Tuesday, October 24, 2023

Kickbacks are bad

It's one thing to settle an unpaid overtime claim; it's another entirely to shake down your employees to repay the settlement funds to you.

That's exactly what the Department of Labor claimed Sparklean Laundry and Piper did.

Following a DOL investigation, Sparklean agreed to pay unpaid overtime back wages to its employees. Shortly thereafter, it began demanding kickbacks from its employees to compensate for the overtime settlement, submitted false receipts to showing that it paid the recovered wages, and threatened workers for exercising their rights under the Fair Labor Standards Act.

As a result, the DOL went to court and obtained a $281,870 judgment, which included $87,735 in back wages, $94,135 in liquidated damages, and an additional $100,000 in punitive damages.

"Workplace retaliation is intolerable and illegal, and demanding that employees return their hard-earned wages to their employer is among the most egregious types of retaliation we regrettably see," said Regional Solicitor of Labor Marc Pilotin. "The Department of Labor will use all of its tools to combat retaliation, including through requiring employers who retaliate to compensate workers above and beyond the wages their workers are owed.... This was a clear case where punitive damages were appropriate against the employer, which both violated federal law and broke its promises to the department."

Frankly, given the nature of the allegations, this company is lucky that its only on the hook for money, that it's still in business, and that its owners aren't in prison.

Employers, repeat after me: Kickbacks are bad. Shakedowns are bad. Retaliation is bad. Trying to defraud the government is bad. No good will come from any of this, ever.