The Department of Labor (“DOL”) recently announced that Life Time Fitness will pay more than $976,000 in back wages and damages to 15,909 of its employees for alleged minimum wage violations. Life Time Fitness deducted uniform costs from their employees’ paychecks per a previous policy. As a result of the deductions, the DOL alleged that the gross wages of some employees were below minimum wage requirements for their first pay period. Life Time Fitness has indicated that they eliminated the policy at issue more than a year ago and that the company now purchases uniforms for newly hired employees.
Regardless, as part of the settlement terms, Life Time Fitness has agreed to train its managers on Fair Labor Standards Act (“FLSA”) requirements at its locations nationwide in addition to paying the back wages and damages. The costly settlement serves as a reminder to employers to review their pay policies and ensure that deductions, including uniform deductions, that are deemed by the DOL to be for the benefit of the employer do not result in employees receiving less than the equivalent of minimum wage for any particular workweek. This is especially important for employers with employees who make at or near minimum wage. The DOL’s District Director in Minneapolis recently stated that “[w]hile employers are allowed to take deductions for the cost of uniforms, those deductions cannot bring an employee’s earnings below the federal minimum wage.”
Under the FLSA, uniforms or other items which are considered to be primarily for the benefit or convenience of the employer cannot be included as wages. Additional deductions the DOL considers to be for the benefit or convenience of the employer include: (1) tools used in the employee’s work; (2) damages to the employer’s property by the employee or any other individuals; (3) financial losses due to clients/customers not paying bills; and (4) theft of the employer’s property by the employee or other individuals. An employer may not take credit for such items in meeting FLSA minimum wage or overtime obligations. Similarly, employers may not avoid FLSA minimum wage and overtime requirements by having employees provide cash reimbursement for the cost of such items instead of a deduction from wages.
Employers also should check state and local laws concerning deductions from pay to ensure full compliance.
The St. Louis employment attorneys at McMahon Berger have been representing employers across the country in labor and employment matters, including those relating to the FLSA, for sixty years, and are available to discuss these issues and others. As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts. The choice of a lawyer is an important decision and should not be based solely on advertisements.