When it comes to the Fair Labor Standards Act (FLSA), no employer is small enough to fly under U.S. Department of Labor’s (DOL’s) enforcement radar.
Defunct 1st National Leasing Inc. agreed to pay eight former telemarketing employees $34,235 in back wages under a July 19 consent judgment that will put an end to DOL allegations that the company violated the FLSA’s minimum wage, overtime pay and recordkeeping rules.
Because the company is no longer in operation, the consent judgment holds the owners personally responsible for repaying the workers (over 48 monthly payments).
The government alleged that the lender misclassified FLSA-covered workers as independent contractors, and failed to pay them minimum wage and overtime. The case is Solis v. 1st National Leasing, Inc. Here’s a copy of the consent judgment.
The settlement is in line with DOL’s focus on enforcing violations involving misclassification and vulnerable workers, announced in the agency’s Strategic Plan spanning the years 2011 to 2016. Employers targeted in this enforcement blitz have included home health agencies and restaurants.
This settlement also reflects the DOL Solicitor’s 2011 Operating Plan for enforcement strategies, leaked to the public in December 2010. Apart from suing employers based on reports from whistleblowers more often, goals include:
- seeking double damages in settlements;
- increasing joint federal-state enforcement actions in misclassification cases;
- using warrants and subpoenas;
- investigating “enterprise-wide violations” (targeting multiple worksites) rather than a single worksite; and
- seeking injunctions preventing defendants from continuing to violate the FLSA.
The draft plan, written by DOL’s Office of the Solicitor, was obtained by the law firm Morgan Lewis Bockius and discussed in a Dec. 3 opinion piece in The Wall Street Journal.
Americans for Limited Government called the plan “a tool of the labor unions to beat business over the head,” alleging that the government uses OSHA, EEOC and WHD inspections to punish companies that refuse to let unions organize.
If you ask, How is DOL going to return hundreds of millions of dollars to American workers with tiny settlements like this, one might say the Department is going for a “sentinel effect,” one that sends a warning shot across the bow of small businesses, resulting in more self-policing from that sector.
Some may applaud DOL for going after small companies that employ low-wage employees, because such companies are more likely to violate the FLSA, and such actions affect poor people.
On the other hand, such companies employ poor people who might very well be out of work otherwise.