As a restaurant in Copiague, N.Y. learned the hard way, failure to track and pay employee hours accurately can lead to a big matzah ball of legal liability. The Wage and Hour Division of the United States Labor Department has announced that the restaurant was ordered to pay $390,000 in back wages to approximately 40 employees who had not properly been paid overtime pay and had not received the equivalent of the required minimum wage, despite working 70-80 hours per week in some cases. Based upon “liquidated damages” provisions under applicable law, the restaurant also was ordered to pay an additional amount equal to the back pay owed to the employees. As a result, the restaurant was required to pay the employees a total of $780,000. The restaurant also apparently was adjudged not to have properly tracked wages and tips, and to have paid employees with un-tracked cash payments, leading to an additional civil fine of $20,000. All told, the restaurant is picking up an $800,000 tab for its lax record keeping and for underpaying its overworked employees.
The action against the employer was based upon the Fair Labor Standards Act, a federal law which requires employers to pay qualifying employees at least the federal minimum wage, plus time and a half for time spent at work beyond 40 hours in a given week. Although there is no indication the violations were inadvertent in this instance, an employer is not excused from paying an employee overtime even if the employer has not directed the employee to work overtime, but the employer generally has to be aware the employee is doing so before it is responsible to pay. There also are provisions aimed at protecting employees who report a violation of the FLSA.
There also may be state laws that apply to a given situation where there are unpaid compensation or a failure to account for employee time. For example, our home state of Minnesota has passed legislation that provides strong remedies to employees, and even commission-based agents, who have not been paid as required. There are strict timing requirements that apply to these payments as well.
Employers or employees with questions about whether a business is in compliance with the law should seek the assistance of counsel in determining whether the FLSA applies and whether changes are necessary. Also, an attorney can pursue or defend cases for recovery of unpaid wages under the FLSA as well as applicable state laws. If you have a question, contact us at Thomsen Nybeck.
Matt Drewes contributed this post. Matt is a Shareholder with Thomsen Nybeck. He is the head of the firm’s nine-member Community Association Representation Group and the firm’s Creditors’ Remedies Group. and practices in the areas of business and real estate litigation and transactions, employment law, construction litigation, community association law, debtor/creditor law and insurance. He has been included in Minneapolis/St. Paul Magazine’s list of Rising Stars for several years, and has been quoted on issues involving construction litigation, community associations and real property issues in the Minneapolis Star Tribune, Minnesota Lawyer, Yahoo!Finance.com, Bankrate.com, and elsewhere. He can be reached at mdrewes@tn-law.com or by phone at 952.835.7000.
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