Business ignores $354K FLSA settlement agreement: DOL sues

Another company has tried to dodge obligations outlined in a consent decree, according to a new lawsuit filed by the U.S. Department of Labor (DOL). The issue: an ignored FLSA settlement agreement.

But that strategy – ignoring a court order – rarely works out, as several companies have learned the hard way in recent months. For example:

• In August 2023, Southwest Airlines found itself back in court after it allegedly failed to comply with notice requirements, and
• In July 2023, a Baltimore logistics, engineering and management support services company faced a DOL lawsuit after allegedly failing to comply with an agreement to restore missing contributions and interest to the company’s 401(k) plan.

When companies duck out of agreed-upon financial obligations, the DOL’s next step is filing a lawsuit.

In this recent incident, an Indiana-based company operating in both Indiana and Michigan allegedly backed out of a deal to settle up on back pay and damages. Here’s how the whole mess got started – and the latest development in the case.

FLSA settlement agreement falls apart

A DOL investigation determined that Vishav Inc., d/b/a Mega Liquor & Smoke, and its owner, Bhola Singh, owed back wages and damages to 156 employees for minimum wage and overtime violations that occurred between Nov. 9, 2020, and Nov. 6, 2022.

To resolve the matter, Singh agreed to pay $354,633 in back wages and liquidated damages. But he didn’t follow through, the DOL said.

The agency sued, alleging Singh engaged in an “ongoing kickback scheme to deprive current and former employees of the money they are owed using threats, intimidation and coercion.”   

Further, the complaint alleges Singh repeatedly demanded employees sign receipts falsely attesting he had paid the back wages and damages – even though the payments had not been made. Moreover, he also threatened to fire employees to get them to comply with his demands.

In the DOL’s view, this alleged conduct amounted to further violations of the Fair Labor Standards Act (FLSA), which prohibits employers from retaliating against workers.

DOL seeks court order, additional damages

The DOL filed a motion for a temporary restraining order and injunction against the defendants to stop them from retaliating against the workers who are owed back wages and damages.

“The Department of Labor is asking the court to hold Bhola Singh accountable for his illegal tactics to prevent employees from receiving the back wages and damages they are owed and that he agreed to pay. Retaliation against workers is a clear violation of the law,” said Regional Solicitor of Labor Christine Heri in Chicago. “We will use every available legal resource to protect workers and end retaliatory practices by employers, including seeking punitive damages for those harassed.”

Specifically, the DOL asked the court to prohibit the defendants from:

• Interrogating, inquiring about or discussing with any employees or former employees of Mega Liquor & Smoke their potential or actual communications with the DOL and its representatives. 
• Withholding wages, terminating or threatening to terminate workers for cooperating with DOL investigators.

The DOL also asked the court to require the defendants to:

• Notify employees in writing of their right to cooperate with investigators.
• Notify employees of the existence of the lawsuit in a language understood by the employee.
• Advise the DOL in writing of the potential termination of any employee seven days before letting the worker go.

It also asked the court to award punitive damages to some employees retaliated against by the company and Singh.

We’ll keep you posted.

Info: DOL seeks an injunction to stop Indiana liquor store owner from intimidating workers, denying them back pay, 2/29/24.