WHEN THE FEDS WON’T LET YOU MAKE A HANDSHAKE AGREEMENT

Successful businesses, especially smaller ones, often rely on a casual, cooperative culture among their employees.  Those businesses rue over-regulation, common as it may be in our modern world.  Bureaucratic edicts get in the way of good people skills.

Yet businesses who exceed a statutory gross revenue trigger find themselves subject to the Fair Labor Standards Act, which imposes both obligations with regard to overtime pay and a multitude of record-keeping requirements.

And if that business later finds out that it owes some employees past-due overtime pay, Big Brother, impersonated by the Department of Labor, will keep an eye on any settlement.  If the amount is not disputed (overtime wasn’t paid due to oversight, the number of overtime hours worked is known), a settlement for less than the full amount must be approved by the DOL.  Even payment in full has been considered a form of compromise by the Federal Court covering Jacksonville and Northeast Florida, making it subject to governmental oversight.

Settlements are left alone more regularly when the amount due is disputed.  If one side thinks the amount is x, and the other side thinks it is y, a settlement somewhere in between is more akin to an arms’ length compromise.  Federal scrutiny becomes less crucial.

Employers enjoying good relations with their employees may earnestly believe in the value of a handshake agreement, and rue the very idea of calling a lawyer when everyone agree on what’s right in the first place.  But happy employees can turn disgruntled, and, crucially, a random DOL audit can throw the whole place in disarray.