Employer Liability Under the Fair Labor Standards Act

Any employee or former employee may file a complaint with the DOL’s Wage and Hour Division that an employer failed to meet its obligations under the FLSA. The DOL has the authority to investigate and make a ruling, and if it determines that the employer owes the employee back wages, it may enforce the ruling by a variety of methods:
  • conciliation – if the DOL can persuade an employer to cooperate, it may supervise a settlement of the claim between the employee and employer, in which case the employer may be able to escape with only liability for back pay (Section 216(c);
  • civil action for back pay and damages – the DOL may sue on an employee’s behalf to recover back wages and liquidated damages(Section 216(c);
  • injunction – the DOL may apply for an injunction to restrain further violations by the employer or to restrain the sale or transfer of goods produced with labor that was compensated in a way that violated the FLSA (Section 217);
  • criminal action – under 29 U.S.C. 216(a), the U.S. Department of Justice may bring a criminal action against an employer in the case of a willful violation of the FLSA; and
  • civil actions by employees - employees have the right to file suit in a court of competent jurisdiction to protect their rights under the FLSA (29 U.S.C. 216(c)).
If the DOL determines that there is no merit to the employee’s claim, it will issue a “right to sue” letter under 29 U.S.C. 216(b) (a “216(b) letter”) notifying the employee of his or her right under that provision to file a civil action in court to recover any amounts that might be due. As a practical matter of enforcement, due to limitations on agency resources, DOL will often issue “216(b) letters” even to those wage claimants who have valid FLSA complaints.
Dealing with FLSA Claims or Audits
Without a doubt, the FLSA is full of potential trouble spots for an employer, and the law gives the DOL enough teeth to be tough when investigating wage claims and enforcing the FLSA. It is good to be prepared with strategies for handling wage and hour investigations involving your company.
A wage claim or DOL audit is never a trifle. Even if you have a solid legal position, you must treat the situation as if you may end up having to pay extra money to employees or ex-employees. While there is no guaranteed formula for success, there are certain things you can do to encourage the wage and hour investigator to at least not view you or your company as a burden:
  • Present the requested information in a timely, concise, and organized manner. That will not only make things easier for the investigator (remember, you want the investigator out of there as quickly as possible), but also make your company look more credible and as if it has nothing to hide.
  • Do not make charges, allegations, or assertions to the investigator that either have nothing to do with a wage and hour situation, or else deviate too much from standard wage and hour law principles.
  • Treat the investigator with as respectfully as possible. DOL procedures leave investigators a surprising amount of discretion in the areas of regular rate calculations, pay method determinations, and hours worked, so it is worth an employer’s while to be pleasant, cooperative, and informative.
  • Be familiar enough with the wage and hour laws to know a good deal when the investigator offers it. Be careful � stonewalling, demanding, or asking for too much can easily backfire! Knowing when to say “OK” is a real art.
  • Consider hiring an experienced wage and hour law attorney. This is especially important in case the investigator has signaled a ruling against your company and is only concerned with calculating the amount, or in case the ruling has already gone against your company and you are trying to decide whether a settlement offer from the DOL makes any sense.
Recommendations for FLSA Compliance    
While court decisions do not lay out an express road map for avoiding corporate or personal liability under the FLSA, those decisions, as well as court rulings involving other types of employment laws, offer some strategies for minimizing the risk of claims or lawsuits:
    • Educate yourself about the intricacies of wage and hour law.
    • To the extent possible, train other managers and payroll department staff the same way.
    • Do not hesitate to call the DOL and your state’s wage payment law enforcement agency for help, advice, and training if possible.
    • If you become aware of wage and hour violations, correct them as soon as possible, even if it means extra work for staff.
    • If higher-ups hinder your efforts at wage and hour compliance, remind them in a diplomatic but clear way that personal liability can extend to anyone who had a hand in the allegedly illegal pay practice.
    • If all else fails, document your wage and hour advice to senior management and advise them of the possible consequences, thus putting yourself on record on the “right” side of the law and arguably removing at least yourself from the liability loop.


Comments are closed.