Seven (7) Long Island restaurants have consented to a settlement with the United States Department of Labor (“DOL”) that includes $1.6 million in back pay as well as over $110,000 in penalties and interest for willful violations of the Fair Labor Standards Act (“FLSA”). Specifically, the DOL found the restaurants failed to pay employees a minimum wage, paid employees in cash, had illegal tip pools, and failed to keep records of all hours worked.
Are your employees prohibited from discussing their wages? Many employers have such policies in their handbooks. If you have not read your employee handbook lately, now is the time to dust it off and see if you have a pay secrecy policy buried in the contents. If you have such a policy, it is most likely illegal. Pay secrecy is viewed as a barrier to equal pay for men and women, as well as attempts to unionize companies, so there is a strong push to eliminate such policies.
On April 8th, President Obama signed an executive order prohibiting federal contractors from discriminating against employees or applicants who inquire about, discuss, or disclose their own compensation or the compensation of another employee or applicant. There is one limited exception pertaining to employees with access the compensation information of other employees because of their essential job functions, such as payroll clerks. Violating this provision could lead to the loss of federal contracts and potential debarment. If your business relies heavily on federal contracts, such a penalty could put you out of business. The executive order applies to federal contractors, rather than employers in general, because the President would be unable to create such a rule on his own, and would need Congress to pass legislation.
It’s déjà vu for Connecticut employers. The Connecticut General Assembly and Governor Malloy have approved the second minimum wage hike in less than a year. Just ten months ago, legislation was passed to increase the minimum wage to $8.70 on January 1, 2014, and $9.00 on January 1, 2015. The new legislation changes the 2015 minimum wage to $9.15 and institutes rates for 2016 ($9.60) and 2017 ($10.10) as well. The employer share of the minimum wage for tipped employees and the apprentice rate will be correspondingly adjusted, as they are based on percentages of the minimum wage.
Connecticut employers with workers classified as independent contractors understand the thin line that often exists between determining whether an individual is properly defined as an employee or an independent contractor. What many employers may not know is how severe a penalty they can pay for misclassifying employees as independent contractors, even where unintentional.