DOL investigation of Pennsylvania diner results in $1.3M fine for FLSA violations

On September 14, 2023, the U.S. 3rd Circuit Court of Appeals upheld a $1.3M verdict against a Pennsylvania diner that failed to pay its employees proper tips or overtime as required by the Fair Labor Standards Act (FLSA). The diner asked the appeals court to overturn the substantial verdict that had been handed down by a district court judge, claiming it had acted reasonably and in good faith, without any willful violation of the law.

The 3rd Circuit disagreed and affirmed the district court’s findings and the $1.3M judgment against the diner. The case illustrates that ignorance of the law and insufficient recordkeeping are a recipe for unlawful payroll practices and costly litigation. Fortunately, employers can avoid these legal pitfalls once they have a proper understanding of their legal obligations.

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