5 Latest Overtime Violation Cases: DOL Penalties Explained

When you think about the latest overtime news, the first thing that probably comes to mind is the recent federal court decision that vacated the DOL’s salary threshold increases for exempt employees.

And while that ruling was getting the lion’s share of the attention, here’s what you might’ve missed: The DOL’s Wage and Hour Division (WHD) has been on a tear this month, targeting overtime shortages and other FLSA violations.

The result? Employers in five states have been ordered to pay out nearly $3.1 million – and that’s what the DOL announced in December alone.

The True Cost of Overtime Mistakes: 5 Recent Case Studies

Employers in various industries across the U.S. have made expensive FLSA mistakes. Here’s what happened – and how you can help your company avoid a similar mistake.

1. Oklahoma Sod Farmer and Landscaper Ordered to Pay $72K

On Dec. 2, the DOL announced it had obtained a consent order against an Oklahoma employer that misapplied the agricultural exemption to retail workers and failed to pay them overtime when they worked more than 40 hours in a workweek.

Robert K. Cook, III, operator of Rob’s Sod Inc., and Cook’s Farmland Enterprises LLC, d/b/a Green Acre Sod Farm, Green Acre Sod & Landscape Center and Enterprise Sod and Landscape Center at four locations has been ordered to pay $72,000 in back wages and liquidated damages to 20 workers.

“Employers must be familiar with federal regulations that apply to their business and make certain that workers are paid as the Fair Labor Standards Act requires,” said WHD District Director Michael Speer in Oklahoma City. “The Wage and Hour Division is determined to hold employers accountable when they fail to meet their legal obligations to pay employees fully for the work they do.”

2. Hawaii Restaurant Owner Will Fork Over $158K – Plus $2K in Penalties

Also on Dec. 2, a DOL investigation found a restaurant owner failed to pay overtime to one employee who worked more than 40 hours in a workweek. It also determined the owner and his wife, a manager, illegally took a share of the tip pool. 

The owner of Domo Café was ordered to pay a total of $158,452, which breaks down as follows: 

• $7,172 in overtime wages to one employee
• $72,054 in tips for 14 employees, and
• $79,226 in liquidated damages for 14 workers.

Plus, the DOL tacked on an additional $2,030 in civil money penalties because of the reckless nature of the violations.

3. Joint Employer Healthcare Staffing Agencies on the Hook for $2.4M

On Dec. 3, the DOL obtained a court order recovering back wages and damages from Massachusetts and Pennsylvania healthcare staffing agencies that denied employees overtime wages and misclassified them as independent contractors (ICs).

The court order requires Gate Solution Systems Inc. of Malden, MA, and joint employer Healthcare Services Group Inc. of Bensalem, PA, to pay a total of more than $2.4 million for 341 employees.

The WHD’s investigation found Gate Solution Systems misclassified housekeepers, and laundry and dietary workers as ICs and failed to pay them overtime when they worked more than 40 hours in a workweek. 

Further, WHD determined Gate Solution Systems hired the employees to provide cleaning, laundry and dietary assistance services, under the supervision of Healthcare Services Group, at various healthcare facilities.

“This case’s outcome should remind employers that the U.S. Department of Labor will take appropriate action, including legal action, to protect workers whose employers deny them proper pay under the Fair Labor Standards Act,” said Solicitor of Labor Seema Nanda. “The Department of Labor will always strive to protect the rights of workers.”

4. Kentucky Smoke Shop Must Cough Up $24K

On Dec. 4, the DOL announced it had recovered back wages and damages for 22 employees who were denied overtime pay for working more than 40 hours per week.

According to a WHD investigation, 25 Vape & Smoke LLC and its owner, Salik Rao, paid employees straight time for all hours worked, instead of paying them the required overtime rate of time and one-half for hours over 40 in a workweek.

“Kentucky workers support their families and communities when they clock in, but they can’t fully achieve their earnings’ potential when they do not get every penny they earned,” explained Wage and Hour Division District Director Karen Garnett-Civils in Louisville, KY. “25 Vape & Smoke asked them to do a job, they did it, and those workers deserve to take home every dollar they earned.”

5. Pennsylvania Home Healthcare Agency Owes $414K – Plus a $5K Fine

On Dec. 9, the DOL announced it had obtained a court order against a home healthcare agency owner who “deliberately failed to pay employees their legally earned overtime wages.”

A WHD investigation determined QualiT Healthcare LLC owed 62 employees $414,351 in back wages and liquidated damages for violating the overtime provisions of the FLSA.

The court also ordered the agency and its owner to pay a $5,649 civil money penalty for the willful nature of the violations.

Before the DOL sought the consent judgment, QualiT Healthcare had paid $198,591 in back wages and $9,341 in liquidated damages to the affected workers. The court order required the employer to pay the remaining balance of $212,067 in back wages and liquidated damages to the workers, and the civil penalties to the DOL.

“Care workers provide essential services to people in need in our communities and they deserve to be paid all of their earned wages,” said WHD District Director James Cain in Philadelphia. “Enforcement actions against employers like QualiT Healthcare help to ensure workers are paid as the law requires and remind other employers of the importance of compliance.”

Common FAQs: Overtime, the FLSA & the DOL

Here’s what you need to know about the overtime provision of the FLSA and the DOL – the federal agency that oversees FLSA enforcement.

What are the Federal Rules for Overtime?

Under the federal Fair Labor Standards Act, most non-exempt employees must be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half their regular rate of pay for all hours worked over 40 in a workweek. 

What is the Penalty for Violating the FLSA Overtime Rules?

There are two important things employers should be aware of here: damages and civil money penalties.

The FLSA allows for the recovery of back wages and an equal amount in liquidated damages for minimum wage and overtime violations. In most cases, a two-year statute of limitation applies – but for cases involving willful violation, that statute of limitations is extended to three years. Damages go to affected workers.

Regarding the civil money penalties, employers that willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to a civil money penalty of up to $1,000 for each such violation. This money is paid to the federal government. Plus, willful violations of the FLSA may result in criminal prosecution, and the violators can be fined up to $10,000.  

Should We Factor Employees’ Performance Bonuses Into OT Pay?

Under the FLSA, non-discretionary bonuses – meaning those based on meeting production, sales or other performance standards – must be factored into the “regular rate” of pay, which is used to determine overtime pay, according to employment law attorney Bennett Epstein of the firm Foley & Lardner LLP.

Moreover, if the employer can determine the precise weeks the employee earned the bonus, it must retroactively attribute the bonus to those weeks, Epstein explained. 

But if the employer can’t identify the specific weeks in which the bonus was earned, then the bonus must be allocated across the entire bonus period. Either way, the employer must pay additional overtime based on the bonus, he clarified.

What’s the Best Way to Handle a DOL Investigation?

And here’s the real money question: What if the DOL comes knocking? What then?

Every situation is unique, employment law attorney Michael Elkins previously explained to HRMorning. Even so, he offered some general tips on handling a DOL investigation to help make the process smoother and more positive. 

Be prepared to provide data and answer questions regarding FLSA compliance 

The DOL investigates numerous employment law matters. Regardless of what they’re investigating, they almost always ask about the FLSA in any investigation, Elkins said. If you’re ready for that inquiry, you can disarm the investigator.

Even if you’re not compliant, you can show good-faith efforts to correct problems by saying, “We were expecting you to ask, and after an internal audit done in advance of your arrival …” while sliding over a perfectly tabbed binder showing measures taken to correct any FLSA violations, according to Elkins.

Have your documents ready 

Most DOL on-site investigations start with a subpoena for records, and the DOL usually provides an online portal to upload documents in advance, Elkins said.

However, usually, the subpoena will also say that the records need to be available at the on-site meeting. So, make sure to do that. Even if the investigator doesn’t read the documents at the meeting, the act itself makes a statement that you’re taking the investigation seriously, and hopefully, don’t have anything to hide.

Have counsel present

“I can’t tell you how many times I have been hired AFTER the investigators were on the premises,” Elkins said. “By that time, the proverbial cat is already out of the bag. Your lawyer can’t help if your lawyer isn’t there.”

Remember that a good attitude goes a long way 

The DOL investigators are just doing their jobs, Elkins pointed out. Remember that it’s not personal, and a professional attitude helps make the process more efficient and hopefully less painful for everyone.