On August 29, 1994, the Respondents were notified, by letter, that they were being assessed a civil money penalty in the amount of $3,780.00 pursuant to section 16(e) of the Fair Labor Standards Act, as amended (29 USC 216(e)), and in accordance with 29 CFR Part 578. (Ad. Ex. 1) This penalty was imposed by the Plaintiff as a result of the repeated failure of the Respondents to pay statutory minimum wage and overtime to employees on a timely basis.

   The Respondents filed a timely exception to this determination with the Wage and Hour Division, United States Department of Labor. (Admin. Ex. 1) The matter was referred to the Chief Administrative Law Judge for designation and a hearing in accordance with the provisions of 29 CFR Parts 578 and 580 on February 1, 1995. (Id.) On March 10, 1995, the parties were notified that the case had been filed and docketed. (Ad. Ex. 2) On June 18, 1996, the case was referred to the undersigned for a formal hearing, which was held on October 29, 1996, in Dayton, Ohio. (Ad. Ex. 5) All parties were afforded full opportunity to present evidence as provided in 29 C.F.R. Part 18.

   The first issue in this case to resolve is whether or not the Respondents violated the Act by failing to pay its employees on their scheduled pay days. It is the contention of the Respondents that the Act does not mandate any time of payment, so there cannot be any violation. Additionally, the Respondents contend that it was financial hardship that led to the tardy payment of wages, thus there is no violation.

   The Respondents are technically correct in their assertion that time of payment is not provided for in the Act. However, this statutory omission does not relieve the Respondents from liability. Both the Department of Labor and the courts that have reviewed this question have found an implicit obligation of timely payments contained in the Act.

   The Department of Labor has interpreted the Act as requiring payments on the scheduled days. In Wage and Hour Opinion Letter No. 63 (November 30, 1961), the Department of Labor's position is clear. It states, "while the Act does not require that the employee's compensation must be paid weekly, it does require the employer to pay minimum wages due for the particular work week on the regular payday for the period such work week ends."

   The case law on this issue also supports an interpretation of the Act which mandates timely payment of wages. In Biggs v. Wilson, 1 F.3d 1537 (9th Cir. 1993), the court was faced with a suit brought under the Act by state employees who were paid fourteen days late for work performed during a budget impasse. The court, in affirming the district court, noted that the Act does not say that a minimum wage must be paid promptly. Id. at 1539. The court looked to the statutory scheme of the Act as a whole and determined that "FLSA wages are unpaid' unless they are paid on the employees' regular payday." Id. at 1538. According to the court, the provisions of the Act "necessarily assume that wages are due at

some point, and thereafter become unpaid." Id. at 1539. The Eleventh Circuit, in Olson v. Superior Pontiac-GMC, Inc., 765 F.2d 1570 (11th Cir. 1985), modified, 776 F.2d 265 (11th Cir. 1985), adopted the Department of Labor's interpretation of the Act. The court stated that, "the Act clearly requires an employee to be paid the minimum wage for each hour worked during the pay period." Id. at 1578. (emphasis original). See also United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487, 491 (2nd Cir. 1960)("While the FLSA does not expressly set forth a requirement of prompt payment, such a requirement is clearly established by the authorities."); Rigopoulos v. Kervan, 140 F.2d 506, 507 (2nd Cir. 1943)("Section 7 of the Act, 29 U.S.C.A. § 207, plainly contemplates that overtime compensation shall be paid in the course of employment and not accumulated beyond the regular payday."); Calderon v. Witvoet, 999 F.2d 1101, 1108 (7th Cir. 1993)(Belated payment of wages is a violation of the FLSA).

   Based on the foregoing, I find that the Act requires employers to pay their employees regularly and as scheduled. No distinction is drawn between days, weeks or years. Therefore, the Respondents will be in violation of the Act if it is established that its employees were not paid as scheduled, even if only once.

   In order to determine if a violation of the Act took place, it first must be established what pay cycle Micro-Chart utilized. The Department of Labor, in Wage and Hour Opinion Letter No. 63 (November 30, 1961), has stated that an employer and an employee are free to contract for any regular pay period. This pay period is usually determined from the actual pattern of payments adopted by the parties. Luther v. Wilson, Inc., 528 F. Supp. 1166, 1174 (S.D. Oh. 1981). Tracey Lemaster, an employee of Micro-Chart who was involved in the payroll process, testified that employees of Micro-Chart got paid every two weeks. (Tr. 76) Based on the uncontradicted testimony of Tracey Lemaster, I find that the employees of Micro-Chart were to be paid every two weeks.

   According to the testimony of Robert Kunz, the Wage and Hour investigator, Donald Harrison, Mr. Kunz's supervisor, and Tracey Lemaster, Micro-Chart was not timely with its payroll in 1990, 1991, 1992, 1993 and 1994. (Tr. 24, 25, 27, 63, 64, 65, 76, 77, 78) The matter specifically before me is the 1994 investigation and whether a violation of the Act took place. According to Tracey Lemaster, the longest period between paychecks was in 1994, and consisted of a delay of at least seven weeks. (Tr. 77) Based on the uncontradicted testimony of Tracey Lemaster, I find that the Respondents violated sections 6 and 7 of the Act by failing to be timely with its payroll in 1994.

   At the hearing, the Respondents established that prospective employees were told that payroll could be irregular and that they accepted the job cognizant of such an occurrence. (Tr. 80-1) However, such a forewarning does not relieve the Respondents from liability under the Act. In Donovan v. Kaszycki & Sons Contractors, Inc., 599 F. Supp. 860, 869 (S.D.N.Y.

1984), the court stated, "[t]he fact that defendants may have intended to pay the employees at some future date, or that some employees might have acquiesced, albeit grudgingly, to deferred payment, has no bearing on the fact that the statute was violated." Therefore, the fact that the Respondents warned potential employees that violations of the Act would occur does not limit the liability that follows when such violations take place.

   Finally, the Respondents argue that its failure to meet its payroll obligations stemmed from the fact that it had cash flow problems. I find no merit in this argument for two reasons. First, the Respondents did not present any evidence to support its assertion of financial hardship. Secondly, the courts that have reviewed this issue have found the Act to impose strict liability in terms of an employer's duty to timely meet payroll. In Biggs v. Wilson, 1 F.3d 1537 (9th Cir. 1993), the court imposed liability on a state government who was forbidden by state law to pay its employees during a budget impasse. The district court, in deciding this case, promulgated a balancing test for when payment is due. The court interpreted the Act to require "payment which is reasonably prompt under the totality of the circumstances in the individual case." Biggs v. Wilson, 828 F. Supp. 774, 777 (E.D. Calif. 1991). However, the Ninth Circuit explicitly rejected this test and any other sliding scale claiming that such tests would frustrate the purpose of the Act. 1 F.3d at 1540. Therefore, I find that the Respondents have not established that a financial hardship existed which precluded payment. Additionally, I find that even if such evidence exists, it is not sufficient to avoid liability under the Act.

   Having found that the Respondents violated the Act, it must now be decided whether civil money penalties brought pursuant to § 578 are proper. Section 9 of the Fair Labor Standards Amendments of 1989 amended section 16(e) of the Act to subject any person who repeatedly and willfully violates section 6 or section 7 of the Act to a civil money penalty not to exceed ,000.00 for each such violation. § 578.1. Section 578.3(b)(1) defines a repeated violation as a situation where the employer has previously violated sections 6 or 7 and has received notice from a responsible official of the Wage and Hour Division that the employer was in violation of the Act. Section 578.3(c) defines a willful violation as a situation where the employer knew that its conduct was prohibited by the Act or showed reckless disregard for the requirements of the Act. In determining whether a violation was willful, all of the facts and circumstances surrounding the violation shall be taken into account. § 578.3(c).

   According to the testimony of Mr. Kunz and Mr. Harrison, a civil money penalty was imposed based on the fact that the Respondents had been investigated in the past, had been informed of the conduct needed to conform to the law, had promised to so conform and had failed to do so on numerous occasions. Mr. Kunz viewed the violations as repeated because they were the same violations that had occurred in 1992 and 1993. (Tr. 33-4) Mr. Kunz viewed the violations as willful because he had personally discussed the requirements of the law in this area with the Respondents and provided them with materials that explained these requirements. (Tr. 34, 58) Mr. Harrison agreed that a civil money payment should be imposed because the violations were

repeated in 1980, 1992 and 1993. (Tr. 67) Mr. Harrison found these violations to be willful in light of the fact that Mr. Kunz had informed Mr. Maxton that failure to pay minimum wage when due is a violation of the Act. (Id.)

   Based on the uncontradicted testimony of Mr. Kunz and Mr. Harrison, I find that Respondents repeatedly and willfully violated sections 6 and 7 as those terms are defined in the Act and the regulations. This testimony establishes that the Respondents have violated sections 6 and 7 of the Act on prior occasions. Additionally, this testimony establishes that the Respondents were made aware of the requirements of the law prior to this transgression. As such, I find that the imposition of a civil money penalty is warranted in this instance.

   The remaining issue concerns an analysis of the amount of the fine imposed. Section 578.4 establishes the factors to consider in assessing such a civil money payment. Primarily, the Administrator is instructed to consider the seriousness of the violations and the size of the employer's business. § 578.4(a). The evidence establishes that Mr. Harrison properly considered both factors. In regards to the seriousness of this violation, Mr. Harrison testified that:

I considered that the violations were serious and that these are low-wage employees that have to go a month or two months without pay. And I considered that the firm had a history of violating in the same way. And I considered that this was a pattern. And I considered that, putting all these things together, that the fine was appropriate.

   The Plaintiff has submitted the internal form used to calculate such penalties in accordance with the requirements of the regulations. (Pl. Ex. 2) According to Mr. Kunz, who completed the form, the Respondents' violations were categorized as repeated and willful, but that the Employer had agreed to comply in the future. (Tr. 32-3) That being the case, Mr. Kunz and Mr. Harrison agreed that the Respondents should be imposed a $900.00 penalty as called for by the form. (Tr. 33, 66; Pl. Ex. 2) This figure was reduced by 30% based on the fact that the Respondents employed less than twenty people. (Tr. 35; Pl. Ex. 2) This figure, $630.00, was multiplied by the number of affected employees, six, to arrive at the total fine of $3,780.00. In addition to the preceding testimony, Mr. Harrison testified that he considered the factors stated in § 578.4(b)(1)-(7) in determining that the penalty imposed was proper. (Tr. 70-2)

   Based on my review of the record, I find that the Administrator's decision on the amount of civil money penalty is in compliance with the regulations, is reasonable and is supported by substantial evidence.

   In conclusion, I find that the Respondents violated the Act repeatedly and willfully and that the civil money penalty imposed by the Administrator is both warranted and proper. Therefore:

   IT IS ORDERED that the Respondents pay the Plaintiff an amount in the sum of $3,780.00 based on its repeated and willful violations of sections 6 and 7 of the Fair Labor Standards Act.

      DANIEL J. ROKETENETZ
      Administrative Law Judge

   Pursuant to 29 C.F.R. § 580.13, any party dissatisfied with this Decision and Order may appeal it to the Secretary of Labor within 30 days of the date of this Decision, by filing notice of appeal with the Secretary of Labor, United States Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210. A copy of the notice of appeal must be served on all parties to this Decision and Order and on the Chief Administrative Law Judge, United States Department of Labor, 800 K Street, N.W., Suite 400, Washington, D.C. 2001-8002. If no timely appeal is made, this Decision and Order shall be deemed the final agency action.