Arkansas tire company pays $96K to resolve overtime violations
- Rental Concepts LLC, which does business as RNR Tire Express in Springdale, Arkansas has paid $96,511 in back pay to 239 employees to resolve "systemic violations of the Fair Labor Standards Act's overtime provisions," according to the U.S. Department of Labor.
- Wage and Hour Division investigators found that the company violated the FLSA's overtime requirements when it failed to include monthly sales commissions and production bonuses earned by employees with hourly pay when calculating overtime for account managers, salesmen and shop technicians.
- The company was also found to have violated the Family and Medical Leave Act by failing to provide notice to its employees regarding the FMLA as legally required when granting employees medical leave.
The FLSA has always been a tricky law for employers, with requirements that appear to be deceptively simple. Employers have to make sure that payment policies are compliant, even for employees receiving commissions, or risk potentially substantial financial and legal repercussions.
"This case is a good example of how seemingly small mistakes in payroll can add up quickly and violate the FLSA," Wage and Hour Division District Director Hanz Grünauer, said in a statement.
Basic steps employers can take to preemptively address compliance — in addition to meeting notice and recordkeeping requirements from WHD — include training front-line managers to properly track overtime and making sure salary calculations are based on all the requisite data points.
Employers that have made FLSA mistakes can take action and possibly avoid litigation or a DOL investigation by self-reporting violations through the Payroll Audit Independent Determination (PAID) program, which WHD launched in March. The program is aimed at resolving claims quickly and without litigation, improving employers' compliance with overtime and minimum wage requirements and making sure that employees receive the back wages they are owed.
One expert recommends that employers conduct audits through PAID because it "can definitely significantly cut down on the probability that they end up in litigation or are subject to fines for violating the act." Other experts, however, have expressed concern that participation in the program may draw the attention of state enforcement authorities.
To participate in PAID, employers conduct a pay audit to spot non-compliant behaviors. If problems are found, WHD says employers should: identify the potential violations; identify which employees were affected; identify the time frames in which each employee was affected; and, finally, calculate the back wages the employer believes are owed to each employee.
When those steps are completed, the employer can contact WHD to discuss the next steps. The employer will need to supply information, including back wage calculations with supporting evidence and methodology, an explanation of the scope of the violations, a certification that it has read up on all the program's information, terms and compliance assistance materials and another certification that the employer is eligible for the program. If the employer owes back wages, back pay must be provided by the end of the next full pay period after WHD gives it a summary of unpaid wages.