USDOL announces another round of Fair Labor Standards Act civil money penalty increases

If you are thinking that you’ve heard all this before, it’s not just your imagination.  For the second time in the past six months, the U.S. Department of Labor (DOL) has announced increases in the civil money penalties for certain minimum wage, overtime, and child labor violations of the Fair Labor Standards Act (FLSA).

Last July, as a result of the Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Adjustment Act), the DOL published rules that increased FLSA penalties. 

Our blog post on that increase can be found here. Those increases took effect in August 2016 and were “catch-up” increases to account for the fact that penalties had not increased over the prior four years.  After the 2016 catch-up, the Inflation Adjustment Act requires that federal agencies review penalties every year in early January, and increase them if the cost-of living formula in the statute calls for them.     

On January 18, the DOL announced its increased penalties for 2017. Given the multiple dates involved in the original penalties and the 2016 and 2017 changes, which penalties apply to which violations is confusing. See the chart on page 2 of the Federal Register announcement
for a chart showing all of the increases and the dates they became effective.  

FLSA civil money penalties fall into two categories: those for violations of minimum wage/overtime provisions and those for violations of child labor laws and regulations.  

Prior to the August 2016 increases, DOL imposed a penalty of up to $1,100 for each "repeat" or "willful" violation of FLSA minimum-wage or overtime requirements. In August 2016, the maximum was raised to $1,894. The 2017 increase is to $1,925. 

Civil money penalties for violations of the federal child labor laws may be assessed for each worker under 18 years’ old who was employed in violation of the FLSA’s child labor regulations. Those penalties are rising to $12,278 from the August 2016 figure of $12,080.  A child labor violation that results in a minor’s serious injury or death now carries a penalty of up to $55,808, compared to the 2016 amount of $54,910. This sum could be doubled to $111,616 as the result of a repeat or willful violation.

FLSA civil money penalties are assessed based upon the number of employees who were employed in violation of the law.  For penalty purposes, FLSA violations can be considered “repeat” even if they are not factually or legally the same as previous ones. For example, a minimum-wage violation found in a previous DOL investigation can be the basis for a penalty in a later investigation that discloses overtime violations.  In most cases, DOL’s practice is not to take into consideration previous violations disclosed in investigations conducted more than 5 years before the current investigation.

DOL may assert a penalty for “willful” violations if it can prove that the employer knowingly violated the FLSA or acted with reckless disregard in causing the violation.

It is not uncommon for civil money penalties to equal or even exceed the back wages found due for FLSA violations. Child labor enforcement is a priority at DOL. Employers may safely assume that penalties, often of significant amount, will be imposed when a DOL investigator finds child labor violations, or repeat or willful wage violations. If you have the misfortune of being assessed a DOL civil money penalty that falls within the violation and penalty assessment dates in the table provided above, be sure to double-check the DOL’s work to confirm that the correct penalty amount was assessed.  

Avoiding the costs of paying back wages and penalties are major reasons for employers to ensure that they are in compliance with the FLSA wage and child labor regulations at all times.  Conducting regular check-ups of FLSA compliance is not only advisable, it is fiscally wise. 

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

- Mike Staebell