All business owners, large and small, should realize the importance of always complying with wage and hour laws. In many cases involving allegations of wage and hour violations, companies end up paying out a lot more than they may have if they had simply followed the law in the first place. One recent case that occurred in California is an example of a costly labor dispute that ended up costing the employer millions of dollars.

Schneider Logistics Settlement

Schneider Logistics is a Walmart contractor that runs several of the retailer’s largest distribution warehouses. In 2008, the company implemented an alternative scheduling system that assigned employees to four 10-hour shifts per week. As a result of this new system, employees alleged the company began participating in the following unlawful behaviors:

  • Not paying proper overtime wages.
  • Withholding unlawful deductions from already short paychecks.
  • Coercing employees into signing waivers that stated they would willingly forgo rest and meal breaks during their 10-hour shifts.
  • Providing such waivers in English only, though many employees only spoke Spanish and therefore had little to no understanding of what they had signed.

After four years of the scheduling system, three employees stepped up and filed a claim against the company for compensation for withheld wages and denied break times. Though Schneider declined to admit any fault in the settlement, the company did agree to pay 568 workers approximately $4.7 million.

The importance of labor law compliance

The Schneider case shows just how costly labor disputes may be for businesses. Both the federal government and the state of California take wage and hour violations very seriously, and in some circumstances impose significant civil penalties in addition to requiring unpaid compensation for employees be paid. To avoid any labor disputes, business owners should make sure they always do all of the following:

  • Always pay workers at least the state minimum wage of $8.00 per hour for all hours worked.
  • Always pay time and a half overtime wages for all eligible employees for every hour worked over 40 hours per week.
  • Provide at least a 10 minute paid rest break for every four hours worked at a time.
  • Provide at least a 30 minute meal break for all employees working more than five hours at a time (this break can be unpaid if the employee is relieved of all duties during the break).

If you follow all of these requirements, you will likely avoid labor disputes, related legal fees, possible civil penalties, and more.

- Claire Kalia

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