labor lawAdivision of labor law center

The U.S. Department of Labor recently announced that CVS Pharmacy has agreed to pay more than $250,000 including $226,000 in penalties. The settlement comes after an investigation by the Department of Labor revealed violations of the minimum wage law, and of federal Child Labor laws.

Last year, several isolated complaints at the company’s retail pharmacies in the Northeast uncovered violations of Child Labor laws. As a result, the U.S. Department of Labor launched a comprehensive investigation into the company’s business practices throughout the region. This settlement is a result of the widespread violations that were uncovered.

The company has agreed to pay $226,598 in penalties. In addition, CVS will pay back wages totaling $38,151, or about $748 per employee.

The investigation focused on 63 CVS stores in Connecticut, Rhode Island, Massachusetts, New Hampshire, New York, New Jersey, Maryland, Pennsylvania and Virginia. Forty-three of the stores investigated, or 68%, had violations.

During the investigation, the Department of Labor found that a number of workers had not been paid overtime. Usually, these underpayments resulted when a store manager improperly edited the worker’s time card, to reduce the number of hours worked. In some cases, managers deducted time for “mandatory” breaks that the employee did not actually receive. In others, when an employee worked more than 40 hours, the manager simply deducted the excess hours to keep the store’s payroll costs within budget.

The company was also fined for not keeping accurate payroll records.

Under the Fair Labor Standards Act of 1938, or FLSA, employers must pay workers 1.5 times their usual rate of pay for all hours in excess of 40, in a single workweek.

The FLSA also has strict regulations regarding the hours that workers under 18 can be employed, and the type of work that they may perform. Under the law, minors are forbidden from holding a wide variety of jobs considered “hazardous.” These jobs range from roofing to operating a mechanical meat slicer in a restaurant.

The investigation of CVS revealed that 78 workers under 18 were engaged in prohibited hazardous occupations. Most of these concerned minors who were working machinery that compacts and bales cardboard boxes at the stores. In addition, 7 of the minors were among store employees who were not paid overtime that was due.

CVS Pharmacy is based on Woonsocket, Rhode Island. After  a recent merger with Caremark, the new corporation, CVS Caremark, has more than 6,200 retail stores nationwide. CVS bills itself as a leader in pharmaceutical services, including mail-in and online retail operations.

As a result of this investigation, CVS Pharmacy Inc. has agreed to pay the back wages and penalties, and to make efforts to achieve full compliance with the FLSA at its more than 6,000 stores nationwide.

The Wage and Hour Division concluded 31,987 compliance actions and recovered more than $171 million in back wages for more than 246,000 employees in fiscal year 2006.

CVS is not the only company to face Child Labor violations in 2007, but it is certainly one of the most prominent ones.

The key federal law governing child labor is the FLSA, or Fair Labor Standards Act of 1938. The law prohibits people under 14 from most areas of employment. A few notable exceptions are delivering newspapers, babysitting and doing domestic chores for pay. There are also exceptions under the federal law for non-hazardous agricultural occupations, or employment by a parent. 

Generally, the FLSA prohibits young people who are 14 or 15 from holding any job not explicitly approved by the Secretary of Labor. The law’s language calls most employment of youngsters “oppressive child labor,” a term that is further defined in the statute. In modern terms, this means that only a few jobs are open to youngsters under the age of 16. Regardless of the job, the work must not interfere with the youngster’s schooling, health or well-being.

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