EE is receiving room instead of wages

A friend of my daughter's is slightly mentally handicapped. He is 29 yrs old. I believe he is being taken advantage of by his employer.

His employer (a national restaurant franchise) is supposedly paying for him to stay at the owner's friend's motel (a fleabag) in lieu of paying wages to this employee. I'm sure this is to avoid paying taxes on the 'wages'.

The employee told me that he's pretty sure that the franchise headquarters has warned this owner that he is in violation of the law, but the owner has not ceased this activity and since the employee is new to this area of Ohio, he is really stuck with few options (he's a very good and hardworking, reliable employee, but he has a learning disability so it's difficult for him to find good work).

The owner is telling this ee that he is 'Management' and therefore exempt from overtime. He makes $5.50 - he is definitely not management! The only wages that are actually paid out to the employee are for hours over 40 hrs. Which should be paid at time-and-a-half, but he is only receiving straight time for these extra hours.

As an HR professional, I can clearly see that this employer is in violation of FLSA and IRS laws. The thing I'm not sure about is whether it is OK to pay someone in this manner - room instead of wages. I guess maybe if the ee was receiving some sort of statement where everything was documented, it might be OK, but I believe that this employer is not reporting any of this properly with local, state and federal tax authorities. Nor is the ee receiving a full accounting of his wages.

I don't really want to get personally involved, but I believe this guy is getting screwed and I feel I should point him toward an attorney.

Any feedback would be appreciated.

Ettelok

Comments

  • 18 Comments sorted by Votes Date Added
  • Point him to an attorney.

    They must leave his paycheck with at least minimum wage for the number of hours worked, and he should be receiving OT for anything over 40.

    He's working for the lowest form of human. There's a special place in down below for people like that.
  • Please clarify: he is getting room and board in lieu of pay, or he is getting $5.50 per hour in addition to having his room and board paid?
  • As a clarification, the employee is receiving only a room in lieu of the first 40 hrs. The employer is telling him he is getting $5.50 per hour, but as far as I can make out, the employee is not being given any accounting of this.

    As a follow-up, I emailed Ohio Wage and Hour and they directed me to call the Federal Division of DOL. I spoke to the inspector at the federal division and she explained that if the company does not do $500,000 per year in sales, they do not have jurisdiction for minimum wage standards. She said the state's minimum wage is $2-something.

    So is she saying that the FLSA has not been violated unless the employer sells $500,000 per year?

    Any comments are greatly appreciated.

    Kolette
  • Oh yes, please help the young man. I agree with Leslie that this employer is the lowest of the low and needs an attitude adjustment. It really, really makes me angry when someone takes advantage of the handicapped. I think that living quarters can be provided as part of a compensation package, but they would have to pay appropriate taxes and follow state and federal payday laws. If the scumbag is telling this young man that he is "management," I'd place a bet that the toad isn't obeying any regulations.
  • Yes, you probably have a pretty good case here in addition to the other illegal activities that this employer is probably involved in.

    Does Ohio have any type of program that rewards employers for hiring mentally or physically challenged individuals?

    Paul
  • Usually you would find this type of arrangement with live in help such as domestic help or nannies where a room is provided for them in the employer's home and could be considered a benefit or a perk, but the employer would still have to pay at least the minimum wage and overtime in hours over 40.

    This person is being taken for a ride and should seek legal assistance or at least be reported to the Department of Labor and I am sure they will take care of him. I would suspect that anyone who would take advantage of someone like this probably has many violations.


  • I agree with the preceding posts. Additionally, if you *really* want to be heard...

    Depending on your city's size, etc., you may have a local organization for the advocacy of disabled persons. This is the kind of offense that would launch a dozen picketers in a heartbeat.


  • Oh... also, I wouldn't be surprised if the restaurant is easily over the $500,000 gross sales requirement for FLSA, depending on the franchise. A McDonald's certainly would be. A Subway wouldn't.


  • Does this city in Ohio have investigative reporters like we have in Kansas City? I would go lawyer, file paperwork, then investigative reporter, as then the termination would be for retaliation of filing claim/lawsuit. Also puts the franchise on the hook, not just the manager. No one deserves to be treated like this. Well almost no-one, maybe the guy that brings the dogs to work and steals paperwork should be treated like this x:D
    My $0.02 worth.
    DJ The Balloonman
  • I lived in KC for 15 years, DJ - who are you with?
  • Are you sure about that WOCO? I just read that Subway surpassed McDonalds in sales and as having the most branches in the U.S. this past year..just FYI! ;;)
  • Your local or area office of the Bureau of Vocational Rehabilitation may be able to help to. .especially if the ee ever received services from them
  • Agree with previous posts. Help this person as much as you can. If possible get this person to an employment attorney ASAP!!!
  • Nothing in this HR "world of work" makes me more mad than owners and senior leadership that do not know the first thing about the law and how to administer the company's business for the benefit of the employee on behalf of the company. Then, to have an employee be "taken advantage of" with some stupid decision on their parts, thinking they can do anything they want just because of their position of POWER AND AUTHORITY gets my dander up even higher.

    The employee does not know and most often does not want to make waves, so he/she says nothing and the stupid decision goes on! Uncle SAM and State SAMs want their money called income tax, FUCA, etc. Uncle SAm and State Sam can not receive taxes on uncalculated dollars. I believe a 1099 is the way that the freebies get reported and there is a whole sytem on that subject. The freebies also get to be apart of the O/T calculation and there is a whole section on that subject.

    Tell the employee he is protected if he goes to the wage and hour folks and makes a complaint. Yes, I know you stated jobs were hard to find for this personality, but it reads like there is a wrong that should be right'ed here! I believe you would have already straighten out the boss, if you could!

    PORK
  • The $2 something you referred to in a below post is only for Tipped employees. The minimum wage in Ohio is $4.25, but the Federal minimum wage is $5.15, so the higher rate must be paid. The person you are talking about is making more than the minimum wage. I've interviewed 2 or 3 people who have been in management in fast food places, and all of them had rates in the $5.50-$6.00 range, so it is very likely that he is in management and is only making the $5.50 amount. If that is the case and he is exempt then he would not be eligible for overtime pay. As far as the employee not getting paid until he has worked over 40 hours because he is getting his rent paid for, I don't know. Maybe the company has filled out all the proper paperwork and has already taken care of this in a legal way...? How do you know for sure that they haven't?
  • March22Collector, I feel that the employee is non-exempt because he does not meet any of the criteria for the 'short test' - he does not manage others, he does not earn $250/wk - he doesn't make hiring decisions or other independent business decisions.

    Originally, I emailed Ohio Wage and Hour. They referred my to the federal office in Columbus. When I called the Columbus Ohio office of federal Wage and Hour - they referred me back to the state Wage and Hour because they said they did not have jurisdiction for a company with sales less than $500,000.

    This restaurant is a nation pizza chain. I don't know what they gross - indeed it may not be $500,000.

    I am going to set this guy up with an employment attorney.
  • Your friend's son may qualify for assistance from the local Ohio Legal Services agency which provides legal advice and counsel to income qualified individuals. Ask your friend to look them up and direct him there. They should be able to help him at no cost to him. I wish him good luck.
  • 29 CFR 531.30 - ``Furnished'' to the employee.

    The reasonable cost of board, lodging, or other facilities may be
    considered as part of the wage paid an employee only where customarily
    ``furnished'' to the employee. Not only must the employee receive the
    benefits of the facility for which he is charged, but it is essential
    that his acceptance of the facility be voluntary and uncoerced. See
    Williams v. Atlantic Coast Line Railroad Co. (E.D.N.C.). 1 W.H. Cases
    289.
    You can also get more info on lodging, board, etc in lieu of wages at [url]www.dol.gov[/url]



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