Labor Department Investigates Wage and Hour Violations Epidemic

Wage, hour and overtime lawyers at Pintas & Mullins Law Firm highlight a recent conference held by the U.S. Labor Department, during which the agency affirmed it was taking new approaches in investigating company wage and hour compliance after an epidemic of violations.

Despite the recent crackdown on illegal practices, workers throughout the country continue to be denied minimum wage and overtime. This problem is particularly persistent in low-wage workers and tipped employees. As the Labor Department’s solicitor put it, the situation at present is nothing short of an epidemic.

This year marks the 75th anniversary of the Fair Labor Standards Act (FSLA); it was initially enacted in the Depression era, when jobs were scarce and exploitation was abundant. At a conference at New York University Law School celebrating this anniversary, speakers affirmed that the agency just recently began a new emphasis on investigations of potential systemic violations of the Act.

In previous years, the federal agency opened investigations based solely on workers’ complaints. Since 2012, however, it has focused more on directed investigations, during which it examines entire industries or geographical areas. For the previous method, based on workers’ complains, the agency found violations 79% of the time. Now, in directed investigations, it finds violations about 71% of the time.

These staggering statistics prove that FLSA violations are indeed an epidemic in the United States, where the average consumer is only just beginning to recover from the recession. For example, Cemex Inc, a Houston-based cement supplier, reached an agreement with the Labor Department in late 2010 after investigations revealed several FLSA violations. That one investigation, centering on just one Cemex facility, spread to other facilities throughout the country, ultimately reaching a $1.5 million settlement.

During the conference the Labor Department also highlighted systemic violations in a garment supply chain based in Southern California. The Department examined about 1,500 manufacturers and subcontractors for minimum wage and overtime violations, leading it to pursue a subpoena of Forever 21, the popular retailer, for information about its subcontractors.

In addition to wage, hour and overtime violations, the department is also working with individual states on issues related to worker misclassifications. In recent years more than 300 wage and hour investigators have been hired in state departments around the country. In 2011 alone, the agency recovered nearly $225 million in back wages for American workers.

New York State recently (2011) enacted a new Wage Theft Prevention Act. Even more recently, in January 2013, the New York State Assembly considered amending the Act to increase the amount of damages an employer must pay for failing to pay employee wages. In fact, it would double the amount. Currently the liquidated damages due in a wage theft dispute is set at 100%. If the failure to pay wages persisted for more than 30 days or involved ten or more employees, that number would shoot up to 200%, if the amendment is accepted.

For example, if it goes through, if an employee was owed $10,000 in back wages the employer would actually be liable for up to $30,000 in damages. Legislators believe this increase would send a clear message to employers who fail to pay or immediately resolve any issues of wage theft.

In related news, W.D. Masonry of Baton Rouge, LA recently agreed to pay 52 masonry workers more than $67,000 in back wages and liquidated damages (set at 100%) after an investigation by the Labor Department. The agency found that the company was forcing its employees to work overtime without compensating them properly for that time. This practice is illegal and unacceptable and the Labor Department used all enforcement tools available to recover the masonry workers’ rightful wages.

Wage, hour and overtime lawyers at Pintas & Mullins Law Firm will continue to report on cases, developments, and legislative changes related to the FLSA. If you or a loved one is not being paid within the requirements of the FLSA or any other state-mandated laws, you have important legal rights, and may be entitled to significant compensation.