Logistics company ordered to pay $120K for wage and hour violations, must implement timekeeping system

By Rick Bell

May. 27, 2021

A Southern California logistics provider was ordered to pay $120,000 in overtime back wages to 388 employees and also must implement a timekeeping system to shore up compliance issues.

Following a recent finding of the Department of Labor affirmed by a federal court in California, an additional $2,000 penalty also was assessed to the employer, Global One Logistics, by the department’s Wage and Hour Division to address the employer’s willful violations of the Fair Labor Standards Act. Employees were told to record only eight hours of labor each day regardless of how many hours they actually worked, according to a May 24 Labor Department press release.

Maintain accurate timekeeping

The court ordered Global One Logistics, which provides warehousing and distribution services for the home fashion and apparel industry, to implement a reliable timekeeping system that allows each employee to accurately record their daily start and stop times, the Labor Department stated. The order also instructed the employer to not alter or manipulate time or payroll records to reduce the number of hours actually worked and not to encourage or pressure workers to underreport hours worked, the statement said.

Aimee Delaney, partner at law firm Hinshaw & Culbertson, said that while the timekeeping order is not unusual, the FLSA places an obligation on employers to maintain accurate time records for its employees. It does not dictate a specific method, but there must be accurate records maintained, she said. 

“Digital time and attendance systems do deter manipulating time and payroll records, particularly if you are comparing to handwritten timesheets,” Delaney said.

 ‘Willful’ wage and hour violations

Investigators found the employer willfully failed to pay employees overtime at time-and-one-half their regular rates of pay when they worked more than 40 hours per week, according to the Labor Department. In addition to requiring employees to falsify the number of hours they worked each day, the employer also paid for the unrecorded hours in cash at workers’ straight-time rates, the Labor Department stated.

A “willful” violation under wage and hours laws has specific meaning and consequences, said Delaney. If a violation is found to be willful, the statute of limitations for the claim goes from two to three years and there are additional penalties, such as the $2,000 levied against the employer, she said.

Aimee Delaney, wage and hour violation
Aimee Delaney, partner at law firm Hinshaw & Culbertson.

“When used in the FLSA context, a violation is willful if the employer either knew or showed reckless disregard for whether its conduct was prohibited by the FLSA,” Delaney said.

Employers who purposefully manipulate payroll records in an attempt to avoid their legal obligations will be held accountable by the Labor Department, said Wage and Hour Division Assistant District Director Rafael Valles in West Covina, California.

“The outcome of this investigation serves as a reminder to all employers to review their pay practices to ensure they comply with the law and as a reminder to workers that they have the right to be paid for all of the hours that they work.”

Compliance is an organizational responsibility

Minimizing the risk of wage and hour and overtime violations falls on several departments and various roles within the organization. Managers in particular often are on the frontline with workers and should be familiar with compliance and timekeeping requirements.

“They know and are often the assigner and approver of overtime,” Delaney said. “Managers certainly bear a responsibility for knowing the state and federal requirements and not directing employees to do something out of compliance with those requirements.” 

Human resources and payroll departments often have higher-level oversight and compliance responsibilities. HR may not always be aware of specific timekeeping violations occurring day to day but can ensure that managers are properly trained. 

Also read: Using software to simplify payroll and overtime

“HR should also be aware if unusual or significant hours are being worked, which may prompt a review or audit to ensure employees working the additional hours are properly paid,” Delaney said. “Payroll is often simply a function of processing pay for what is reported on the time records. However, payroll certainly has a role to play in ensuring that all reported hours are paid correctly, including the correct overtime premiums.”

Labor Department enforcement

Delaney also pointed out that “off the clock” violations are among the clearest abuses of state and federal wage and hour laws.

“It literally means you are requiring the employees to work while not recording their time, which means they will not be paid,” she said. “Under the FLSA, non-exempt employees must be paid for all hours worked. Employers also have an obligation to maintain accurate time records.”

She added that this case isn’t necessarily a predictor of tougher Labor Department enforcement of wage and hour laws. The violations presented in the facts were blatant violations of fairly established wage and hour rules, she said. 

“Once violations are found, the Labor Department is always going to ensure enforcement to get the employees paid the wages owed,” she said.

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Rick Bell is Workforce’s editorial director.

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