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The Department of Labor (DOL) recently announced that a restaurant owner could be fined $1.87 million for wage & hour violations, including overtime damages. Generally, on September 18th, 2024, the federal agency filed suit for minimum wage and overtime regulations. Specifically, the DOL’s Wage and Hour Division (WHD) found servers worked for tips only. Meanwhile, cooks were paid a set cash salary regardless of how many hours they worked. Previously, in August, the DOL announced that a Pennsylvania restaurant owner would be fined $1.3 million for wage & hour violations.
The Fair Labor Standards Act
Chiefly, the WHD found that the restaurant violated the Fair Labor Standards Act (FLSA). As the nation’s primary wage law and one of the major employment laws employers must follow, the FLSA establishes minimum wage and overtime protections for non-exempt part-time and full-time employees. However, under section 13(a)(1) of the FLSA, employees paid above the FLSA’s current salary basis are generally exempt from overtime provisions. To qualify for overtime exemption, employees must have been paid on a salary basis at not less than $844 per week. These exempt employees must also perform at least one of the duties of an executive, administrative, or professional employee.
Also, every covered employer must keep certain records for each covered employee. Records do not have to be in a particular form. However, they must include the following information:
- specific identifying information about the employee,
- data on hours worked,
- pay rate, and
- wages earned.
Overview of the Overtime Damages
The case was filed at the U.S. District Court for the Western District of Missouri, Central Division. Markedly, the lawsuit seeks $1,871,840 in overtime damages, back wages, and liquidated damages for 26 affected workers. Additionally, the DOL assessed a civil money penalty of $35,672 for willful violations of the FLSA.
Basically, the action comes after the WHD found multiple violations over some time. According to the agency, from at least December 21st, 2021, through July 31st, 2024, the employer violated federal regulations by doing the following:
- Paying cooks and other back-of-the-house employees straight-time pay rates when overtime wages should have been paid.
- Failing to pay servers and other front-of-the-house employees the required minimum wage and overtime pay.
- Paying servers only the tips they received.
- Not maintaining complete and accurate time records, as required.
In addition to paying back wages, overtime damages, and penalties, the lawsuit forbids the restaurant from future FLSA violations. The restaurant owner must also provide employees with information on federal wage protections in any language that the employee requests.
Employer Takeaways
In conclusion, as mentioned before, the FLSA requires that most employees in the U.S. be paid at least the federal minimum wage for all hours worked. Unquestionably, employees must also receive overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 in a workweek. To help business owners and their managers comply with overtime exemption laws and avoid wage & hour violations, WorkWise Compliance created the Overtime Exemptions Compliance Program eLearning Module. This digital solution helps employers, managers, and human resources representatives understand the DOL’s overtime rule requirements and determine if employees need to be re-classified.
The DOL is seeking $1.87 million in damages for wage and hour violations, including overtime pay issues, in a case involving 26 restaurant workers. Employers should review their practices using Workplace Compliance Checklists to ensure compliance with the FLSA and avoid similar penalties.
