Court Orders Company to Pay a Historic $22M for FLSA Violations

In the largest ever recorded verdict under the Fair Labor Standards Act (FLSA), a federal court ordered a Pennsylvania manufacturing company to pay $22 million in back wages after significant FLSA violations. An investigation by the U.S. Department of Labor (DOL) found that the company denied overtime to over 7,500 employees. Similar cases regarding FLSA violations regularly result in judgments in the hundreds of thousands, occasionally breaking the million-dollar mark. For example, an employer paid more than $1.6 million for unpaid overtime pay in January. This month’s $22 million settlement is among the largest in DOL history.

Testimonies Recount Significant FLSA Violations

According to DOL investigators, the company failed to pay workers for all actual working time. The FLSA violations consisted of a failure to pay overtime for hours worked over 40 in a workweek performing tasks directly related to the job. Typically, the company only paid employees for their standard 8-hour scheduled shifts. However, the employer did not account for the employees' time putting on personal protective equipment (PPE) or showering to avoid lead exposure and other hazards. During the trial, the DOL presented the following evidence:

• testimony from 39 employees confirming that they and others were not paid for time worked;
• a witness who performed a study estimating how much time employees spent on this work;
• witness testimony on calculated back wages due and altered time cards; and
• numerous, extensive time records that showed illegally adjusted times and withheld wages.

Wage and Hour Requirements Under the FLSA

The FLSA provides for several federal wage and hour standards and is one of five commonly cited employment laws that all employers should familiarize themselves with. Denying overtime pay is a violation of the FLSA and applicable state and local wage and hour laws. Currently, the FLSA entitles covered workers to the following minimum wage and overtime pay requirements:

• The federal minimum wage of not less than $7.25 an hour, effective July 24th, 2009.
• An overtime pay rate of not less than one and one-half times the regular pay rate during hours worked more than 40 a week.

Notably, employee hours worked include all the time during which an employee is required to be on the employer’s premises, on duty, or at a prescribed workplace. This may include time spent powering up machinery, donning PPE, or booting computers.

Judgment in the Case

After the 30-day trial ended, a 12-member jury found that the company must pay the 7,500 affected workers for all of their working time as a result of the FLSA violations. The jury will ask for this judgment in the U.S. District Court for the Eastern District of Pennsylvania (the District Court). The liquidated damages totaling $22 million will be equally distributed among all claimants in this case. Additionally, the DOL will seek an injunction requiring the Pennsylvania manufacturing company to fully comply with the FLSA in the future.