Benefits and Compensation

‘Classic example of a complete disregard for employees’ basic rights’ (DOL)

It’s time for another wage and hour roundup—our regular collection of cases that remind HR managers that wage and hour violations are still prevalent—and expensive.

"This is a classic example of a complete disregard for employees’ basic rights," said Janet Herold, DOL’s regional solicitor in San Francisco, speaking about the recent Intelliconnect case. "It is unacceptable for employers to cheat workers of the simplest right to be paid their full wages for all hours worked and to cheat taxpayers of the payroll taxes due. This must stop. This judgment is part of the department’s effort to make sure that these schemes fail."

In the case, the court ordered Intelliconnect, a Las Vegas-based telemarketing company, to pay $280,000 in minimum wage and overtime back wages and an equal amount in liquidated damages to 398 employees for violations of the Fair Labor Standards Act (FLSA).

Wage and Hour Division (WHD) investigators found that Intelliconnect classified its telemarketers as independent contractors, which denied them minimum wage and overtime wages. Investigators found the employer paid the telemarketers based on a percentage of individual sales, resulting in many of them working for days and weeks for little or no pay.

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Misclassification is a hot button these days, and not only for the DOL. Plaintiffs’ attorneys look at wage and hour cases as low hanging fruit, and they particularly like misclassification because it often means many employees are affected, and that means the possibility of a collective action.

Here are a few other recent cases:

Hawaii Steak Restaurant—$150,000 in Tips, Back Wages

Hawaii’s Buzz’s Original Steak House will return $150,000 in tips and other back wages to 109 employees at its Kailua and Pearl City restaurants. During a 2-year period, an investigation determined cash wages of tipped employees were reduced below the minimum wage of $7.25 per hour, and servers were unlawfully required to pay a portion of their tips to managers.

Drywaller Slapped with $100K Plus

Abayla Contracting Services, a drywall construction contractor in Livermore, Calif., agreed to pay $108,900 in back wages and liquidated damages to 42 workers when WHD investigators found employees were not paid an overtime premium when they exceeded 40 hours in a workweek.

Off-the-Clock Charting Nets Nurses $114,690

Nurses at a skilled nursing facility in Mountain View, Calif., failed to receive compensation for time spent updating patients’ charts after their shifts ended. "Unfortunately, we have found it is all too common for skilled nursing facilities and other businesses to create workloads for nurses so high that they are forced to finish their charting off the clock," said Susana Blanco, WHD’s district director in San Francisco.

Wage and hour lawsuits are expensive—and easily prevented. Here’s how to protect against crippling judgments. Go here for information or to order Wage & Hour Compliance: Practical Solutions for HR

The Baggage

The downside of these wage and hour cases isn’t only the fines. There is a substantial hassle factor as well. Not only is there the time, expense, and energy of going through the investigation, but there is usually a substantial commitment of time and resources after the judgment. Most decisions, agreements, and settlements include ongoing components, such as submitting to monitoring, delivering reports, hiring experts, etc.

And don’t forget the detriment to your brand and to employee engagement and morale.

In the Intelliconnect case mentioned at the beginning of this article, the court ordered that the company be independently monitored for the next 3 years to ensure future compliance, and it prohibits any retaliation against employees for accepting back wages or for exercising their rights under the FLSA. The company must take additional proactive measures to ensure future compliance.

Additionally, Intelliconnect and its owners agreed to annual training sessions for a period of 3 years, and to produce and maintain explanations for workers when they claim a worker is exempt from minimum wage and overtime.

Now Feds and States Share Info

Finally, the DOL recently signed an agreement with the Florida Department of Revenue to reduce misclassification of employees through sharing of information, joining Alabama, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah, and Washington state.
So, if you are in one of these states, you are immediately going to be on the radar of one entity if you’re on the radar of the other.

In tomorrow’s Advisor, the DOL targets specific industries, plus an introduction to BLR’s Wage & Hour Compliance Solutions.

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