United States Department of Labor Increases Civil Monetary Penalties for 2023

By Steven Siegler and Sachika Yadav

The U.S. Department of Labor (U.S. DOL) has increased penalties for violating the Fair Labor Standards Act (FLSA). The FLSA “establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.”[1] The FLSA is enforced and administered by the U.S. DOL’s Wage and Hour Division (WHD). The U.S. DOL is an executive agency responsible for administering federal laws regarding safety and health in the workplace, wage and hour standards, and unemployment benefits. The Inflation Adjustment Act, which was passed in 2015, requires the U.S. DOL to review its civil penalties every year and adjust them for inflation. This adjustment must take place no later than January 15 of each year.

As of January 12, 2023, the U.S. DOL issued final regulations pursuant to the Inflation Adjustment Act. These regulations went into effect on January 15, 2023.  The Act provides a cost-of-living formula to calculate the adjustments. The adjustments for 2023 were published on the Federal Register. The penalties are categorized by types of violation, with different violations having different penalty amounts. For example, violating minimum wage standards and violating the standards for the number of hours an employee may work in a workweek will result in a penalty of $2,203, an increase from last year’s $2,074.[2] Additionally, employers who keep employee tips are subject to penalties of $1,234. Further, homeworkers who are in violation of recordkeeping and monetary regulations are going to be penalized $1,240 as of this year. Last year, the penalty for this type of violation was $1,151.[3] Lastly, child labor violations ranged from $1,234 to $127,710 last year, depending on the specific regulation violated.[4] The new penalties for child labor violations will range from $1,330 to $137,602.[5] All of these adjustments apply to penalties that are assessed after the effective date of the final regulations.

Business owners need to be aware of the civil monetary penalties they can incur if the FLSA is violated. We highly recommend that all our business owner clients review the FLSA regulations and make sure their employment practices are following those regulations, so they are not penalized as per the new inflation adjustments. For help ensuring and maintaining compliance, or for more information on the aforementioned FLSA regulations and associated monetary penalties, reach out to the knowledgeable labor & employment attorneys at KI Legal.

[1] https://www.dol.gov/agencies/whd/flsa

[2] 29 U.S.C. § 206; 29 U.S.C. §207

[3] https://www.dol.gov/agencies/whd/resources/penalties

[4] Id.

[5] Id.

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