier. Now, Employers need to be pay attention to any verbal complaints raised by employees, and address them in the same manner as a more formal written complaint.