What Happens to Employers That Violate the Fair Labor Standards Act?
The Fair Labor Standards Act (FLSA), initially passed by Congress in 1938 and amended since, governs the federal minimum wage, calculation and payment of overtime hours, child labor and recording of wages and hours worked. The FLSA is enforced by the Wage and Hour Division of the United States Department of Labor, and penalties can result from violations of the act.
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Covered Entities
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The FLSA applies to any entity that conducts more than $500,000 in business per year as well as schools, hospitals, public agencies, operations involved in interstate commerce, and some domestic employees, such as housekeepers, chauffeurs and babysitters. Numerous exemptions exist regarding covered employees. A business owner should consult legal counsel or a representative of a Wage and Hour District Office before determining whether his employees are exempt from these provisions.
Enforcement
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Employees who believe they have been subjected to a violation of the FLSA have the right to file a complaint directly with the Wage and Hour District Office and may do so by contacting their local branch. Once a complaint is received, a DOL representative investigates the matter. This investigation can consist of a thorough assessment of the organization's time and payroll records, job descriptions and revenue sheets. Confidential interviews often are conducted with employees as well. The Department of Labor may select certain entities for audit, based on industry or other factors.
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Violations
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Upon conclusion of the investigation, the investigator will determine what violations, if any, of the act have occurred. One of the most common violations of the FLSA involves the improper classification of hourly employees, rendering these workers exempt from overtime provisions. Other common violations include miscalculating hours worked and/or incorrect overtime payments. The Department of Labor offers many online tools to assist employers in ensuring they are operating in full compliance with the FLSA (see Resources).
Penalties
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Penalties for violating the provisions of the FLSA are outlined in Sections 215 and 216 of the act. The FLSA has the authority to block the sale or shipment of any goods manufactured under a FLSA violation, and employees who have been subjected to minimum wage or overtime violations are due back pay for any miscalculated hours. Civil fines or criminal penalties can also result, up to $1,100 per violation and six months imprisonment.
Notable Statistics
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In fiscal year 2008, the Wage and Hour Division uncovered more than 20,000 cases of overtime and minimum wage violations. These violations resulted in more than $140 million in back wages paid to wronged employees, with 88 percent of these wages stemming from overtime infractions. Examples of the violations cited include: paying straight-time wages for overtime; not paying employees for all hours worked; and incorrectly identifying employees as independent contractors. In addition to back wages owed, the Department of Labor levied fines totaling $3.1 million upon employers responsible for violating these provisions.
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References
Resources
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