Telemarketing Company to Pay At Least $1.75 Million in Back Wages for FLSA Violations

Tuesday, January 5, 2016

A telemarketing company docked employees' pay for virtually all time not spent by them making sales calls, sometimes bringing their wages below the federal minimum wage. 

A federal judge recently found the defendants in violation of the Fair Labor Standards Act, and determined that American Future Systems, doing business as Progressive Business Publications, and its owner, Edward Satell, are liable for pay back wages resulting from these unpaid breaks, plus an equal amount in liquidated damages.

Although the exact amounts have not yet been determined, the U.S. Department of Labor estimates that for violations occurring through June 2013, Progressive and Satell are liable for at least $1.75 million in back wages and liquidated damages to more than 6,000 employees who worked in 14 call centers throughout Pennsylvania, New Jersey and Ohio. Progressive's refusal to come into compliance for more than two years during the course of the litigation will increase significantly the amount of back wages and damages due its employees as a result of its illegal pay policy. 

Issued on December 16, 2015, by a judge in the U.S. District Court for the Eastern District of Pennsylvania, the decision resolves the primary issues in a department lawsuit filed after a Wage and Hour Division investigation found that telemarketers had to clock in and out for every break, even those as short as two to three minutes. The timekeeping system then deducted the break time from their total hours worked each week. The Wage and Hour Division advised the company that the practice violated the law, but the employer failed to comply with the FLSA. The court found the company also violated FLSA recordkeeping requirements. 

Founded in 1959, American Future Systems is the parent company of Progressive Business Publications, a direct marketing company. Progressive Business Publications publishes subscription-driven, business-to-business newsletters and other publications on business management, sales and marketing, human resources and employment law.

The FLSA does not require lunch or coffee breaks. However, when employers do offer short breaks (usually lasting about 5-to-20 minutes), the law considers the breaks compensable work hours that must be included in the sum of hours for the work week and considered in determining overtime. 

The FLSA requires that covered, nonexempt employees be paid at least the minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records. Employers who violate the law are liable to employees for their back wages and an equal amount in liquidated damages. Both back wages and liquidated damages are paid directly to the affected employees.

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