Two Metro-Detroit employers have recently agreed to settle wage and hour violations under the Fair Labor Standards Act (FLSA) involving overtime compensation and misclassification issues.
Specifically, Belle Tire agreed to pay over $340,000.00 for violations under the FLSA. Payments will be made to employees in approximately hundred stores in Michigan, Indiana, and Ohio.
According to the Department of Labor Department (DOL), this settlement arose out of a DOL investigation, which concluded that Belle Tire “failed to include incentive bonuses and sales commissions” in calculating overtime pay to its employees. According to a DOL statement, because of failure, 1,207 employees were incorrectly paid time-and-a-half of only their base rates, “without considering the amounts by which these bonuses and commissions had boosted employees’ straight-time earnings.”
Timolin Mitchell, the DOL’s wage and hour District director in Detroit noted in the DOL’s April 30, 2018 press release that Belle Tire cooperated throughout the investigation and will implement plans to address compliance with overtime requirements. He further noted in the DOL’s statement,
Wage violations can be avoided when employers understand the requirements under federal labor law. Belle Tire is now training its store managers, supervisors, and payroll personnel to ensure they compute overtime properly and employees receive the wages they have rightfully earned.
Also on April 30, the DOL announced a settlement with Summit Properties & Development Co. Inc., based in Clarkston, Michigan. Under the DOL agreement, Summit Properties will pay $137,237 in back wages and liquidated damages to 17 employees.
DOL investigators determined the general contractor misclassified certain employees as independent contractors and failed to pay them overtime when they worked over 40 hours in a workweek. Summit Properties also agreed to revise its employee handbook and all future subcontractor agreements to help educate those employers about compliance with the FLSA.
What should companies take-away from FLSA Violations?
Our firm was not involved in the DOL investigation and matters leading up to the violation. However, having represented Belle Tire in employment litigation and in getting to know its general counsel, it is definitely a company that prides itself on “doing the right thing.” And it appears the violations found by the DOL are an honest mistake rather than willfulness by the company.
Even so, these settlements illustrate the truism ignorance of the law is no excuse for non-compliance. Yet, mistakes involving wage and hour and misclassification issues our areas where employers most often misunderstand their legal obligations.
For more information about complying with the federal FLSA or other employment laws, contact employment attorney Jason Shinn.