Employers Beware: Employment Law Compliance Gurus are Doing it Wrong!

This is one of those “Come on Man!” moments. Or, like Seth Myers and Amy Poehler used to say: REALLY??

On December 16, 2015 American Futures Systems (aka Progressive Business Publications) and its owner Edward Satell were handed FLSA violation fines requiring them to pay back wages totaling $1.75 million to employees who were deprived of minimum wage and overtime pay. So, why do we care? Well, I care because this company publishes employment law compliance newsletters that tell us how to do it right. I, personally, have spent a lot of money subscribing to their publications, which I believe are very good and give accurate guidance. So, why did they do it wrong? How did this happen? Good Question! Hang on…. I have the answer.

Amy Poehler and Seth Myers from SNL

So, it’s the old “cobbler’s kids have no shoes” trap that the experts often fall into. I can relate. My hubby owned a decorative concrete business for about 12 years. During much of that time, we had carpet and tile in our house. Go figure!

But, this case is especially nutty because the violation was not even an innocent mistake. American Futures Systems was requiring employees in the call center to clock out for restroom breaks! Really? Unbelievable. Their attorney tried to make the flimsy argument that payment for breaks is not required. Again, Really? and Come On Man! PLUS, they actually refused to come into compliance for more than 2 years after they were notified of the illegal pay practice. Seriously.

Read this statement by the DOL in a recent press release:

Although the exact amounts have not yet been determined, the U.S. Department of Labor estimates that for violations occurring through June 2013, Progressive and Satell are liable for at least $1.75 million in back wages and liquidated damages to more than 6,000 employees who worked in 14 call centers throughout Pennsylvania, New Jersey and Ohio. Progressive’s refusal to come into compliance for more than two years during the course of the litigation will increase significantly the amount of back wages and damages due its employees as a result of its illegal pay policy.

“For far too long, American Future Systems penalized its employees for taking breaks to meet the most basic needs during the work day — stretching their legs, getting a glass of water or just using the restroom,” said Jim Cain, district director for the department’s Wage and Hour Division. “The judge’s decision reaffirms how clear the FLSA is about short breaks being compensable, and goes a long way in making these employees whole by awarding liquidated damages.”

The decision resolves the primary issues in a department lawsuit filed after a Wage and Hour Division investigation found that telemarketers had to clock in and out for every break, even those as short as two to three minutes. The timekeeping system then deducted the break time from their total hours worked each week. The Wage and Hour Division advised the company that the practice violated the law, but the employer failed to comply with the FLSA. The court found the company also violated FLSA recordkeeping requirements.

“Rehabilitative breaks have always been considered compensable time under the law,” said Oscar L. Hampton, the department’s regional solicitor in Philadelphia. “This action underscores how aggressively we plan to enforce the law to ensure that workers receive the proper wages.”

The FLSA does not require lunch or coffee breaks. However, when employers do offer short breaks (usually lasting about 5-to-20 minutes), the law considers the breaks compensable work hours that must be included in the sum of hours for the work week and considered in determining overtime.

You see, sometimes the employment law compliance gurus are so busy telling you how to do it right they neglect to follow their own advice. But, just because I understand how this works, it doesn’t mean I think it’s OK. So, I tell business owners and management to watch out and be sure the advice you get is credible. Be sure you use the Rule of 3s and check all of your answers enough times to get the  same answer 3 times from 3 different credible sources. This way you establish Reasonable Basis and are one step closer to your goal of an Audit-Secure business.

Lisa Smith

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