Finance News & Insights

Beyond the FLSA: 4.5 million reasons state law is critical for Finance


With all of the time your Finance department spends make sure everything pay-related gibes with FLSA standards, it’s easy to see how state regs could be overlooked from time to time. Unfortunately for employers, those mistakes almost always prove very, very costly. 

And a recent investigation by the California Labor Commissioner’s Office  can serve as a cautionary tale for employers everywhere on the importance of state-reg compliance.

Both organizations on the hook

Here’s what happened: Janitorial workers at eight different Cheesecake Feactory restaurants throughout California were expected to work through the night without getting breaks for meals or rest periods dictated for by state law. In addition, when restaurant managers showed up to inspect their work, janitorial workers would regularly have to finish additional tasks before they were allowed to leave.

This wound up adding more time to their shifts, and the janitorial workers didn’t wind up getting paid overtime for their shifts. In some extreme cases, the employees were working up to 10 hours of unpaid OT each week.

These issues led to a visit by state inspectors, which in turn led to several costly fines and penalties.

The Cheesecake Factory and  its contractor, Americlean Janitorial Services Corp., were jointly found liable for more than $4.57 million for violating CA wage law.

Broken down, the companies wound up owing $.94 million to 559 employees in back wages, overtime and penalties. And to add insult to injury, they also have to pay $632,750 in civil penalties.

Both organizations on the hook

Bottom line: Just because you’re following the FLSA to a T doesn’t mean you’re in compliance with your state’s regs. Plenty of state’s have more strict pay regs than the FLSA and, when that happens, employers must follow the more stringent regulations.

California is a prime example: Under CA law, employers must provide employees with a 30-minute meal break when their shift lasts longer than five hours.


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