Disney Reaches Settlement In Wage Violation Case

The Walt Disney Co. (NYSE:DIS) has agreed to pay $3.8 million in back wages to settle charges of violations of minimum wage, overtime and recordkeeping rules under the Fair Labor Standards Act. The Labor Department made the agreement with the Disney Vacation Club Management Corp. and Walt Disney Parks and Resorts U.S. Inc., both in Florida. Daniel White, district director for the Wage and Hour Division in Jacksonville, said that “the Disney resorts were very cooperative throughout the investigative process.”

A U.S. Labor Department investigation found that employees were routinely not paid for 15 minutes of work before and after shifts. Disney also failed to maintain required records of hours worked by certain employees.

The investigation also found that a uniform expense deducted by Disney caused some workers’ hourly rates to fall below the federal minimum wage. White said, “Employers cannot make deductions that take workers below the minimum wage and must accurately track and pay for all the hours their employees work.”

Disney said in a statement that “we will be providing a one-time payment to resolve this.” The statement also said, “We are adjusting our procedures to avoid this in the future.” Disney is not admitting to any violations as part of the agreement.

More than 16,000 hotel- and timeshare-resort employees will receive back wages averaging about $233 per worker. Roughly 700 employees who worked at the Old Key West Resort since November 2013 and an additional 15,000 employees working at other Florida resorts since January 2015 will receive compensation. According to Disney, the payments will be made by July 31.

The agreement also calls on Disney to increase managers’ training covering activities that constitute “compensable work time.” Disney has agreed to start that training within 30 days.

White said that these violations are not uncommon and are found in other industries. He said in his statement, “We hope the resolution of this case alerts other employers who may be paying employees in a similar manner, so that they too can correct their practices and operate in compliance with the law.”