Donut judge me!

—Anonymous

Yet again. Krispy Kreme Doughnut Corp. is out some real dough for failing to pay additional overtime — this time it is due on top of nondiscretionary bonuses.  This is one of the most common foot faults employers commit under the Fair Labor Standards Act (“FLSA”), and we are consulted frequently on the topic by clients. The amounts due from Krispy Kreme for this error, including liquidated damages, total $1,187,757 payable to 516 workers, to resolve overtime violations in multiple locations found as part of a U.S. Department of Labor (“DOL”) investigation.

On Nov. 7, 2022, DOL filed a complaint listing the violations and a consent order defining the settlement in the U.S. District Court for the Western District of Kentucky. The investigation at originated at a Krispy Kreme location in Louisville, Kentucky, but was found to be systemic, and thus spread to a nationwide inquiry  focused on the  company’s 242 locations.

DOL found that Krispy Kreme failed to include monthly bonuses in some employees’ regular rates of pay. By doing so, the employer paid overtime at lower rates than them FLSA required. As part of the consent order, Krispy Kreme agreed to redouble its efforts to achieve future compliance.

However, as noted in the DOL press release, Krispy Kreme employs approximately 9,200 workers nationwide. Getting caught over giving small bonuses to 516 workers that didn’t get factored into the overtime rates isn’t exactly the most egregious FLSA violation. Yet Krispy Kreme has likely been around this track before, and thus DOL demanded a consent order be entered in the court. 

This demonstrates the harder line DOL is now taking on FLSA investigations and remedies.  And it shows the need for companies to get legal counsel  when they entered into bonus programs, for under the FLSA it is inevitable that no good deed good unpunished.