By: Katherine Muniz Oct 19, 2016

4 Spooky Tales of Wage & Hour Violations That Will Send Chills Down Your Spine

With Halloween approaching, the air is getting colder and the season is perfectly right for some spooky stories. What could be scarier than hearing the plight of your fellow business owners, and realizing that their misfortune could easily be yours? When employers violate the Fair Labor Standards Act (knowingly or not), the consequences are potentially dire. Consider these first-person accounts of business practices gone wrong:

Slammed with a Frightening Sum of Money

My previous company was a landscaping organization that I grew to over 130 employees over the course of 15 years. Last year I navigated the successful acquisition of that company to a national organization. However in 2011 my company was slammed with a half-million dollar fine for failure to classify our laborers correctly. My advice to business owners is to not be foolish and think they can properly diagnose complex labor laws as they relate to the context of their business. If I had sought counsel beforehand I would have been educated on proper classification. However I thought I properly understood the myriad of labor laws that applied to my company. A few thousand dollars and consultation could’ve saved me over a half million dollars and a painful ordeal that almost sunk my company.” – Bryan Clayton CEO of GreenPal

The Ghost of Poor Wage Reporting Past

I’m a wage and hour lawyer. I litigated these cases for 5 years, and I’ve seen so many crazy cases that it’s hard to choose a shortlist. Here are two of the worst: Case #1: In one case, several employees claimed that they were paid well below the minimum wage, and the wage records supported their position. The employer claimed that it paid more than the minimum wage and that it made up the difference between the reported wages and the minimum wage with unreported cash payments. Unfortunately for the employer, it had no way of proving it paid additional money besides the owner’s testimony, which the employees denied. Case #2: The employer’s poor record keeping created numerous problems for it when the case was litigated. In another case, an employee actually lived at the place where she worked. The cost of her room and board was supposedly factored into her pay, but there was never an agreement as to the dollar value of this form of compensation. Moreover, there were no time records to show when she was working. As a result, the employer faced an uphill battle both in proving the wages it had paid and proving the hours that the employee worked.” – Jeff Kerr of CaseFleet

 A Villain Who Got Away with Murder

A friend of mine runs a personal injury law firm in Los Angeles. By his own admission, he frequently violates the FLSA. Below is the most cringe-worthy/funny story he told me: He loves hiring unpaid interns, but a recent law passed that requires the following two provisions in order for a business to hire unpaid interns legally:

  • The experience should be educational to the intern
  • The work done by the intern cannot result in instant value creation to the business

This presented my friend with a big problem, because he uses unpaid interns to do client follow-up calls. Under the new law, he would no longer be able to legally retain unpaid intern do such a task (which is both not educational and provides instant value to the business). How did he solve the problem? He had each intern provide a written statement after each shift, detailing how they ‘learned how to effectively communicate with people of different backgrounds over the phone.” – Brian Lucas of Pre Settlement Funding, Inc. 

As you can see, there are endless ways to violate the FLSA. If you’ve recently fallen into trouble, rest assured that you’re not the first. We’ve written in detail about how to respond should the Department of Labor audit your organization, which may be helpful reading for you. If you have any frightening lessons to share, leave them in the comments below! 

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Category: HR | Time and Attendance

Katherine is a New York-based digital writer who joined Fingercheck in 2015. She promotes Fingercheck through the power of the written word. She graduated from Fordham University with a B.A. in Communications and Media Studies with a focus on Journalism. Connect with her on LinkedIn

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