Good and services as part of wages? In New York City, if you work for a hotel or motel, can they provide you with a room instead of wages? If so, how does this affect minimum wage and overtime requirements? The answer is complicated, but a recent case highlights some of the issues that may arise when an employer in any state fails to pay close attention to employment regulations.
Recently, The United States Department of Labor filed a lawsuit against The Sunshine Motel Inn in Yakima, Washington. They also named the manager, Rajiv Sauson, as a defendant in the action. In the lawsuit, the motel, and manager have been accused of purposefully and consistently failing to pay employees proper wages.
The Department of Labor alleges that the inn failed to meet federal overtime and minimum wage standards and seeks to recover damages in an amount consistent with those requirements. The Defendant asserts that the allegations are unsubstantiated and come from disgruntled former employees. Sauson claims that the employees are angry because he evicted them after they refused to pay for their rooms – even though they no longer worked for the inn.
After conducting an investigation into the business, the Department of Labor determined that Sauson violated the Fair Labor Standards Act (FLSA) when he provided false information and payroll documents to the wage-hour division. The agency also found that instead of full pay, employees were given a room at the inn or a room plus a small amount of cash. They also determined that some workers worked nearly 90 hours per week. The Labor Department concluded that this arrangement violated federal standards.
Sauson has vehemently denied the allegations and stated that he “has sufficient paperwork to show that employees were paid the state minimum wage and did not work more than 36 hours a week.” He added that “The Department of Labor never put enough effort to collect the documents.”
Can an employer provide lodging to an employee as a form of compensation? Sometimes. Under the FLSA, the fair value of boarding may count toward wages. But the fair value must always equal at least the federal minimum wage. At the motel in this particular case, the Department of Labor determined that the rooms provided to the workers fell short of the necessary $7.25 per hour for all the hours worked by employees. One Department of Labor solicitor stated that:
“This employer has a long-standing business model of not paying his employees the minimum and overtime wages federal law requires, often paying no wages at all.”
The hope is that cases like this prevent other employers from abusing their workforce and ignoring the laws. It is important for employees to know that they have rights and can seek to have them enforced when they are not being paid fairly.
Sadly, workplace harassment, discrimination, and wage violations occur every day across the nation and right here in New York. If you think you are owed overtime or other unpaid wages, you may want to speak with an employment lawyer.
New York City employment lawyers at Leeds Brown Law have been successfully protecting employees for years and helping people like you fight for your rights to a safe workplace and fair compensation. Contact our office for a free consultation.