Human Resources News & Insights

Caution: DOL can cripple your future recruiting efforts for current pay mistakes

Imagine going through the stress of a DOL investigation, being ordered to pay out nearly $200,000 and then finding out you have to tell every new hire you plan to bring on about the ordeal.

That’s the nightmare situation a restaurant with locations in both Ohio and West Virginia faced following a DOL investigation.

Back pay plus …

In 2016, the DOL investigated Tampico Restaurant and uncovered a slew of pay issues, including:

  • tipped workers were required to contribute to illegal tip pools
  • kitchen staff made subminimum wage, and
  • accurate records weren’t kept.

The DOL came down on the restaurant in the usual manner. The agency ordered Tampico to provide $190,000 to the employees in back pay and offer training to managers on the ins and outs of the FLSA.

But it also added a more creative – and potentially far-reaching – penalty: It required the company to provide a copy of the investigation decision, including all evidence against the company, to each and every new hire through Feb. 2017.

Beyond standard penalties

No doubt, having to fork over money for FLSA violations hurts. But having to tell every hire about the issues that brought the DOL to your door in the first place could be more damaging in the long run.

After all, top candidates are likely to head for the hills after reading detailed info about FLSA violations.

And this isn’t the first time the DOL has shown its creativity with penalties. Last year, an FLSA violator was ordered to hire independent consultants to report back to the DOL on the company’s pay practices.

To avoid one of the DOL’s creative punishments, carefully track and document all employee records. Even if a mistake happens, this shows the feds you acted in good faith.

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