The Labor Department isn’t kidding when it comes to violations of the Fair Labor Standards Act (FLSA) wage and hour laws. A franchise of The Upper Crust, a chain of Bostonarea pizzerias, was recently fined more than $80,000 for violating overtime and time reporting laws. The Department of Labor found that the franchise neglected to pay 11 employees overtime pay for hours worked in excess of 40 per week, as is required by law for non-exempt employees. The suit also found that the Upper Crust franchise did not maintain accurate time records for the period in question. Back in 2009, the company was fined more than $341,000 for other wage and hour violations and last year 2 employees filed a retaliation suit, which is still in process. These suits serve as a wake up call to companies flirting with FLSA infractions.
The FLSA establishes guidelines for minimum wage, child labor, overtime pay and time reporting. Violations of FLSA can result in treble damages and fines for back wages, attorney’s fees, liquidated damages, civil penalties and potential criminal penalties. So, as an employer, what can you do? First and foremost, familiarize yourself with the FLSA guidelines. The Department of Labor website offers information about all the guidelines and provisions. Understand what applies to you and how you will comply. Once you are familiar with the guidelines, you can implement steps to ensure you are compliant. Writing job descriptions should be at the top of that list. One of the biggest pitfalls employers fall into is incorrectly classifying employees as exempt. Without a proper job description, how will you prove the employee was classified correctly? A good job description that will allow you to make a correct FLSA exemption status determination, includes an explanation of the essential functions of the job, additional responsibilities, and required experience and education. Once the job description is written, you can apply the Department of Labor’s exemption status tests to determine the FLSA classification as either exempt from overtime or non-exempt.
You should also be sure you have a defensible time reporting system in place. How do employees report their time? Every hour the employee works should be reported and paid and, if eligible, applied to overtime calculations. Failure to track or pay overtime can result in violations of FLSA. The bottom line is, don’t think you’re immune to an employee raising a suit or being audited. The Department of Labor takes FLSA violations seriously and will enforce with a strong arm.