Employers in the wholesale industry have been the target of several investigations conducted by the Wage and Hour Division (WHD) of the US Department of Labor across various states. Although the WHD enforces a number of federal statutes, including the Family and Medical Leave Act (FMLA), wholesale employers should be particularly mindful of the WHD's enforcement focus on the Fair Labor Standards Act (FLSA). Employers should review internal processes for classification of employees; proper payment of the minimum wage and overtime; and child labor policies in order to remain compliant.
The White House initially requested $243 million in funding for the WHD for the 2014 fiscal year. Although challenging fiscal negotiations between the White House and Congress continue at this time, the current administration has made it clear that increased enforcement of the FLSA is a budgetary priority. Labor Secretary Tom Perez, who was confirmed by the Senate in July after several delays, has been vocal in his support of increased enforcement efforts and wage protections for workers.
The WHD is responsible for enforcing the minimum wage, overtime pay and child labor provisions of the FLSA. Employers whose gross annual sales or business volume is at least $500,000 are covered by the FLSA. However, some employers are covered on an individual basis, based on engaging in interstate commerce or producing goods for interstate commerce. In its Fact Sheet on Wholesale and Warehouse Industries, the WHD states that in its experience, "virtually all employees of wholesale and warehouse businesses are covered by the Act's provisions."
An informal search of the DOL's enforcement database for the years 2012 through 2013 revealed various investigations across the country resulting in a number of citations (in Florida, the largest amount of cited violations on a single wholesale employer numbered 86). The WHD also collects data on repeat violators, which may be used to launch court claims.
Repeat violations may be costly for wholesale employers. For example, the WHD may request court remedies including back wages, an equal amount in liquidated damages, compensatory damages, punitive damages, and a court order that prohibits an employer from shipping any goods handled by workers who were paid in violation of the FLSA.
Of course, the WHD is not the only federal agency interested in wholesale employers' compliance with federal laws. Last month, the Equal Employment Opportunity Commission filed a lawsuit for racial discrimination against Battaglia Distributing Company, a large Chicago-based wholesale food distributor.