Company Pays $300,000 for Violations of Section 14(c ) of the FLSA

Monday, December 1, 2014

In a settlement agreement announced by the U.S. Department of Labor, Training Thru Placement Inc., based in North Providence, has agreed to pay a total of $300,000 to more than 100 employees, including workers with disabilities. The settlement resolves findings that, between June 1, 2010, and January 31, 2013, TTP violated the minimum wage, overtime and record-keeping provisions of the Fair Labor Standards Act. The settlement further stipulates that the department on June 12, 2013, retroactively revoked the certificates allowing TTP, subject to specific conditions, to pay workers with disabilities less than the current federal minimum wage.

Specifically, the department alleged that TTP failed to properly determine a subminimum wage for each worker, as allowed under Section 14(c) of the FLSA; properly record and pay employees for all hours worked; determine the prevailing wage rates for workers performing similar work in the area; and conduct appropriate time studies to determine subminimum wage rates. 

The department also alleged that the company falsified documents to misled investigators. To redress violations fully under all applicable laws, the agency referred the matter to the U.S. Department of Justice's Civil Rights Division which, consequently, entered into an interim settlement agreement with the state of Rhode Island and the city of Providence. The agreement resolved violations of the Americans with Disabilities Act for approximately 200 Rhode Islanders with intellectual and developmental disabilities.

Based on the severity and willful nature of the violations, the Wage and Hour Division issued a retroactive revocation of TTP's authorization to pay subminimum wages between June 1, 2010, and Jan. 31, 2013, during which time the company was operating in violation of the FLSA. As a result, all FLSA-covered employees performing work for TTP during that period are owed no less than the federal minimum wage of $7.25 per hour for all hours worked.

When notified that its authorization to pay workers subminimum wage rates would be revoked, TTP took immediate corrective action to comply with the law. TTP implemented significant changes, including replacing its board of directors and removing or replacing management and administrative staff in charge when the violations occurred. Further, TTP contracted with a new provider of services, FedCap Rehabilitation Services, to assume day-to-day operations, hire new staff and provide training to ensure understanding and compliance with Section 14(c) of the FLSA. In connection with an asset purchase of TTP, FedCap has agreed to assume TTP's responsibilities under the settlement agreement.

Because of the extent of these corrective actions; its commitment to ensure future protection of its workers; and the results of a follow-up investigation, the division allowed TTP to apply for a new provisional certificate and continue to operate as a Section 14(c) certificate holder under the new management. This allowed TTP to continue to operate with little to no interruption and ensured that workers with disabilities continued to receive their pay and educational and vocational training. 

Under the settlement agreement, TTP will pay back wages to workers with disabilities and staff. TTP will provide free benefits counseling to the workers with disabilities who are owed the majority of the back wages, at no cost to those workers, their families and guardians. 

The FLSA, in general, requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates of pay, including commissions, bonuses and incentive pay, for hours worked beyond 40 per workweek. Since its enactment in 1938, the FLSA has contained provisions designed to promote employment opportunities for individuals with disabilities. 

Section14(c) of the act allows employers, after receiving a certificate of authorization from the division, to pay wages less than the federal minimum wage to workers with disabilities when their disabilities impair their productive capacities for the work being performed.

Section 14(c) of the Fair Labor Standards Act (FLSA), which authorizes employers, after receiving a certificate from the U.S. Department of Labor (DOL) Wage and Hour Division (WHD), to pay special minimum wages—wages less than the federal minimum wage—to workers who have disabilities for the work being performed. The certificate also allows the payment of wages that are less than the prevailing wage to workers who have disabilities for the work being performed on contracts subject to the McNamara-O’Hara Service Contract Act (SCA) and the Walsh-Healey Public Contracts Act (PCA). The Regulations applicable to FLSA Section 14(c) are contained at 29 CFR Part 525.

Under FLSA Section 14(c), a worker who has a disability for the job being performed is one whose earning or productive capacity is impaired by a physical or mental disability, including those relating to age or injury. Disabilities that may affect productive capacity include blindness, mental illness, mental retardation, cerebral palsy, alcoholism, and drug addiction. The following, taken by themselves, are not considered to be disabilities for purposes of paying special minimum wages: educational disabilities, chronic unemployment, receipt of welfare benefits, nonattendance at school, juvenile delinquency, and correctional parole or probation.

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