Krispy Kreme pays $1M to settle claims of ‘systemic’ overtime violations

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Dive Brief:

• Krispy Kreme Doughnut Corp. will pay $1,187,757 in back wages and damages to 516 workers to resolve alleged overtime violations the U.S. Department of Labor found in a probe of the company’s 242 nationwide locations. 
• The doughnut chain failed to include monthly bonuses in some workers’ regular rates of pay, DOL said, thereby paying overtime at lower rates than required by the Fair Labor Standards Act. 
• “Krispy Kreme is strongly committed to always paying our dedicated team members fairly for all time worked in accordance with applicable laws,” the company told HR Dive in a statement. “We do not agree with the department’s findings and the basis for them. However, we have agreed to settle this matter with no admission of wrong-doing in the best interests of our business and our team members.”

Dive Insight:

Krispy Kreme’s agreement is among the latest high-dollar wage and hour disputes the DOL has pursued in recent months. Food service is one of the industries DOL has aggressively pursued, with overtime and child labor often the issues of contention. 

In October, the agency investigated and charged two Boston restaurants with failing to pay minimum wage, failing to pay overtime and failing to maintain complete and accurate records of employees’ hours and pay, resulting in more than $200,000 in fines and civil penalties. An Austin restaurant also allegedly ran afoul of the FLSA when it required tipped employees to share tips with managers.

Managers in low-wage industries like food service often try to cut costs or “punish” employees for things like working through their breaks or beginning work early in violation of company policy, an employment attorney recently told HR Dive; in these situations, his advice was to always pay employees for time worked, and document and address the issue afterwards — through warnings or disciplinary action, if necessary.

DOL has released overtime resources for employers to help them ensure they stay on the right side of the FLSA. The agency also requires that every employer with workers subject to the FLSA post the minimum wage poster, which informs employees of their rights.