Restaurant pays $45K to settle claim that it paid back-of-house workers a flat rate
- The Journey restaurant, an Indianapolis-based Japanese/American buffet-style eatery, has agreed to pay 16 employees $45,828 in back wages to settle wage and hour claims. The employees worked as line cooks, dishwashers and in food preparation.
- The settlement follows an investigation by the U.S. Department of Labor's (DOL) Wage and Hour Division, which the agency said revealed Fair Labor Standards Act (FLSA) overtime and recordkeeping violations.
- Investigators determined that the back-of-house employees worked an average of 63 hours per week for a flat salary, regardless of the number of hours they actually worked. This practice resulted in overtime violations when they worked more than 40 hours in a workweek. In addition, the employer's failure to record the number of hours that employees worked resulted in FLSA recordkeeping violations, DOL said.
Employees covered by the FLSA are generally entitled to overtime pay unless they meet one of several exemptions, such as those for executive, administrative, professional, outside sales and computer employees. Employees also must meet a salary threshold to be exempt from overtime, currently $23,660 or $455 a week. If they don't meet both of those requirements, the employee must be paid at least time and one-half for all hours worked over 40 in a workweek.
An effort by the Obama Administration to increase the salary threshold to $47,476 — meaning that anyone paid less would be eligible for overtime — was put on hold in November 2016 when a federal district court enjoined the regulations. The current DOL has announced plans to try again, although experts expect the threshold to be significantly lower. A proposal is slated for January 2019, and the agency has listening sessions planned for this fall. Still, employers may not be out of the woods just yet with respect to the Obama-era rule. An earlier delay, coupled with a few other potential developments, could eventually put the $47,476 threshold into effect, with little notice, according to one expert.
Finally, while there are ways to pay a nonexempt employee a fixed salary, they're complicated, narrow, and, according to some experts, often not worth the accompanying risk.
- U.S. Department of Labor Wage and Hours Worked: Minimum Wage and Overtime Pay
- Wage & Hour Insights Paying a Fixed Salary for a Fluctuating Workweek - Or, How To Pay Half-Time Overtime