Fast Food Chain to pay $7.7M for Misclassifiying Employees

In a recent wage and hour lawsuit, a fast food company agreed to pay more than $7.7M to settle a lawsuit based on misclassification. The Fair Labor Standards Act (FLSA), provides that all employees must be paid at least minimum wage, and that all non-exempt employees be paid overtime compensation at a rate of one and one-half their standard rate of pay for all hours worked in excess of 40 hours in any work week.

Misclassifications occur when employers incorrectly designate workers as exempt when they should be non-exempt, or as independent contractors rather than employees. Depending on your classification, you are entitled to critical employment benefits. Further, non-exempt workers may earn overtime for all hours worked in excess of 40 hours in any one work-week. However, exempt workers do not earn overtime, regardless of the number of hours worked.

In this instance, the plaintiffs asserted that the fast food company intentionally misclassified managers in order to avoid paying overtime. The judge noted that the failing to pay overtime was not “a good-faith mistake”, but that the company knowingly had managers do the work of non-managerial employees in order to avoid paying the extra compensation. As such, in addition to award of back pay, the court ordered the company to pay $3 million in liquidated damages.

Whether by accident or intentional, misclassifications are one of the top violations of the FLSA. Further, simply classifying workers as exempt does not mean that they are – several tests exists to help ensure employers categorize their employees correctly.

For more information, or if you have any wage and hour question, please contact the experienced Atlanta employment lawyers at Buckley Bala Wilson Mew LLP for an immediate case evaluation.