Taking a Bite Out of Wage and Hour Audits
— Portland restaurateurs take heed, the Department of Labor could come knocking on your door soon!
By Barran Liebman LLP
Oregon law firm
On April 5, 2012, the Wage and Hour Division of the U.S. Department of Labor unveiled a Fair Labor Standard Act (“FLSA”) enforcement initiative to occur in the Portland metropolitan area, focused primarily on restaurants. The impetus for this crusade is to reduce common FLSA violations, including violations of minimum wage, overtime, record-keeping, and child labor. Examples of frequent violations found by the Wage and Hour Division on these inspections include:
– The failure to pay employees for all hours worked, such as for work done while the employee is supposed to be on a break and relieved of all duties;
– The misclassification of workers as “exempt” resulting in the failure to pay overtime wages to those employees;
– Improper deductions from employees’ paychecks; and
– Allowing minors to operate hazardous machinery, such as meat slicers and other bladed equipment.
These visits can come with some hefty consequences if violations are discovered. Between 2006 and 2011, the Portland office of the Wage and Hour Division found violations at 79 percent of the 281 restaurants it investigated and collected more than $3 million in back wages – both minimum wage and overtime – that was owed to more than 1,600 employees. Additionally, on top of the Wage and Hour Division’s administrative efforts to recover back pay through these investigations, employees also have a private cause of action to recover liquidated damages and attorney fees in addition to actual back pay. Employers may also be subject to civil penalties for each violation, and the possibly criminal penalties, including fines and imprisonment, for willful violations.
If the prospect of financial penalties is not enough, employers have another reason to take the investigations seriously: their public image. The Wage and Hour Division will be compiling their investigation information into their database on the Department of Labor’s website, which is available to members of the general public, including consumers and employees, at this link:
http://ogesdw.dol.gov. And in keeping up with the times, this information will also be available via a free smartphone application called “Eat Shop Sleep,” where consumers can find which restaurants, retail establishments, and hotels have been inspected, whether FLSA violations were found, and if back wages and penalties are still owed.
Although no official start date was provided by the Department of Labor for its enforcement initiative, employers should presume visits may be imminent. The best way to survive an audit is to be proactive. Take the following steps to prepare for a possible audit:
• Compile payroll, time records, employment history, job descriptions, and I-9 forms for all employees for the past three years. Review these documents to be sure they are complete and without mistakes.
• Review meal and rest break policies and verify strict compliance.
• Examine any employees classified as exempt to be sure they meet all the requirements.
• Review assignments and job duties for minors against the child labor laws.
• Consider engaging an employment attorney who has experience with Department of Labor audits, especially if you find mistakes or have concerns.
Sean P. Ray is the firm’s newest associate, focusing his practice on employment & labor law. He defends employers, including restaurateurs, against discrimination complaints, sexual harassment lawsuits and retaliation claims, and represents employers in state court, as well as before Oregon’s Bureau of Labor and Industries. In addition to litigation, Sean also works with employers to draft and revise their employee handbooks to ensure compliance with changes in the law. Sean regularly writes about employment law cases and decisions, and he often provides on-site employment law training to help businesses prevent workplace grievances.
Electronic Alerts are written by Barran Liebman attorneys for their clients and friends. Alerts are not intended as legal advice, but as employment law, labor law, and employee benefits announcements. If this has been forwarded to you, and you would like to begin receiving Electronic Alerts directly, please email Traci Ray at [email protected] Copyright © 2011 by Barran Liebman LLP.