Company faces historic $35.8 million smackdown for stolen wages

August 1, 2024

Employers, please don’t try this at home, or anywhere.

A federal court recently awarded $35.8 million in overtime back wages and liquidated damages to 6,000 current and former workers in one of the nation’s largest wage recovery judgments.

The employer, whose actions the court deemed willful, operated 15 residential skilled nursing, rehabilitation, and assisted living facilities in western Pennsylvania. The award included $17,902,219.10 in back wages and another $17,902,219.10 in liquidated damages.

U.S. Department of Labor (DOL) investigators discovered the employer violated the federal Fair Labor Standards Act (FLSA) for years by doing the following:

Willfully not paying employees for all hours worked, including work done during meal breaks.
Failing to incorporate all promised compensation, including non-discretionary bonuses and shift differentials, when calculating overtime pay.
Avoiding paying overtime by incorrectly treating employees as exempt (“salaried”) from the FLSA’s overtime requirements.
Not keeping accurate records of hours employees worked and compensation due for those hours.

Initially, the DOL also charged the employer with:

Alternating the pay of supervisory employees between hourly and salary depending on the number of hours they worked, and
Failing to combine the hours some employees spent when they worked at more than one facility.

What should employers do to avoid risking wage violations?

Courts take strong issue with willful violations. Employers that do not want to experience the same costly fate as the one in the case above need to pay nonexempt (“hourly”) employees for all hours worked.

Under the FLSA, employers may classify executive, administrative, and professional employees as exempt from minimum wage and overtime rules only if the employees are:

Paid on a salary basis,
Paid a minimum salary (currently $844 per week - equivalent to $43,888 per year), and
Perform certain job duties.

Employers must also keep certain wage and hour records for each nonexempt worker. These records must include certain information about the hours worked, and the wages earned for nonexempt employees.

Key to remember: Violating the FLSA can be costly, particularly if employers have a history of willful violations.

Publish Date

August 1, 2024

Author

Darlene Clabault

Type

Industry News

Industries

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