Compliance

Wage and hour violations during staff gatherings lead to substantial Labor Department fines

By Rick Bell

Apr. 15, 2021

Employee meetings are typically meant to discuss policies, reinforce training and build organizational transparency.

Two companies discovered the hard way that if not properly monitored, such gatherings can violate wage and hour and overtime laws, leading to the Fair Labor Standards Act violations and steep financial penalties.

Investigations by the Department of Labor Wage and Hour Division determined that Keystone Adolescent Center Inc. owed workers $44,858 in back wages for time spent in meetings, while Maggiano’s Little Italy restaurant in Philadelphia owed 82 employees $116,308 in back wages for minimum wage and overtime violations stemming from pre-shift meetings.

According to investigators, supervisors and behavior specialists gathered every two weeks at Keystone Adolescent Center’s five Greenville, Pennsylvania, facilities where they discussed policy changes, completed required training and reviewed safety procedures to help the at-risk youth they serve.

Also read: Labor Department reopens the floodgate to liquidated damages in wage and hour investigations

Keystone also used the meetings to distribute paychecks, yet failed to pay 80 workers who attended these meetings and required training outside of their regular shifts for the time they spent at them. The investigation determined that — by excluding this work time from employees’ pay — Keystone Adolescent violated the FLSA, leading to the recovery of back wages for the workers.

Wage and hour violations during staff meetings

According to an April 5 Labor Department press statement, investigators found that Keystone paid employees for time spent at staff meetings and required training only if those meetings and training occurred during their scheduled shifts. 

The employer failed to pay workers attending outside of their normal work hours for time they spent in those meetings and required training. Failing to record and pay for this time violated FLSA overtime and recordkeeping requirements, according to the statement.

“Employers must pay employees all the wages they legally earn, which includes paying them for any hours they work outside of their scheduled shifts,” said Wage and Hour Division District Director John DuMont in Pittsburgh.

Complying with federal, state laws

Aimee Delaney, a labor and employment law expert at law firm Hinshaw & Culbertson in Chicago, said that any time an employer requires a nonexempt employee’s attendance at a meeting, training or other mandatory event, the employer needs to realize that this time is considered hours worked and is compensable under state and federal law. This also means that if the time spent at the mandatory meeting puts the employee over 40 hours for the week, the employee is entitled to overtime for any time over 40 hours.

Aimee Delaney, wage and hour violation
Attorney Aimee Delaney, Hinshaw & Culbertson

The employer also needs to understand that state law may require overtime at different thresholds.

“One easy question an employer can ask itself when trying to determine if the time is compensable is whether the meeting or other event was mandatory, as that is usually a sign that the time must be paid,” Delaney said.

Compensation for pre-shift meetings

Oftentimes restaurant managers hold pre-shift meetings to motivate their employees, reinforce training or update the day’s menu. It is time for which employers typically should also be paying their workers, which is the lesson Maggiano’s Little Italy restaurant learned the hard way after a Labor Department investigation.

Investigators found minimum wage and overtime violations of the FLSA. In addition to the $116,308 in back wages, the Wage and Hour Division assessed a civil money penalty of $68,060 as investigators deemed the violations as willful, according to an April 12 Labor Department press statement.

The division determined that by failing to pay workers for time they spent attending pre-shift meetings, the restaurant failed to pay the required federal minimum wage. Maggiano’s Little Italy required dining room servers to attend 15- to 30-minute meetings before the start of their scheduled shifts. When employees worked more than 40 hours in a workweek, this unpaid time triggered overtime violations, according to the Labor Department.

“Restaurant workers are often among the nation’s lowest paid, and most vulnerable, particularly during the coronavirus pandemic,” said Wage and Hour District Director James Cain in Philadelphia. “When employers fail to account for all hours employees work, they deprive workers of their hard-earned wages. Other employers should use the outcome of this investigation as an opportunity to review their own pay practices, and ensure they comply with the law.”

Delaney noted that the Labor Department has a number of resources that explain the law and regulations on this topic specifically and there are specific rules on when activities by a non-exempt employee outside of work hours must be considered hours worked and/or compensable.

She also pointed out that vigorous enforcement of wage and hour and overtime laws is nothing new.

While there may be a number of areas that employers can expect stricter compliance enforcement on with the new administration, this is a fairly settled area of the law and violations of this nature have been and will continue to be enforced regardless of a change in administration at the top,” she said.

Make wage and hour compliance headaches a thing of the past with Workforce.com’s industry-leading time and attendance software. Book your demo today.

Rick Bell is Workforce’s editorial director. For comments or questions email editors@workforce.com.

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