Payroll professionals know the current trend of the current administration leans towards more labor law enforcement and a desire to close the “tax gap” (payroll taxes that the government thinks should be paid that are not). To that end, the Labor Department’s Wage and Hour Division has launched enforcement initiatives throughout the country to combat wage violations. For example, the DOL has initiated investigations of wage and child labor violations at restaurants in a Hillsborough County, Florida and service stations in New Jersey. In Florida, more than $2.8 million in minimum wage and back overtime for 3,873 workers was recovered over a four-year period. In New Jersey, more than $1.2 million in minimum wage and back overtime for 381 workers was recovered over a three-year period.

Other examples of successful enforcement since March 1, 2011:

  • An Arizona doughnut and coffee shop owner was indicted by a federal grand jury in connection with the alleged withholding of more than $27,000 in back wages to eight employees during a two-year period, The owner was indicted on charges of concealment by trick, making false statements to the Labor Department, and willful failure to pay overtime.
  • A restaurant in North Carolina will pay $245,500 in back wages to 12 employees following an investigation by the Labor Department’s Wage and Hour Division. The two-year investigation found that the workers were owed $183,452 in back pay for minimum wage violations and $62,048 in back overtime.
  • A meat processor and its president must pay more than $1.8 million in back wages and damages for failure to pay 31 workers minimum wage and overtime for at least three years. The Texas company violated the FLSA by failing to properly pay the workers, who sometimes worked 40 hours a week for $65 a month. The company also allowed the employees to work more than 40 hours a week without overtime pay.
  • A 19-count indictment unsealed in a federal court charged individuals with creating a scheme to rig a restaurant’s payroll system to avoid paying taxes for undocumented workers. Two men who owned a chain of restaurants devised a payroll system in which undocumented employees were paid without any federal tax withholding and without the employer’s share of the employment taxes being paid, the court found. The owners knowingly participated in preparing false quarterly Forms 941 that did not report any of the wages of the undocumented employees or the employer’s share of employment taxes. They under-reported and failed to pay at least $400,000 in employment taxes, the complaint alleged.
  • A supermarket chain reached an agreement with the Oregon departments of justice and veterans’ affairs to pay back wages to about 110 employees who did not receive scheduled raises during leaves to serve overseas in the military.
  • A restaurant and catering hall agreed to pay $610,000 in back wages, interest, and penalties to resolve a contempt proceeding stemming from a 2005 court order. The company and its owners are to pay about $483,000 in back wages and $127,000 in penalties and interest. An investigation by the Labor Department’s Wage and Hour Division found that the employer failed to pay minimum wage and overtime, and also had violated record keeping and child labor provisions
  • A utility contractor agreed to pay $750,000 in back overtime wages to 740 employees in three states, the Labor Department said Mach 30.  Arizona Pipeline Co. of Hesperia, Calif., violated the Fair Labor Standards Act by failing to pay employees for pre-shift and post-shift time spent loading and unloading material, cleaning trucks, and picking up equipment according to the department’s Wage and Hour Division. The employer did not pay workers for travel time to and from job sites and for mandatory attendance at a monthly one-hour meeting. The company also docked a half-hour’s pay for lunch each day even though employees typically had only a 15-minute lunch period or worked through lunch periods.
  • A subcontractor agreed to pay $270,696 in back overtime to 114 cable installers who were misclassified as independent contractors. An investigation by the department’s Wage and Hour Division found that the employer had paid the misclassified workers on a piece-rate basis for all hours worked instead of paying them time and one-half the regular rate of pay for overtime hours. The employer also failed to maintain accurate records of employees’ work hours and wages.

Every week we receive payroll publications full of examples of labor law enforcement like the above. Based on our experience, The Advi$or notes that the cost of compliance is always significantly less than the cost of non-compliance. The IRS and the DOL have numerous resources available to verify compliance questions. Time & Pay would also be glad to assist you with any questions you may have regarding payroll and labor law compliance. Don’t let your business make headlines! Contact us today if you need assistance.