LEE’S SUMMIT, Mo. – Imagine being told that you and your spouse would have to split a paycheck for 80 hours of work – despite that fact that each of you worked 80 hours – or receiving your paycheck issued under a co-worker’s name because your employer was attempting not to pay you overtime.

That’s what U.S. Department of Labor Wage and Hour Division investigators found at Magic Touch Cleaning Inc. where management paid workers fixed amounts per project, without regard to the number of hours they actually worked, paid straight time rates for overtime, and falsified employees’ names, timesheets and payroll records, all violations of the Fair Labor Standards Act.

Under terms of a plea agreement in federal court for the Western District of Missouri, Gary L. Walker, owner of the Lee’s Summit-based cleaning company, will pay $196,484 in unpaid minimum wage, overtime, and damages to 40 former employees of the company. U.S. Magistrate Judge Robert E. Larsen also sentenced Walker to five years of probation.

“No worker should ever be asked to accept a payroll check made payable to another person, or to share their rightfully earned wages – both clear violations of the law,” said Ricky Robinson, assistant district director for the wage and hour division in Kansas City. “Recovering these wages makes a real difference to these vulnerable employees, who worked long hours and were not paid even the minimum wage or for overtime worked. Too often, we find unscrupulous employers taking advantage of workers with language barriers who may not fully understand their rights, or who may be afraid to step forward when those rights are violated. The judge has sent a clear message to employers – criminal violations will be pursued and the law will be enforced so that workers’ wages are protected.”

Investigators found the cleaning company violated the FLSA’s minimum wage, overtime and recordkeeping provisions by:

• Paying multiple employees with one check, made payable to just one of the workers, expecting them to share the wages, resulting in payment less than the required federal minimum wage.
• Paying for overtime hours at straight time rates, on checks made out in other employees’ names.
• Paying husband and wife teams a combined 80 hours per bi-weekly pay period and requiring them to “split” the pay, despite each of them having worked 80 hours.
• Falsifying employee’s names, timesheets and other payroll records.
• Failing to pay workers for time spent traveling between work sites.
• Failing to accurately record daily and weekly work hours and earnings paid.
• Failing to provide final paychecks to at least four workers.

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular hourly rates for hours worked beyond 40 per week. The FLSA provides that employers who violate the law are, as a general rule, liable to employees for their back wages and an equal amount in liquidated damages. Liquidated damages are paid directly to the affected employees. Additionally, the law requires employers to maintain accurate time and payroll records and prohibits retaliation against employees who exercise their rights under the law.

For more information about the FLSA, visit https://www.dol.gov/whd or call the division’s toll-free helpline at 866-4US-WAGE (487-9243).

Date of Action: Nov. 28, 2016

Type of Action: Family and Medical Leave Act complaint

Name of Defendants: Michigan Department of Health and Human Services
Kalamazoo Psychiatric Hospital

Allegations: An investigation by the U.S. Department of Labor’s Wage and Hour Division revealed that the Michigan Department of Health and Human Services and the Kalamazoo Psychiatric Hospital interfered with an employee’s FMLA entitlements and retaliated against him for taking protected leave. 

Investigators found that Michigan DHHS and the hospital expected the employee to complete the duties of a full-time employee while on leave and denied the employee a promotion to assistant director of nursing.

The employee made two requests for intermittent FMLA leave in June 2015 to care for family members, who had serious health conditions and required transportation to medical appointments.

Resolution:  The department is asking the court to issue an injunction, and require the employer to pay lost wages of at least $6,252, an equal amount in liquidated damages, and any other make-whole remedies under the FMLA, including reconsidering the employee for promotion.

The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons.

Quote: “The Michigan Department of Health and Human Services has a legal responsibility to allow an eligible employee to take medical leave when provided with proper documentation,” said Mary O’Rourke, district director for Wage and Hour Division in Grand Rapids. “This worker did everything required to request leave properly, care for his family and protect his job. The Family Medical Leave Act was enacted to protect employees in just this type of circumstance so that they can request leave in order to balance both their job and family responsibilities.”

Court: U.S. District Court for the Western District of Michigan

Docket Number: 1:16-cv-01368

MINNEAPOLIS – A Minnesota-based company has agreed to pay 15,909 employees nationwide a total of $976,765 – $488,229 in back wages and an equal amount in liquidated damages – after a federal investigation found the employer violated federal minimum wage requirements at its health clubs and fitness center locations in 26 states.

Investigations by the U.S. Department of Labor’s Wage and Hour Division found Life Time Fitness Inc., a subsidiary of the Healthy Way of Life Company, took deductions for uniform costs, which resulted in workers making less than the required federal minimum wage per hour, in violation of the Fair Labor Standards Act.

“The U.S. Department of Labor takes its responsibility to ensure workers receive the wages they have earned very seriously. This agreement will put thousands of dollars where they belong – in the pockets of hardworking people and their families,” said Karen Chaikin, regional administrator for the Wage and Hour Division in Chicago. “This comprehensive agreement will ensure Life Time Fitness locations nationwide comply with the FLSA and that workers take home their rightfully earned pay.”

In addition to paying the back wages due, the company will:

• Pay civil money penalties of $99,825 for violating the FLSA.
• Conduct formal training on FLSA requirements with general managers who hire, oversee, manage and develop employment and pay practices at its locations nationwide.

“While employers are allowed to take deductions for the cost of uniforms, those deductions cannot bring an employee’s earnings below the federal minimum wage,” said David King, the division’s district director in Minneapolis. “The Wage and Hour Division offers a great deal of compliance assistance and stands ready to help workers and employers alike. Employees who have faced similar deductions or employers who have questions about how to comply should give us a call.”

Investigators found violations at the following locations:

• Fridley, Minnesota: back wages of $2,757 due to 87 employees.
• Lakeville, Minnesota: back wages of $7,895 due to 240 employees.
• Roseville, Minnesota: back wages of $1,247 due to 36 employees.
• Corporate-wide: back wages of $476,329 due to 15,546 employees at locations in 26 states.

Based in Chanhassen, the Healthy Way of Life Company is a privately held, health and lifestyle company. As of October 2016, the company operates 122 centers in 26 states and 35 major markets in the U.S. and Canada under the Life Time Fitness and Life Time Athletic brands.

The FLSA requires that covered, non-exempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers must maintain accurate time and payroll records.

For more information about federal wage laws, or to file a complaint, call the Wage and Hour Division's toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd/.

Date of Action: Nov. 22, 2016

Type of Action: Lawsuit settlement and entry of judgment and injunction

Name of Defendant: Han Nara Enterprises L.P.
Lubbock, Texas

Findings: The U.S.  Department of Labor and Han Nara Enterprises L.P. have resolved a lawsuit filed Nov. 8, 2016 with a consent judgment and injunction entered by the court on Nov. 22, 2016. The judgment’s entry and injunction requires Han Nara – which does business as Ashley Furniture Homestore with seven retail outlets in New Mexico and Texas – to comply with the Fair Labor Standards Act’s minimum wage, overtime and record-keeping requirements and pay a total of $161,221 in back wages and liquidated damages to pay more than 500 employees. The company will also pay $55,000 in civil money penalties for committing willful and repeat violations. Han Nara has also agreed to five years of semi-annual audits by an independent third-party auditor, to ensure its ongoing compliance.

The department’s Wage and Hour Division investigated Han Nara four times in the past nine years, each time finding that the employer failed to pay employees properly. In the most recent investigation, investigators found that the company misapplied an exemption from the FLSA’s overtime requirements intended for commissioned sales employees, and altered time cards to reduce employees’ hours and pay. Han Nara attempted to use these practices to avoid paying its employees overtime.

Quote: “This is not the first time this Ashley Furniture store operator has violated the law,” said Betty R. Campbell, regional administrator for the Wage and Hour Division in the Southwest. “This settlement ensures that these workers will receive the wages they have rightfully earned.  Employers should take note - the costs associated with choosing to break the law extend beyond court costs to liquidated damages and civil money penalties. The resolution of this case illustrates the Wage and Hour Division’s commitment to protecting low wage workers, and leveling the playing field for law-abiding employers.”

Additional Information: The division continues to conduct investigations focusing on low-wage industries and recidivist employers. For more information about the  overtime exemption for commissioned retail workers or other information about compliance with the FLSA, visit www.dol.gov/whd/, or call 866-4US-WAGE.

Court: U.S. District Court for the Northern District of Texas.

Docket Number: 5:16-CV-256-C

Employer name: Environmental Painting Alternatives Inc.     

Investigation site: 1130 S. Rio Grande Ave.
Orlando, Florida 32805        

Investigation findings: Investigators from the U.S. Department of Labor’s Wage and Hour Division, Jacksonville District Office, found that Environmental Painting Alternatives – a commercial and residential painting and pressure-washing company – violated the overtime and recordkeeping provisions of the Fair Labor Standards Act.

The investigation revealed that Environmental Painting Alternatives jointly employed the workers in question with Caceres Custom Services LLC, which provided the contractor with most of its painters on an ongoing basis. As a result, both employers could be held liable for the violations disclosed. The employers misclassified workers who were, in fact, employees as independent contractors. This practice led to overtime violations when the employers paid only straight time rates to employees who worked more than 40 hours in a work week.

The employers also failed to maintain legally required time and payroll records, and failed to have a Family Medical Leave Act policy in place or to display the required poster in the workplace.

Resolution: Environmental Painting Alternatives Inc. will pay 19 employees $21,423 in unpaid overtime wages.

Quote: “The workers in this case fell victim to an all-too-common scenario – employers misclassifying employees as independent contractors,” said Daniel White, district director for the Wage and Hour Division in Jacksonville. “We are committed to routing out and eliminating this practice, in which workers are typically denied overtime, unemployment insurance, workers compensation and a host of other benefits that come with their rightful status as employees. Contractors who play by the rules must not find themselves at a competitive disadvantage to those who attempt to skirt the law for their own financial gain.”

Background: Environmental Painting Alternatives provided painting services to facilities in Orlando, Kissimmee and Miami including Walt Disney World’s Magic Kingdom, Fort Wilderness, Universal Studios, Marriott Hotel locations and the Hard Rock Stadium, formerly known as Miami Dolphin’s Stadium.

Information: The division has agreements with 35 states, including Florida, to combat misclassification of employees as independent contractors to ensure workers’ get the wages, benefits and protections to which they are entitled. The violations in this case are typical of those referred to other agencies, including the IRS, and the State of Florida Department of Revenue under this agreement.

More information regarding the Department of Labor’s initiative to combat the misclassification of employees as independent contractors can be found at http://www.dol.gov/whd/workers/Misclassification/index.htm. The FLSA requires that covered, nonexempt employees be paid for all hours worked, plus time and one-half their regular rates of pay for hours worked beyond 40 per week. Employers are prohibited from retaliating against workers who exercise their rights under the law.

For more information about the FLSA and wage laws or to file a complaint, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243); the Jacksonville District Office at 904-359-9292 or visit http://www.dol.gov/whd/.

Date of Action: Nov. 15, 2016

Type of Action: Consent judgment

Name of Defendants: Puerto Rico Police Department
Commonwealth of Puerto Rico

Background: An investigation by the U.S. Department of Labor’s Wage and Hour Division found that, between June 2010 and August 2014, the commonwealth’s police department willfully committed a number of violations of the Fair Labor Standards Act, most significantly regarding the failure to pay overtime properly.

The department requested on Oct. 19, 2016, that a federal judge approve a consent judgment requiring the police department to pay $8,732,386 in back wages and interest to 2,642 current and former police officers who did not receive all their overtime wages required under the FLSA.

Resolution: U.S. District Judge Gustavo A. Gelpí approved the consent judgement on Nov. 15, 2016. It requires the police department and the Commonwealth of Puerto Rico to pay the back wages and take additional corrective actions to pay employees properly, provide FLSA training, implement electronic recordkeeping and payroll systems and provide annual reports to the division. Details can be found in the approved consent judgment.

Quote: “This judgment ensures that that these public safety workers will be compensated properly for their important work, and that reforms are put into place to prevent such violations from occurring in the future,” said Jeffrey S. Rogoff, the department’s regional solicitor in New York, whose office litigated the case for the division.

Court: U.S. District Court for the District of Puerto Rico.
Civil Action Number:  3:16-cv-02849-GAG

Read this news release in Spanish.

NEW YORK – Sixty-three workers employed on the federally funded reconstruction of Chambers Street between Broadway and West St. in Lower Manhattan will receive a total of $1,190,861 in back wages following an investigation and litigation by the U.S. Department of Labor, in keeping with a consent order  approved by the department’s Office of Administrative Law Judges.

The department’s Wage and Hour Division found that between August 2010 and September 2013, flagpersons employed by Judlau Contracting Inc., a College Point-based prime contractor, and Network of Patrols Inc., their Queens-based first-tier subcontractor, were paid between $12 and $19.88 per hour instead of the prevailing wage rate and fringe benefits of $39.69 per hour required by the Davis-Bacon and Related Acts.

The investigation also found workers did not receive all the overtime they were due under the Contract Work Hours and Safety Standards Act when they worked more than 40 hours in a week. The department’s Office of the Solicitor filed an administrative proceeding in February 2016 against Judlau and Network.  Under the order, 43 Judlau employees will receive $1,078,885 in unpaid wages, and 21 Network employees will receive $111,976 in unpaid wages. One worker was employed by both companies.

“Taxpayers, who ultimately funded this project, have a right to expect that federal contractors understand their obligations and comply with the law,” said Wage and Hour Division Regional Administrator Mark Watson. “When Judlau and Network, or any other employer, fail to pay their employees their legally required wages they get an unfair advantage over employers who obey the law.”

“When employers do not pay workers their rightful wages, the U.S. Department of Labor will pursue appropriate legal remedies on the workers’ behalf,” said Regional Solicitor of Labor Jeffrey Rogoff. “We are committed to enforcing these laws to protect both employers and employees. We will continue to use all of the enforcement and legal tools we have to ensure that taxpayer dollars used to fund such contracts are properly spent.”

DBRA require all contractors and subcontractors performing work on federal and certain federally funded projects to pay their laborers and mechanics the proper prevailing wage rates and fringe benefits, as determined by the secretary of labor. The CWHSSA requires contractors and subcontractors on federal and federally assisted construction contracts over $100,000 to pay laborers and mechanics employed in the performance of the contracts one and one-half times their basic rate of pay for all hours worked over 40 in a workweek.

The division’s New York City District Office conducted the investigation, while attorneys from the department’s Office of the Regional Solicitor in New York litigated the case for the division.

For additional information about these and other laws enforced by the Wage and Hour Division, call its toll-free helpline at 866-4US-WAGE (487-9243). Information is also available at http://www.dol.gov/whd.

U.S. Department of Labor, Office of Administrative Law Judges
In the Matter of:
Judlau Contracting Inc., Prime Contractor
Network of Patrols Inc., First-Tier Subcontractor
Case Number: 2016-DBA-00010

Employer name: Windy City Doc Holding LLC, doing business as Metro Diner

Investigation site: 1534 North 3^rd St.
Jacksonville, Florida 32250

Investigation findings: An investigation by the U.S. Department of Labor’s Wage and Hour Division’s Jacksonville District Office found that Windy City Doc Holding LLC, doing business as Metro Diner, violated minimum wage and overtime provisions of the Fair Labor Standards Act.

Specifically, the employer made illegal deductions from workers’ pay when it charged servers for their uniforms – that resulted in them earning less than the legally required federal minimum wage of $7.25 per hour in the weeks that they paid for those items. The employer’s practice of sharing the tips of tipped employees with non-tipped workers, such as dishwashers, also contributed to the minimum wage violations for affected servers.

The employer also calculated overtime incorrectly when it based servers’ overtime rates on time and a half of their direct cash wages, rather than basing it on the full minimum wage, as required.

Resolution: The employer will comply with the FLSA and pay 59 employees $154,179 in back wages.

Quote: “Restaurant workers are among the most vulnerable that we see,” said Daniel White, district director for the Wage and Hour Division in Jacksonville. “Violations such as those found in this case are all too common.  When these workers aren’t paid every penny they have rightfully earned, it harms not just the workers, but their families, and their communities. We will continue our enforcement in this industry, along with our education and outreach activities, to ensure that workers are paid what they’ve earned, and to level the playing field for employers who play by the rules.”

Information: The Wage and Hour Division’s Fact Sheet on Tipped Employees provides more information. For more information about federal wage laws administered by the Wage and Hour Division, call the agency's toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd/.

Employer: Good Shepherd Home Inc., a residential care facility doing business as Good Shepherd Home, with locations in Shoreline, Washington

Sites:

Investigation findings: An investigation by the U.S. Department of Labor’s Wage and Hour Division found that Good Shepherd Home violated the minimum wage and overtime provisions of the Fair Labor Standards Act.  Specifically, the employer paid employees flat daily rates without regard to the number of hours that they actually worked. That practice resulted in minimum wage violations when those amounts fell short of $7.25 per hour, and caused overtime violations when employees worked more than 40 hours in a week yet received no additional pay. Workers typically worked 12- to 24-hour shifts.  Investigators also found that this employer failed to keep accurate records of hours worked, in violation of the FLSA’s recordkeeping provisions.

Resolution: Good Shepherd Home will pay $259,030 in back wages plus an equal, additional amount in damages, totaling $518,060 to 39 underpaid caregivers.

Quote: “The dedicated caregivers at these adult family homes work long hours providing for the health and comfort of their elderly and disabled residents,” said Jeanette Aranda, district director for the Wage and Hour Division in Seattle. “Employers must pay their employees for all of the time they put in on the job- paying a day rate or a salary does not mean these facilities can ignore their legal obligation to pay minimum wage and overtime. As the resolution of this case illustrates, we will continue to use every enforcement tool available to ensure that such workers take home every penny that they rightfully earn.”  

Information: For more information about wages and residential care facilities, please consult the following fact sheet: https://www.dol.gov/whd/regs/compliance/whdfs33.htm

For more information about federal wage laws administered by the Wage and Hour Division, call the agency’s toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd/.

Read this news release in Tagalog

OAKDALE, Minn. – A Minnesota company that provided cable equipment recovery services to leading cable providers such as Comcast, Time Warner and Charter Communications, will pay $350,000 to drivers and market contractors misclassified as independent contractors to resolve a U.S. Department of Labor lawsuit.  

An investigation by the department’s Wage and Hour Division found Oakdale-based, Cable Equipment Services Inc and one of its owners, Marilyn Appeldoorn, violated overtime, minimum wage, and recordkeeping requirements of the Fair Labor Standards Act when they failed to pay 41 market contractors and drivers overtime and minimum wage after treating them as independent contractors instead of as employees. 

The Division determined that CES misclassified its workers as independent contractors when, in fact, they met the definition of employees and were subject to the FLSA’s overtime and minimum wage protections. The defendants agreed to pay $350,000 in back wages and liquidated damages to resolve the department’s legal action on behalf of the workers.

“Far too often, employers misclassify workers as independent contractors when the law defines them as employees. In this case, Cable Equipment Services denied workers overtime, minimum wage, and access to employee benefits, unemployment insurance and the payment of federal and state taxes on their behalf,” said David King, district director for the Wage and Hour Division in Minneapolis. “In these instances, not just the workers, but the whole economy loses. We are committed to rooting out misclassification and, as this case shows, will continue to use every enforcement tool available to us to achieve that goal.”

The investigation revealed that CES used employees it called “market contractors” to distribute its work orders for cable equipment collection to drivers, collect the cable equipment from drivers, prepare invoices and return the collected cable equipment to the cable company clients. In turn, drivers collected equipment from cable subscribers for CES on behalf of the cable provider clients. CES paid the misclassified workers, in both positions, on a per piece basis for retrieving equipment and failed to pay an overtime premium regardless of how many hours the misclassified employees worked. 

CES also failed to pay some misclassified employees the minimum wage as required by the FLSA when their total compensation fell below $7.25 per hour for all hours worked. The company additionally violated the FLSA’s recordkeeping requirements when it failed to maintain time records for these employees.

The Oakdale-based company ceased operations in November 2015.

A misclassified employee – with independent contractor or other non-employee status – loses minimum wage, overtime, workers compensation, unemployment insurance and other workplace protections. Employers often misclassify workers to reduce labor costs and avoid employment taxes. By not complying with the law, these employers attempt to gain an unfair advantage over competitors who obey the law, pay fair wages and required taxes, and ensure other protections for their employees. These illegal practices lower standards for all workers, especially in highly competitive markets and industries where employers try to reduce overhead, often at the expense of their workers.

The division has aggressively expanded its efforts to combat employee misclassification in sectors where workers are especially vulnerable and violations are rampant. To assist in combating the problem, the department has entered into agreements with more than 30 states to share information and to coordinate enforcement efforts. The department also engages in a robust education and outreach, and works with stakeholders to change behavior at the industry level.  

For more information about the FLSA, visit https://www.dol.gov/whd or call the division’s toll-free helpline at 866-4US-WAGE (487-9243).

Docket Number: 0:15-cv-00416, Perez v. Cable Equipment Services Inc., and Marilyn Appeldoorn