Wage and Hour: Is There a Target on Your Back?

Sept. 20, 2018

 April 2018: $342,926 back wages paid to employees from a Midwest auto chain. April 2018: $306,000 back wages paid to employees in a New York auto shop. April 2018: $174,400 back wages paid to employees in a California body shop. July 2018: $76,000 back wages paid to employees, plus a $14,160 civil penalty assessed in Alaska. July 2018: $51,506 back wages paid in Kentucky to auto shop employees.

I only have so much space to write this column, so I can’t list every single violation, but in two months’ worth of work, the federal government has disciplined the tire and automotive industry alone by nearly $1 million. Make no mistake about it, there are targets on our backs as the government feels this industry is an easy place to generate revenue. And, sadly, they are right.

This isn’t some witch-hunt the government is cooking up by twisting the facts to get the result they want. This is right in their face, silver platter, “Thank you, sir. May I have another?” bona fide easy pickin’s. And it is all so easily fixable, and the right thing to do.

Wage and Hour violations are discovered in two ways: random audits and complaints.

Random audits occur when the government starts finding “willful” violators: those businesses that knew better and still violated the law. Those types of judgements drive hundreds of more random audits since they are viewed as easy ways to generate revenue. Every time an auto shop is disciplined, and the Depart­ment of Labor classifies it as willful or neglectful or “in disregard,” we should all cringe. It makes everyone’s job that much harder. And if you’re not doing the bare minimum to ensure all of your employees at least are getting paid the equivalent of minimum wage, then shame on you. Your primary job as an employer is to take care of the employees. They take care of the customers. And the customers take care of the company.

Complaint-driven violations are generally a little hairier, as an emotionally upset employee (or ex-employee) tells the government their right to fair pay has been violated. The employee may or may not exaggerate, but there are nearly zero cases where some pay violations don’t exist. Is there is a statute of limitations regarding how far back the government can go in looking at these issues? There’s no statute per se, but if they find willful disobedience in the current year they will typically go back four years.

The bottom line is simple: You owe it to your employees, your customers and your family to stay in compliance with Wage and Hour, at a federal level and state level (in some cases). How many shop owners reading this article could survive a $100,000 fine and still have cash to keep their doors open? Make the next inventory purchase? The bare minimum is to make sure all employees meet minimum wage guidelines. This includes overtime premiums, spiffs, bonuses, and every aspect of pay. Sometimes that means you must crack the whip on employees clocking in and out correctly. You must manage the process. The burden falls on you, the owner, to be in compliance, not the employee. If you believe that you may not be in compliance with Federal Wage and Hour requirements, first get educated. https://www.dol.gov/general/topic/wages . Push through the legalese and gain an understanding of the law. If it’s just too much, employ the services of a legal company, like SESCO Management, to help you.

Get compliant with minimum wage. Everyone clocks in and out. Everyone. Just get them used to it. Pay time-and-a-half for any hours over 40 (California you know you are different), or manage your employees to 40-hour work weeks.

Get compliant with salaried employees. Salaried employees must meet a financial requirement and a job duties requirement. More on that here: https://www.dol.gov/whd/overtime/fs17r_geico. htm, but essentially, anyone in your shop who is salaried must do a significant amount of independent work and be able to make decisions without consulting the owner. If they do mostly task-driven work like sell or file papers or pull parts and tires, then they must be hourly.

If you happen to find a big discrepancy in your current form of pay to employees, you might want to consider self-reporting to the Department of Labor. I know that may sound scary, but in nearly every instance of self-reporting the government has been very lenient and works with the company. Wage and Hour compliance is a must-do for everyone in the tire and automotive industry. To appear professional and attract the right kind of new employee to the business, we must get on board with the basics. ■

Dennis McCarron is executive director of Dealer Strategic Planning Inc., a company that manages multiple tire dealer 20 Groups in the U.S. (www.dsp-20group. com). To contact McCarron, email him at [email protected].

See also:

Do, Delegate, Delay or Dump: Learning How to Spend Your TIme Efficiently

Are you an S Corp or a C Corp?

Are You Reaching Your Goals for ROI in 2018?

About the Author

Dennis McCarron

Dennis McCarron is a partner at Cardinal Brokers Inc., one of the leading brokers in the tire and automotive industry (www.cardinalbrokers.com.) To contact McCarron, email him at [email protected].