Recent U.S. Labor Department news releases show something important about its current approach to enforcing the federal Fair Labor Standards Act:

♦       An enforcement initiative directed at Long Island, New York full-service restaurants resulted in assessments of more than $2.3 million in back-wages for 578 employees, as well as in civil money penalties of over $200,000.

♦       DOL is conducting a multi-year enforcement initiative focused upon the construction industry in Connecticut and Rhode Island, where 183 investigations of construction-industry employers have so far recovered nearly $3.3 million in back-wages for 1,226 employees.

♦       A DOL enforcement initiative focused upon hand-harvested crops in Florida has generated back-pay of over $156,000 for 689 agricultural workers and approximately $680,000 in civil money penalties.

♦       DOL is conducting a multi-year enforcement initiative focused upon the gas-station industry in New Jersey, where it has already conducted 74 investigations resulting in over $1 million in back-wages for 295 workers.

♦       An ongoing DOL enforcement initiative targeting full-service buffet restaurants in south Florida has to date resulted in 34 completed investigations involving more than $667,000 in back-wages for 271 restaurant employees, as well as in the levy of over $14,000 in civil money penalties.

♦       DOL has embarked upon an enforcement initiative focusing on the residential-care industry in North Carolina, through which officials seek to remedy what they believe to be "systemic violations" in this industry.

As this reveals, DOL's Wage and Hour Division is allocating substantial resources to broad-based regional, state, and local efforts centered around certain industries and employers.  DOL probably feels it appropriate now to make full use of the hundreds of investigators it has hired in the last two years or so, viewing them as being experienced enough to take on these efforts.  The categories involved seem for now to be among those to which DOL has devoted heightened attention in the past, that is, agriculture, day-care/residential care, restaurants, garment manufacturing, guard services, healthcare, hotels and motels, janitorial services, and temporary workers.  However, employers should not assume that the initiatives will be limited to these industries.

DOL is no doubt scheduling selected employers for compliance audits even though no individual has made an FLSA complaint.  And although DOL sometimes undertakes "directed" audits to look into specific issues, management should not necessarily expect an investigator to limit his or her inquiries to these areas.

These efforts are also likely to include compliance reviews of at least some employers whom DOL has previously found to be in violation of the FLSA.  And as the summaries above reveal, it is entirely possible (maybe even likely) that DOL will assert FLSA civil money penalties and/or will take more-serious action if these follow-on audits reveal additional shortcomings.

Employers should immediately confirm that they are fully in compliance with the FLSA and with all applicable state or local laws.

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Lurking in Senate and House "misclassification" bills are expansive changes in the Fair Labor Standards Act's civil money penalties.  The impact of these revisions would extend far beyond U.S. Labor Department investigations involving independent-contractor status.

Today, the FLSA permits DOL to impose a civil penalty of up to $1,100 for each violation of the minimum-wage or overtime provisions, but only if the violation was either repeated or willful.  The law currently authorizes penalties for "each such violation".  DOL tends to apply these on a per-employee basis, and the total fines can be more than the wage underpayments.  If the pending proposals are adopted, the potential exposure will broaden substantially.

For one thing, fines of up to $1,100 could be imposed for violations that are neither repeated nor willful.  That is, infractions would be punishable in this way even if the employer had never before violated the FLSA and had the best of intentions.  Furthermore, any question about the proper multiplier would be resolved:  The employer would be exposed to the penalty "for each employee or other individual who was the subject of" a violation.  If violations were repeated or willful, then the per-person penalty ceiling would jump to $5,000.

And for the first time, civil penalties would apply to violations of DOL's recordkeeping requirements.  The DOL investigator says that employees' time records are not accurate, but you say they are?  Can't meet an investigator's demand to get two years' worth of payroll records from Los Angeles to Nashville within 72 hours?  Don't have the time, staff, or resources to "make such extension, recomputation, or transcription of the records" a DOL investigator says you must?  Didn't put a "symbol, letter or other notation" on the pay records to show that certain employees were paid in a particular way (even though it was obvious how they were paid)?  Employees sometimes forgot to punch in or out?  Didn't record the birthdate of every employee under 19 years old?  Numerous situations could put an employer to the choice between paying or fighting substantial fines, even if the recordkeeping violation resulted in no FLSA wage underpayments or child-labor problems.

When one's chosen tool is a hammer, everything looks like a nail.  This will be particularly apt here, where the law calls for penalties collected to be used to fund more DOL enforcement.  Employers should do all they can to avoid having these changes swept through under the radar.

UPDATE (05/14/10):   Fisher & Phillips has now called these proposed changes to the attention of Georgia Senator Johnny Isakson, a member of the Senate's Committee on Health, Education, Labor and Pensions.

Letter To Senator J. Isakson.pdf (131.87 kb)