The High Cost of Noncompliance

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A consent judgment reached stemming from an investigation by the Department of Labor’s Wage and Hour division into Cleveland employer Citywide Protection Services, Inc.’s payment practices serves as a reminder of the importance of adhering to the Fair Labor Standards Act’s  requirements.

“I told them I really can’t afford to pay all those extra hours, but a lot of them kept begging for hours, just begging for hours,” Citywide’s President George Lewandowski explained in a recent Cleveland.com article. However, Lewandowski was reluctant to allow his employees to work in excess of 40 hours per week, as financial concerns led him to believe that he would be unable to pay his workers at one and one-half times their normal pay.  In light of his concerns, Lewandowski agreed to allow his employees to work additional hours without paying them as if they were on overtime, “I said: ‘I can’t pay the overtime.  I’ll let you work at straight time’” he explained.

Under the FLSA, however, all non-exempt employees must be paid at least “one and one-half times the regular rate” at which they “suffer” or are “permitted” to work in excess of 40 hours in a given week. Thus, Lewandowski’s purported agreement does not pass legal muster—even if Citywide’s employees consented to it.

Following an investigation into the employer’s payment practices, the Department of Labor brought suit against Citywide in late November 2013. The case recently concluded in a settlement, under which Citywide has agreed to pay $14,760 in overtime back wages to its employees, in addition to $5,000 in civil penalties for willful and repeat violations of the FLSA.

Employers should heed this warning and take this opportunity to review their payment practices and ensure compliance with the FLSA. As Citywide’s recent case demonstrates, a failure to do so could be costly.

Topics:  Compliance, DOL, FLSA, Investigations, Unpaid Overtime, Wage and Hour

Published In: Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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