Recent investigations by the Department of Labor’s (DOL) Wage and Hour Division (WHD) have disclosed a variety of violations that include: (1) failure to pay overtime; (2) child labor law violations; and (3) misclassification of employees as independent contractors.
Failure to pay overtime.
In the first investigation, a residential healthcare facilities management company paid $121,525 in back overtime wages to 640 employees. A WHD investigation found that Advantage Living Centers paid non-discretionary bonuses to employees for perfect attendance, working in the Coronavirus (COVID-19) isolation unit and for mentoring and training new employees, but failed to include the bonuses into an employee’s rate of pay when calculating overtime rates.
Acting WHD District Director Angela Telang noted that: “Overtime rates must be calculated on an employee’s average hourly rate of pay, including any non-discretionary bonuses paid. She added that the WHD offers assistance to employers and workers to help calculate overtime pay rates accurately [Wage and Hour Division, Release No. 22-1906-CHI, 9/26/2022].
Child labor law violations.
Another WHD investigation found that a Fort Wayne-based operator of 11 Dairy Queen franchise locations, H&H Coldwater (W&H) violated child labor provisions of the Fair Labor Standards Act at 11 of its locations. Specifically, the WHD found 102 minors ages 14 and 15 illegally working.
The FLSA prohibits 14- and 15-year-old employees from working later than 9:00 p.m. from June 1 through Labor Day and past 7:00 p.m., the remainder of the year. Additionally, they cannot work more than three hours on a school day, eight hours on a non-school day or more than 18 hours per week.
H&H Coldwater LLC agreed to pay $42,572 in civil money penalties by November 14, 2022, for the nature of its violations.
WHD District Director Patricia Lewis commented that “Franchisees like H & H Coldwater provide teen workers an opportunity to learn customer services and other skills that prepare them for successful careers but as employers, they have an obligation to ensure child labor laws are followed. Child labor laws protect teens’ health and ensure their first job experiences are positive and manageable with schooling and other commitments” [Wage and Hour Division, Release No. 22-1437-CHI, 9/26/2022].
Misclassification of workers.
In the third investigation, WHD investigators recovered $352,347 in back overtime wages for 653 workers of a staffing agency that assigned them to manufacturing facilities and illegally classified them as independent contractors. By doing so, the employer denied their workers overtime wages, as well as benefits such as unemployment insurance and worker’s compensation and are required to take on the employer’s tax burden.
The WHD found that LTL Staffing and Business Solutions assigned most of the employees to work as machine operators, welders and forklift drivers at Challenge Manufacturing. While the employees worked directly at the manufacturing plants, LTL Staffing maintained all employee records and processed their paperwork and payroll.
Acting WHD District Director Angela Telang noted that: “When there is an employment relationship between a worker and an employer, these workers are covered under the Fair Labor Standards Act. This means employees must be paid the minimum wage and overtime as required by the FLSA. Failing to recognize workers as employees strips them of a wide range of valuable benefits and labor protections.”
She added that misclassification of employees as independent contractors is a major concern for the U.S. Department of Labor, and violations associated with misclassification are found all too frequently by WHD investigators [Wage and Hour Division, Release No. 22-1905-CHI, 9/23/2022].
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