Monday, June 15, 2009

Unpaid training time puts employer in trouble

The U.S. Department of Labor (DOL) recovered $117,023 from America’s Car Mart in overtime back wages for 103 current and former management trainees, following an investigation that found the company violated the Fair Labor Standards Act (FLSA).

The DOL found that America’s Car Mart failed to pay its employees overtime compensation they were legally entitled to receive for the time they spent in training.

“This company failed to follow federal wage and hour regulations,” said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest. “In this case, non-exempt trainees were not compensated at time and one-half their regular rate of pay for overtime hours while in training.” (DOL press release)

The company cooperated with the DOL investigation and agreed to future FLSA compliance.


The FLSA requires that covered employees be paid at least the federal minimum wage of $6.55 for all hours worked, plus time and one-half their regular rates of pay for hours worked more than 40 per week, unless otherwise exempt. Employers must also maintain accurate time and payroll records. Effective July 24, 2009, the minimum wage will increase to $7.25 per hour.

To determine whether an employee is exempt or nonexempt, they must meet certain job responsibility and salary tests. Current information on FLSA exemptions can be found on the DOL’s site at

Because FLSA violation lawsuits can critically damage your business, it’s important to understand all of the federal the state labor laws on employee time and pay requirements. Know how to navigate the confusing FLSA compliance waters now, and eliminate the risk of fines and penalties later.

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