The labor laws in our country are complex, and it’s not too surprising people get confused over some of the more obscure regulations. But sometimes, for some reason people trip over the most straightforward provisions, and you may find yourself wondering, “What were they thinking?”
Here are a few examples of employers who ended up in court when just a little forethought (and, perhaps, a good time and attendance system) might have saved them. Don’t try these tricks at home, folks:
The 40 Hour Week
The Fair Labor Standards Act (FLSA) was signed into law by President Franklin D. Roosevelt back on June 25, 1938. It established the principle of a 40 hour work week, and mandated overtime when workers put in more hours, with a few limited exemptions. Over the years, the rules have been adjusted to allow for additional exemptions and to modify the criteria for exemption, but the basic 40 hour workweek has remained.
Unfortunately, it seems that even after nearly 75 years, not everyone has gotten the word about that 40-hour-week thing.
KBE Landscaping, Inc., of Garner, North Carolina, was recently cited by the Department of Labor for various violations of the FLSA. Among other things, they only paid workers overtime when they worked more than 45 hours a week, rather than the FLSA-mandated 40 hours a week.
I can’t help but think a consultation with their employment law advisor and a good time tracking system would have saved them from a lot of headaches.
Mama Told You To Watch Your Mouth
The president and a supervisor at Coyote Ugly (a chain of “concept saloons”) both found out the hard way that mom’s admonition to “watch your language” was wise. After two employees sued, claiming violations of the FLSA, the company president posted a blog entry peppered with obscenities, available through the official company website, talking about the lawsuit and alleging one of the plaintiffs was fired for theft. The only good part was that she didn’t actually name names.
Later, the workers’ supervisor lashed out on Facebook, and again verbally, while in the workplace — in the presence of the other plaintiff — with additional tirades and veiled threats. The court decided the blog post, the Facebook post and the supervisor’s statements were sufficient evidence of possible retaliation and refused to dismiss either the FLSA claim or the retaliation claims of the plaintiffs.
So, as satisfying as it might feel to, uhm, “express yourself,” it’s almost never a good idea — especially if your “expressions” concern an active wage and hour lawsuit. If you must blow off steam, write it down on a piece of paper. Then shred the paper.
State and Federal Are Two Different Things
Recently, Thomas & Betts Power Solutions purchased at auction the assets of a bankrupt company. They knew the previous company had an outstanding judgment of $500,000 entered against them as the result of a FLSA lawsuit. So, Thomas & Betts wrote a contingency clause into the purchase contract with the condition that the transaction be “free and clear of all liabilities.” This was sufficient to shield them from outsanding liabilities — under Wisconsin state law.
But what they (and their legal advisors) apparently forgot is that the FLSA is a federal law. And in the case of the FLSA, as the court ruled, it’s sometimes necessary to pass along the liability to the successor organization, no matter what their purchase agreement might say. To do otherwise would allow unscrupulous company owners to declare bankruptcy, “sell” the assets of a company to a buddy and wiggle out from under their FLSA obligations… leaving employees in the lurch, without the pay they rightfully earned.
In this case, the successor company was aware of the liability before the bought the assets, they had the ability to pay, and they had maintained continuity of operations with the previous owners, so the court found they should be liable for the judgement, regardless of the contingency clause in their purchase contract.
An expensive lesson learned. If you’re thinking of buying a company’s assets, and they have an outstanding liability under the FLSA or other federal employment law, consider reducing the purchase prices to account for the liability. It’s likely you will be on the hook if the previous owners don’t pay up before the sale is finalized.
And finally, it isn’t just employers who sometimes seem to get a little mixed up about labor laws:
You Actually Have to Work There to File a Complaint
In the case of Lugardo V. Prima Pasta & Café, Inc., the plaintiff brought suit against Prima Pasta for unpaid wages under the FLSA and New York labor laws. He claimed he worked full time as a dishwasher and later as a pizza preparer for the restaurant. The restaurant owners strongly disputed his claims, saying he had worked for them only on a few occasions serving private parties. Unfortunately, they didn’t have any records of his hours worked, but the restaurant manager was able to corroborate their story at trial.
Usually, the courts require the employer to provide records to prove they have paid an employee correctly. In the absence of these records, the courts are generally inclined to give the employee the benefit of the doubt. But in a somewhat unusual move, the court in this case found the plaintiff’s claims lacked credibility, and ruled in favor of the employer.
Whew! A relief for the employer — but it could easily have gone the other way, had the plaintiff been just a bit more persuasive. Without records, the worker could have claimed all sorts of unpaid wages. In some cases I’ve seen, the penalities are enough to bankrupt the business!
These company owners were lucky. The best defense is complete and accurate time records of all workers — including those you just brought on temporarily to help with a special event. Fortunately, Acroprint offers a full line of time recording clocks, software and cloud-based services to meet the needs of any organization. If you’re not yet recording all your employees’ time, give us a call or visit our web store today. Your business survival may depend on it.