Initially, we apologize for the delay in posting. We were following the advice in our last post and trying to see how much we could leverage our sick leave.
On to the topic du jour. The Department of Labor’s Wage and Hour Division collected more than $166 million in back wages in fiscal year 2005, marking a four-year low. Could it be that many employers are beginning to hear the cry of employment lawyers and HR consultants? Is there an increased recognition of the financial risk involved in not complying with highly complex labor laws such as the Fair Labor Standards Act and the Family and Medical Leave Act? Or is it mere coincidence – a random twist of fate? Well let’s see.
Overall, the DOL collected back wages for 241,379 employees in FY 2005, which represents a 30 percent decrease from the DOL’s peak of 342, 358 in FY 2003 and it is the lowest number since 2001. The DOL however, claims that its effort to collect back wages in the last year has not waned. In fact, wages collected on behalf of low-wage workers has increased to a record high of 45.8 million in back pay for 96,511 low-wage workers during FY 2005. What's more, the amount collected in low-wage industries such as day care, restaurants, and temporary help increased by 13 percent over figures from 2004. Well critics may differ, but for those of us who wake up in the morning wondering, “does X employee perform the requisite number of job activities directly related to management or the general business operations to qualify as exempt employees under the FLSA and corresponding state statues?” the answer is clear. Increased awareness and attention, preventative “simulated” audits, and perhaps a mortal fear of collective actions in California have guided an increasing number of employers toward safe shores.
In this area, however, the work is never done. Thus, while numbers for 2005 have decreased, employers still need to focus on a number of areas for improvement. Notably, the largest awards were for violations of the FLSA’s overtime rules. In FY 2005, 188,954 employees received back wages totaling over $119 million dollars for unpaid overtime. This amount represented 89 percent of all wages collected under the FLSA. Of the back pay collected under the FLSA, the DOL reports that nearly $14.7 million was collected for roughly 11,000 employees as result of violations based on the 2004 changes to the overtime rules. An additional 21.4 million in back wages were collected for employees who were paid straight-time instead of overtime and 20.1 million was collected for workers who were not paid for all hours worked.
So, despite the trend, complacency is not an option. Unless you like jury trials in California.