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Last Month, the U.S. Department of Labor
(the “Department”) filed a lawsuit against Janitorial Carpet's
Maintenance for violations of the minimum wage, overtime pay and
recordkeeping requirements of the Fair Labor Standards Act (the “FLSA”).
According to the Department, the violations stem from the company’s
improper classification of workers as independent contractors. The suit
further alleges that the employer was aware that some employees brought
relatives to work with them, to help complete heavy workloads on time.
None of these helpers were paid. The suit seeks back wages and damages
of at least $900,000 for these workers and their helpers.
The lawsuit against Janitorial Carpet’s
Maintenance follows on the heels of two successful FLSA enforcement
actions by the Department. In February, the Department obtained nearly
$530,000 in back pay and damages for some 400 employees in a lawsuit
against Self Pride Inc., a Baltimore-based organization. In that case,
the organization failed to pay employees proper overtime and did not
maintain accurate records of employee hours.
Also in February, the Department obtained
a settlement of more than a half a million dollars from
Careerbuilder.com, an internet employment recruiting firm, headquartered
in Chicago, to resolve allegations of overtime pay violations for 677
workers. The Department alleged that the company improperly classified
some workers as exempt from overtime pay provisions of the FLSA, and
therefore failed to pay those workers at time and a half their regular
rate of pay, including commissions, for hours worked over 40 in a
workweek.
As these cases illustrate, employers in a
broad range of industries face potential exposure for FLSA liability.
Improper classification of an employee as an independent contractor or
as an exempt employee is often the root problem. Such mistakes can be
extremely costly, and yet many employers spend little time or effort to
make sure that they are FLSA-compliant. To reduce the risk of
liability, employers should take the following preventative measures:
- Create or update job descriptions of all
employees so that they accurately reflect the duties of each position
within your company.
- Determine whether
your company engages individuals as “independent contractors”. Consult
with legal counsel to determine the risk that such workers have been
improperly classified.
- Classify each
position as exempt or non-exempt under the new FLSA regulations issued
in 2004, using updated job descriptions. Consult with legal counsel if
in doubt about whether a position may be classified as exempt.
- Maintain accurate
records of hours worked by non-exempt personnel.
- Do not allow
non-exempt employees to work beyond their normal work hours without
supervisory knowledge and approval. If non-exempt employees are required
or permitted to work more than forty hours in a workweek, pay overtime
as required by the FLSA.
- Make sure overtime
pay is calculated properly. Be sure to include applicable commissions or
bonuses in determining the regular rate of pay.
- Do not
permit outsiders to help an employee do his or her job.
- Review your
employment-related record retention practices. Consult with legal
counsel to make sure that you are keeping all required records for a
sufficient period of time.
For questions
about this Employer Alert, the Americans with Disabilities Act or any
other employment law question, please contact
Anuja Purohit at
919-783-2823 or
apurohit@poynerspruill.com or
Susie Gibbons at
919-783-2813 or
sgibbons@poynerspruill.com |
