Back-Wage Recoveries Reach 5-Year High in 2017, Report Says

Payroll on Bloomberg Tax is built to get you to the right answer faster and more efficiently. Get all the payroll intelligence you need with Bloomberg Tax expert analysis, perspectives and...

By Jazlyn Williams

The $270.4 million in back wages recovered in fiscal year 2017 was the highest amount recovered in the past five years, according to enforcement statistics recently released by the Labor Department’s Wage and Hour Division.

The back-wage level for fiscal 2017, which ended Sept. 30, 2017, was a slight increase from the $266.6 million recovered in fiscal 2016 and the second-highest amount recovered in the past 20 years, the division said.

The number of workers receiving back wages dropped to about 241,000 in 2017 from 284,000 workers in 2016. The 2017 level ties with 2015 for the lowest number of workers receiving back wages since 2010.

More back wages distributed among fewer workers caused the average amount of back wages paid to affected workers to increase to $1,125 in 2017, the division said.

Amounts collected for violations of the Fair Labor Standards Act decreased from 2016 to 2017, the division said.

The division recovered $31.2 million in minimum wages, down from $35 million in 2016, and $157.6 million in overtime pay, down from $171.9 million. Of the employees who received FLSA back wages in 2017, 34 percent received minimum wages and 89 percent received overtime.

The division concluded nearly 29,000 cases in 2017, about the same as the number of cases concluded in 2016.

Back Wages Up Sharply for Temporary Workers

Enforcement statistics for 15 low-wage industries were released by the Wage and Hour division. Of the targeted industries, the temporary-help industry had the largest percentage increase in the amount of back wages collected, the division said.

The $9.44 million collected from the temporary-help industry in fiscal 2017 jumped more than 150 percent from the $3.71 million collected in fiscal 2016, despite an increase of 4 percent in the number of cases for the industry for the same period.

The temporary-help industry also had almost 1.5 times more employees receiving back wages in 2017 than in 2016, rising to 9,003 employees from 6,382 employees, the division said.

The amusement industry also had sharp increases in 2017 from 2016. The amount of back wages paid to amusement-industry workers increased 53 percent to $924,267 from $602,061, and the number of employees receiving back wages more than doubled to 2,038 employees from 967 employees.

Workers in the construction industry were paid the highest total amount of back wages in 2017, as in 2016. The $49.3 million in back wages stemmed from 2,959 cases and were paid to 26,514 workers, the division said.

The food-services industry had the highest number of cases investigated, the highest number of workers collecting back wages, and the second-highest total amount of back wages in 2017, unchanged from the industry’s 2016 rankings. The division investigated 5,446 food-service cases and collected $42.9 million in back wages for 44,363 workers, it said.

Compliance Outreach Expands

About 3,200 outreach events were conducted in 2017 and 14,000 events were held in the past five years, the Wage and Hour Division said. Such events are meant to “educate employers and workers alike to promote compliance,” it said.

Employers soon will have another avenue to improve compliance with guidance from the Wage and Hour Division. Under the Payroll Audit Independent Determination program, announced March 6 by the Labor Department, employers that report themselves for potential FLSA violations may be able to receive help from the division to resolve wage and hour claims.

Employers that participate in the program may be able to avoid large fines and avoid lawsuits, the department said in a news release.

To contact the reporter on this story: Jazlyn Williams in Washington at jwilliams@bloombergtax.com. To contact the editor responsible for this story: Michael Baer at mbaer@bloombergtax.com.

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Try Payroll