San Diego-based Fashion Graphics has agreed to pay back wages and penalties while voluntarily stopping all shipments until the $171,000 is paid to its current and former employees. The screen printer supplies such retail chains as Macy’s, Walmart, Kohl’s and Hot Topic.
The U.S. Department of Labor’s Wage and Hour Division (WHD) investigated the garment screen printer and found it owed $151,337 to 185 current and former employees. WHD investigators found the company willfully violated the Fair Labor Standards Act () and did not keep accurate time records for employees.
Investigators discovered the company would have employees record their overtime hours on a separate timekeeping system. The company paid them straight time in cash under the name of former employees in order to hide the under-the-table underpayments.
WHD invoked the “hot goods” provision of the FLSA. It allows the government to order an employer to stop shipments of goods until all back wages and fines are paid. Fashion Graphics voluntarily froze its shipments until it repaid the employees, plus the fine.
Note: Employers that try to get around the law’s overtime requirement invite scrutiny from the WHD, whose investigators have seen every trick in the book. Ultimately, paying the overtime is probably cheaper than hiding your illicit activities.