The federal minimum wage for non-exempt employees increases to $7.25 per hour this Friday, June 24, 2009. This means that by Friday, every employer of employees subject to the minimum wage provisions of the Fair Labor Standard Act (FLSA) will be required to:
- Ensure non-exempt employee pay equals or exceeds the increased federal minimum wage of $7.25 per hour; and
- Update the federal minimum wage and hour notice postings that the FLSA requires employers post in a conspicuous place in all of their establishments to notify employees about the FLSA minimum wage and overtime rules. A revised Federal minimum wage poster, reflecting the minimum wage increase to $7.25 per hour is now available free of charge on the Department of Labor’s Web site here in multiple languages.
While implementing these required updates, U.S. employers also generally should audit existing wage and hour practices and documentation and take other steps to defend against the heightened emphasis on enforcement of federal wage overtime, minimum wage, child labor and other wage and hour laws announced by the U.S. Department of Labor Wage & Hour Division (WHD). In March, 2009 Secretary of Labor Hilda Solis announced that the Labor Department was adding 250 new field investigators and taking other steps to strengthen its enforcement of these federal wage and hour laws. See WHD Press Release. Consistent with this promise to emphasize wage and hour enforcement, the Labor Department has announced a series of wage and hour enforcement actions since President Obama took office in January affecting various industries in all regions of the nation. These include the following:
- U.S. Labor Department recovers more than $200,000 in back wages and interest from New York City staffing company and president (April 16, 2009);
- Fredericksburg, Va., military contractor pays nearly $180,000 in back wages following U.S. Labor Department investigation (April 15, 2009);
- Dairy Queen in East Grand Forks, Minn., cited for federal child labor violations (April 15, 2009);
- U.S. Labor Department recovers nearly $270,000 for low-wage workers in Mountain View and Sunnyvale, Calif. (April 2, 2009);
- Teaneck, N.J., information technology company agrees to pay more than $509,000 in back wages following U.S. Labor Department investigation (March 30, 2009);
- U.S. Labor Department secures nearly $517,000 in back wages for 60 employees of Merrill Lynch & Co. Inc. in New York City (March 24, 2009);
U.S. Labor Department cites Smith’s Restaurant, Bolivar, Mo., for overtime, minimum wage and child labor violations (March 17, 2009);
- U.S. Department of Labor obtains more than $370,000 in back wages for employees of Carrollton, Ky., company (March 6, 2009);
- Willow Lake Mine in Galatia, Ill., agrees to pay more than $510,000 in back wages to workers to settle U.S. Department (March 2, 2009);
- U.S. Labor Department fines Southland plasterer for repeat pay violations (February 26, 2009);
- New York City car washes, corporate officer agree to pay more than $228,000 in back wages, interest and penalties to resolve U.S. Labor Department suit (January 29, 2009);
- Former owner of Queens, N.Y., restaurant agrees to pay more than $85,000 in back wages, damages and penalties to settle U.S. Labor Department lawsuit (January 28, 2009);
- U.S. Labor Department recovers nearly $192,000 in overtime back wages for employees of New York City parking garage chain (January 27, 2009);
Labor Department officials are promising continued strong enforcement of federal wage and hour and other labor and employment laws in the months ahead.
The continuing emphasis of the DOL upon FLSA enforcement, coupled with the growth in FLSA enforcement actions by private plaintiffs, provides an important warning to employers of low wage workers specifically, as well as employers generally, of the importance of being prepared to defend their worker classification and overtime practices against DOL and/or private litigant investigations. When it updated its regulations governing the classification of workers as exempt versus non-exempt under the FLSA in 2004, the DOL urged employers to review and update their worker classification and overtime practices to comply with the updated regulations. At the same time, the DOL announced its intention to vigorously enforce its FLSA regulations against employers failing to adhere to these updated rules. Despite these widely publicized compliance efforts, DOL studies of employer compliance with overtime rules continue to reflect that 50 percent of employers are not in compliance with these mandates.
Therefore, in addition to adjusting existing rates of pay to comply with the increased minimum wage, employers also should:
- Audit overtime pay practices to verify they comply with applicable federal and state requirements,
- Review workers classified as exempt employees and/or non-employee contractors in light of the FLSA and applicable state wage and hour laws to assess the sustainability of these characterizations against a legal challenge; and
- Audit the adequacy of current practices for tracking and documenting time worked by non-exempt workers in light of the FLSA and applicable state wage and hour laws.
Employers are cautioned to keep in mind that employers generally bear the burden of proving that their existing worker classification, wage and overtime practices meet or exceed the minimum standards imposed by the FLSA and any applicable state wage and hour law. In addition to specifically targeting wage and hour enforcement generally, the Obama Administration also has directed the Department of Labor and other agencies to carefully scrutinize the appropriateness of situations where businesses classify persons performing services as working in a non-employee capacity.
The minimum wage increase that takes effect this Friday is the last of three provided by the enactment of the Fair Minimum Wage Act of 2007, which amended the FLSA to increase the federal minimum wage in three steps: to $5.85 per hour effective July 24, 2007; to $6.55 per hour effective July 24, 2008; and now to $7.25 per hour effective July 24, 2009. The latest change will directly benefit workers in 30 states (Alabama, Alaska, Arkansas, Delaware, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Maryland, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin and Wyoming) where the state minimum wage is currently at or below the federal minimum wage, or there is no state minimum wage. It will also benefit workers in the District of Columbia, where the minimum wage is required to be $1 more than the federal minimum wage. A family with a full-time minimum wage earner will see its monthly income increase by about $120.
Every employer of workers subject to the FLSA’s minimum wage provisions must post, and keep posted in each of its establishments, a notice explaining this act. The notice must be posted in conspicuous places to permit employees to readily read them. Posters and other compliance assistance materials concerning the minimum wage increase are available free of charge from the Labor Department’s Wage and Hour Division and may also be obtained from the agency’s Web site at http://www.wagehour.dol.gov.
Many states have minimum wage laws with provisions that differ from the federal law. When an employer is subject to both, the employer must pay the higher of the two rates.
The author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer and other members of Curran Tomko and Tarski LLP are experienced with assisting employers and others about compliance with wage and hour and other employment and compensation compliance and risk management concerns, as well as defending employers against federal and state Department of Labor and private plaintiff wage and hour and other labor and employment, compensation and employee benefit charges, claims and investigations. Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer has advised and represented employers on wage and hour and a diverse range of other labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 20 years. If your business needs assistance auditing or updating its wage and hour or other human resources compliance practices, or responding to wage and hour or other employment related charges or suits, please contact Ms. Stamer at firstname.lastname@example.org, (214) 270-2402; or your favorite Curran Tomko Tarski, LLP attorney. For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi, LLP team, see here.
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©2009 Cynthia Marcotte Stamer. All rights reserved.