Just six months after increasing the penalties for violations of the Fair Labor Standards Act (FLSA), the U.S. Department of Labor has announced another adjustment to the penalties for FLSA violations. The first adjustment was made last August pursuant to the Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Adjustment Act). The Inflation Adjustment Act required the Department to first calculate “catch up” penalty adjustments to make up for inflation during the years since the last time penalties were increased. Then, the Inflation Adjustment Act requires an annual adjustment of penalties for inflation every subsequent January.
Starting January 13, 2017, the penalty for willful and repeated violations of minimum wage or overtime requirements increased to $1,925. The penalties are normally assessed per-person, based on the number of employees who were unlawfully paid. The penalties for violation of the FLSA’s child labor restrictions increased to $12,278 for each employee who was the subject of a child labor violation. The penalty for a child-labor violation that results in serious injury or death of a minor increased to $55,808. The penalty for willful or repeated violations that result in serious injury or death of a minor increased to $111,616.
The primary reason for regularly increasing the penalty amounts is to maximize their deterrent effect. Outdated penalties are less effective when they do not keep pace with the cost of living. Also, penalties help deter violations which result in safer, more productive workplaces. For that reason, penalty increases were not limited to FLSA violations. Penalties also increased for violations of the Family and Medical Leave Act (FMLA), the Employee Polygraph Protection Act (EPPA) and, as previously reported, the Occupational Safety and Health Act (OSH Act), among other laws. The annual adjustments are incentive to annually review employer policies and compliance with applicable laws.