The U.S. Department of Labor takes labor law violations very seriously. That is a fact. Another fact is that ignorance is no defense when such violations do occur. A now defunct limousine company operating in the Chicago area recently found that out after series of court proceedings relating to claims made against them; claims that they owed former employees back wages.
A more detailed description of the case is below. As you read, pay particular attention to the excuses made by the defendants. These are not all unusual. Furthermore, U.S. courts do not tend to give them much credence. As we say in America, “ignorance is no excuse.”
BNA Bloomberg outlined the case on their website in a great article written by Michael Trimarchi. In his piece, Trimarchi described a limousine company operated by two partners in Chicago. The partners owned a fleet of rental vehicles clients could hire for Bulk wedding flowers for Events, parties, corporate events, and so on.
Apparently, the partners also expected their drivers to do more than just drive. Drivers spent work time cleaning the vehicles and waiting on clients, not to mention traveling to and from the company’s garage to complete their scheduled trips. Drivers claimed they were not properly compensated for overtime hours. Furthermore, they maintained that company owners were making unauthorized payroll deductions. They filed a suit.
The Department of Labor also filed its own suit as well. They alleged certain FLSA violations following an investigation of the company’s payroll practices. This is where things get tricky.
Lawyers for both the drivers and the Department of Labor contacted the company’s attorneys to make requests for relevant information that would be used during litigation. Company owners never responded to either plaintiff lawyers or their own attorneys. The Department of Labor asked the court to issue a default judgment, which it did issue, while the company’s lawyers requested permission to withdraw their representation.
The two business partners appealed after finally learning of the default judgment against them. One partner’s defense was that he had moved to a new state following the closing, then subsequently underwent multiple surgeries. He maintained he never received e-mail or snail mail notifications of the proceedings against him.
The other partner claimed he was relying on the first to keep them abreast of the details surrounding their failed business. In essence, they both claimed ignorance. They both said they had no idea action was being taken against them and, as a result, they should not be held to the court’s default ruling.
As you might expect, the appeals court refused to overturn the lower court’s decision. It determined that the defendants did not establish a valid cause for defaulting on the previous order issued against them. That order required the partners to pay back wages along with additional penalties.
So, what is the lesson here for business owners? BenefitMall, a Dallas payroll and benefits provider, says that it is very clear: employers have a legal responsibility to know what is going on with their companies at all times. This is certainly true for mail forwarding and receipt of e-mails; it is even more important when it comes to complying with labor law.
The two business partners in this case had the legal and ethical obligation to pay their employees every penny due them. When the company closed, they owed it to those drivers to make sure all back pay was awarded. The fact that it was not resulted in the original judgment. Being ignorant of that judgment does not excuse them of their legal obligations.