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Failure to pay employee overtime and keep proper records results in stiff penalties



By Kyle Watlington

According to the U.S. Court of Appeals for the 8th Circuit, an employer who operates a day care for pre-school age children is required to pay his employees one-and-a-half times the hourly rate for any work performed beyond forty hours a week under the Fair Labor Standards Act (FLSA). Additionally, employers are required to keep records of their employees and of the wages they earn while working. 

The Department of Labor (DOL) conducted three separate investigations of the employer’s day care business over the course of five years. At the conclusion of each investigation the investigator for the DOL found that the employer was paying “straight time,” or an equal amount of pay, for all hours regardless of the amount of hours worked by an employee in a work week. The employer was warned the first two times that these violations should be corrected and back pay should be given to the employees. After the third investigation revealed that the employer’s practices were still continuing, the DOL filed a lawsuit against the employer seeking $92,402.35 in back pay.

Does a daycare qualify as a pre-school under the FLSA?
On appeal, the employer argued that his business did not fall within the FLSA. The court disagreed and found that a daycare does qualify as a pre-school when it establishes programs of study, utilizes lesson plan coordinators, gives its employees the title of “teacher,” advertised that it provided “Reading / Math Services,” and served children averaging three years of age. Pre-schools fall within the coverage of the FLSA and employers must therefore follow the guidelines of the Act.

Can the court rely solely on the DOL’s calculations to determine damages?
The employer also argued that the DOL investigator miscalculated the total amount of back pay that was owed to employees. The investigator found that many months of the employer’s time cards were missing, the employer often declared overtime pay as “other pay,” and often the employer would pay employees their wages a month late. The investigator reviewed what records were available and calculated the damages based on the information provided by both the employer and employees. 

It is the job of the employer to keep proper records. An employee will not be penalized by being denied recovery on the grounds that he is unable to prove the exact amount of unpaid work. All the employee is required to do is show that they did perform work which was not properly paid and give enough information so that a general finding can be made by the investigator. It is the job of the employer to provide evidence that the employee is incorrect. If the employer cannot provide this information then the court will award damages to the employee, even if the calculation is only estimated.

Employers whose business falls within the guidelines of the FLSA should be sure to pay all employees the proper time and a half hourly rate for all hours worked over forty hours and should keep full and detailed records of all wages paid to employees. The DOL is not required to be exact when calculating back pay and it is the employer’s job to dispute any incorrect information.




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