US Department of Labor; Small Businesses; Minimum Wage

October 22, 2014

Many startups are often owned and operated by U.S. immigrants and in most cities there is a burgeoning workforce ready to work at minimum wage.  Immigrants, and many other new business owners, are often unfamiliar with the complexity of overlapping laws and regulations that apply to businesses.

There is one business trap that I have been working on that business owners should heed: minimum wage documentation.  The reason I mention immigrant in this context is that a Department of Labor investigator I spoke with had a great deal of familiarity with asian-owned small businesses and seemed to be disdainful of their intention to comply with minimum wage law.  I don’t know that the Department of Labor is focusing on this segment of the population but from this conversation I got the impression that it might be or at least this investigator seemed to view this part of the business world with cynicism.

Apparently based on a complaint by a disgruntled formed employee the Department of Labor investigated an immigrant-owned small business and found that its recordkeeping was inadequate with respect to hours actually worked.  Apparently based on the word of this former employee, the Department of Labor determined that a nearly crippling amount of money was owed to employees for nonpayment of overtime.

The business owners were not fluent in English, were not given a translator, and the method of calculating the underpayment was not shown to them.  They were not advised to get a lawyer and they were told that if they did not pay it right away they would be taken to court where they would be assessed a higher amount and have to pay a huge amount of money for lawyers.  The people were terrified, signed a “confession,” and agreed to pay the assessment.

These bullying tactics have been repeated.  People subjected to a minimum wage audit need to be aware of their rights and understand that the unverified conclusions of the Department of Labor can be substantially off the mark.

The Fair Labor Standards Act, a federal law, requires a level or recordkeeping that is not difficult to maintain.  It is prudent to verify compliance.  If audited by the Department of Labor, seek assistance as the conclusions of the Department of Labor are not unassailable.