On June 8th, 2022, the U.S. Department of Labor’s (DOL’s) Wage and Hour Division (WHD) found illegal wage deductions occurred at an Oklahoma gas station and convenience store. In effect, the payroll deductions brought employee wages down below the federal minimum wage. All in all, in that case, the WHD recovered $166K in back wages. The WHD’s mission is to enforce employment laws under the Fair Labor Standards Act (FLSA). In an earlier investigation, the WHD uncovered unpaid wages at a merchandising company.
Wage and Hour Standards Under the FLSA
The FLSA provides for several federal wage and hour standards. These include the federal minimum wage, mandatory overtime pay, recordkeeping requirements, and youth employment standards. The FLSA is one of five commonly cited employment laws with which businesses should familiarize themselves. In general, the FLSA covers employers in the private sector and in federal, state, and local governments. Currently, the FLSA entitles covered workers to the following minimum wage and overtime pay requirements:
- The federal minimum wage of not less than $7.25 an hour, effective July 24th, 2009.
- An overtime pay rate of not less than one and one-half times the regular pay rate during hours worked more than 40 a week.
Accordingly, the WHD enforces federal minimum wage, overtime pay, recordkeeping, and child labor requirements under the FLSA. In order to ensure employers succeed in their compliance efforts, the WHD keeps a team of investigators to support the enforcement of the several labor laws applicable to businesses.
The Company’s Illegal Wage Deductions
According to the investigation, Modern Oil Co., and its Oklahoma-based Sparky’s Kwick Stop Stores, made illegal wage deductions to pay for several employee items. These included smocks, uniforms, and cash register shortages. These deductions effectively reduced workers’ wages below the federal minimum wage rate. While employers may make certain deductions from pay for uniforms or shortages, these must not violate the FLSA. The WHD’s Fact Sheet #16 covers how an employer may legally deduct wages for uniforms and other facilities.
Back Wages and Other Remedies
Ultimately, the WHD recovered $166,073 in back wages for 732 workers. In addition to the monetary penalties incurred, the company signed an enhanced compliance agreement whereby they must:
- provide employer training on wage and hour compliance,
- maintain accurate records under the FLSA, and
- ensure they only make legally permissible wage deductions in the future.
Employees seeking to claim illegal wage deductions or other wage and hour violations may file a complaint with the DOL. Meanwhile, workers may use the WHD’s search tool if they feel they are owed back wages already collected by the division.