Here’s a story that proves it’s easier and cheaper to pay employees for overtime while it happens vs. paying for it in court.

Raceway, a petroleum company based in Piscataway, N.J., promises its customers low prices at the gas pumps at their locations throughout the state. Its website claims the company is famous for its “fast, friendly service,” but employees in a class action lawsuit claim that Raceway didn’t pay their employees for working overtime.

In April, the U.S. Department of Labor settled a case against Raceway to the tune of $3.9 million in unpaid overtime for six years and more than 700 former and current employees. Raceway, who continues to deny the charges, nonetheless has agreed to pay damages and $100,000 in civil penalties as well as hiring an independent monitor to survey the company’s time clocks. $1.95 million will go to overtime compensation and another $1.95 million will go toward damages.

The lawsuit, which lasted for three weeks and involved more than 25 witnesses, claimed that many Raceway employees, most of them gas station attendants, worked as many as 100 hours a week and were docked two hours for breaks even though the breaks were less than 90 minutes long.  Many employees testified that Raceway gave them less than 30 minutes for breaks on long shifts.
The settlement resolves a 2006 lawsuit filed by the Department of Labor.  An investigation by the Wage and Hour dispute division discovered that Raceway violated the Fair Labor Standards Act (FLSA) starting in June 2002.  The company, according to the investigation, failed to pay employees time-and-a-half their regular hourly rates when they worked more than 40 hours in one workweek. The Wage and Hour Division also found that Raceway didn’t keep accurate time and payroll records. It was later revealed that Raceway failed to comply with the Wage and Hour division’s recommendations through December 2009.

The FLSA requires that employees be paid at least the federal minimum wage of $7.25 per hour as well as overtime pay of one-and-one-half times their regular rates.