Current Wage and Hour Issues

By Lehr Middlebrooks Vreeland & Thompson, P.C.

May 24, 2018

At this time, Wage Hour continues to operate without an Administrator who has been confirmed by the Senate. The previous Administrator left at the end of the last Administration and the President nominated a replacement in September 2017. The nominee is Cheryl Stanton, the current head of the South Carolina Employment and Workforce Agency. Until a nominee is confirmed by the Senate, the agency will operate under the direction of an Acting Administrator.

In March of 2018, Wage Hour introduced new nationwide pilot program, the Payroll Audit Independent Determination (PAID) program, which facilitates resolution of potential overtime and minimum wage violations under the Fair Labor Standards Act (FLSA). The program’s primary objectives are to resolve such claims expeditiously and without litigation, to improve employers’ compliance with overtime and minimum wage obligations, and to ensure that employees receive back wages they are owed faster.

Under the PAID program, employers are encouraged to conduct audits and, if they discover overtime or minimum wage violations, to self-report those violations. Employers may then work in good faith with Wage Hour to correct their mistakes and to quickly provide 100% of the back wages due to their affected employees. Details explaining how the program is expected to operate can be found on the Wage Hour website.

In recent years, Wage Hour has concentrated their efforts on low wage industries. Those industries included agriculture, day care, restaurants, garment manufacturing, guard services, health care, hotels and motels, janitorial and temporary help. This resulted in over 97,000 employees receiving almost $86 million in back wages last year. Among this group were 44,000 food service employees that resulted in back wages of $43 million and 26,000 construction employees who were due $49 million. During FY-17 (year ended 9/30/17), approximately one-half of their investigations were directed rather than being in response to complaints they received.

In addition to the Wage Hour enforcement activities, there was considerable private litigation. While less in previous years, it still reached 7800 cases during 2017 with over 100 of those being filed in Alabama. In addition to those filed in federal courts, there were a substantial number filed in state and local courts. Thus employers need to take every precaution they can to ensure they are doing their upmost to comply with the FLSA. As you are aware, the employer can be liable for back wages for a two or three year period. Additionally, there is the potential for liquidated damages (an amount equal to the back wages) plus attorney fees.

Further, a couple of years ago Wage Hour began assessing Civil Monetary Penalties for repeat and/or willful violations of the Act. In 2015, Congress passed the Federal Civil Penalties Inflation Adjustment Act which increased the amount of the maximum penalty. Effective January 1, 2018, the maximum penalty for minimum wage or overtime violations has increased to $1,964 per employee who is found to be improperly paid. In addition, when a minor is found to be employed contrary to the child labor regulations, the penalty can be as large as $12,529. In situations where the minor is seriously injured or dies due to job related injuries, the penalty may be up to $56,947 with the potential for doubling in the case of repeat or willful violations.

The status of the revised salary requirements, which were scheduled to become effective in December 2016, for an employee to qualify for the “white collar” exemptions continues to be in limbo. At the request of the Department of Labor, the Fifth Circuit has agreed to delay further action to give the new appointees time to determine how they wish to proceed. Apparently, Wage Hour is preparing to recommend some changes to the salary requirements but nothing has been released at this time. Stay tuned as I expect there will be significant Wage Hour issues raised in the coming months.

This article was prepared by Lyndel L. Erwin, Wage and Hour Consultant for the law firm of Lehr Middlebrooks Vreeland & Thompson, P.C. Prior to working with the firm, Mr. Erwin was the Area Director for Alabama and Mississippi for the U. S. Department of Labor, Wage and Hour Division, and worked for 36 years with the Wage and Hour Division on enforcement issues concerning the Fair Labor Standards Act, Service Contract Act, Davis Bacon Act, Family and Medical Leave Act and Walsh-Healey Act.