Disney to pay $3.8 million for FLSA violations

Those Walt Disney World “cast members” sweltering in the Florida sun were losing more than water weight as they pranced through the Magic Kingdom. According to the U.S. Department of Labor’s Wage and Hour Division, their paychecks were melting away as well, to the point they violated the Fair Labor Standards Act.

Disney World’s practice had been to deduct uniform costs from employees’ pay. The FLSA bars employers from counting as wages the cost of “uniforms and other items that are considered to be primarily for the benefit or convenience of the employer.”

Employers may deduct uniform costs from employee paychecks, but the deduction must not cause the employee’s wage to fall below the federal minimum wage of $7.25 per hour. It’s perfectly legal to prorate deductions over several paychecks to satisfy the minimum wage requirement.

In cases where the deduction must cover uniform rental or cleaning that must be performed on a regular basis, the employer must ensure the hourly wage is high enough to cover the minimum wage, plus uniform costs.

DOL investigators also found other Disney practices goofy. Employees were not compensated for required work performed before or immediately after their shifts. Because that time was not recorded, Disney racked up another FLSA violation for inaccurate timekeeping.

In all, Disney will pay an estimated $3.8 million to approximately 16,000 employees. The settlement is sure to tarnish the company’s snow white reputation and dwarf any short-term benefit the practice provided.

Advice: Have your attorney review your payroll deduction practices.

Many unusual arrangements are legitimate. For example, an employer that provides lodging and meals can count those benefits toward wages. So even if the practice results in the employee receiving less than minimum wage in cash, the total value the employer provides still meets the law’s requirements.