Compensation, FLSA/Wages

Disney Owes Workers $3.8M for ‘Costume’ Expense

Two subsidiaries of the Walt Disney Co. have agreed to pay $3.8 million to settle claims that they improperly deducted uniform and “costume” expenses from workers’ pay.

Minnie Mouse

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The Florida companies, Disney Vacation Club Management Corp. and the Walt Disney Parks and Resorts U.S. Inc., caused workers’ pay to dip below the federal minimum wage when they made the deductions, the U.S. Department of Labor (DOL) found.

The resorts also did not pay employees for pre- and post-shift duties, creating more minimum wage and overtime violations, the DOL said in a press release, and failed to maintain required time and payroll records. The back wages from the settlement will be shared by 16,339 employees.

“We hope the resolution of this case alerts other employers who may be paying employees in a similar manner, so that they too can correct their practices and operate in compliance with the law,” said Daniel White, a district director for the DOL’s Wage and Hour Division (WHD).

The announcement is the WHD’s second since Trump took office. (See DOL Offers First Peek at Toned-Down Enforcement.)

Employer Takeaway

In announcing the settlement with Disney, the DOL said that Fair Labor Standards Act (FLSA) violations caused by uniform deductions are common. Employers need to understand that they cannot make pay deductions that cause workers’ pay to fall below the relevant minimum wage or deny them required overtime pay, White explained.

The FLSA permits payroll deductions for uniforms, but only if the FLSA’s mandates are met. The DOL offers the following explanation in its Fact Sheet #16: Deductions From Wages for Uniforms and Other Facilities Under the Fair Labor Standards Act (FLSA):

[I]if an employee who is subject to the statutory minimum wage of $7.25 per hour (effective July 24, 2009) is paid an hourly wage of $7.25, the employer may not make any deduction from the employee’s wages for the cost of the uniform nor may the employer require the employee to purchase the uniform on his/her own. However, if the employee were paid $7.75 per hour and worked 30 hours in the workweek, the maximum amount the employer could legally deduct from the employee’s wages would be $15.00 ($.50 X 30 hours).

Employers may, however, prorate the cost of uniforms over several pay periods, the DOL says.

Finally, the agency noted certain actions that an employer may not take, such as: (1) furnishing or requiring elaborate uniforms and then requiring workers to have them cleaned; and (2) requiring that employees reimburse it for uniforms in cash to avoid the FLSA’s minimum wage and overtime requirements.

For more information, see the DOL’s fact sheet.

Kate TornoneKate McGovern Tornone is an editor at BLR. She has almost 10 years’ experience covering a variety of employment law topics and currently writes for HR Daily Advisor and Before coming to BLR, she served as editor of Thompson Information Services’ ADA and FLSA publications, co-authored the Guide to the ADA Amendments Act, and published several special reports. She graduated from The Catholic University of America in Washington, D.C., with a B.A. in media studies.