A New York State Department of Labor (DOL) investigation led TJX Companies, the parent company of T.J. Maxx, Marshalls, HomeGoods, Homesense, and Sierra, to pay $674,526 to over 7,500 employees. In a recent press release, the DOL said the payments followed a review of potential spread-of-hours violations at about 185 New York stores. Some employees received as much as $4,686.
For small businesses, the lesson is straightforward: payroll reviews should account for the full span of an employee’s workday, including unpaid breaks. And shift work can trigger spread-of-hours pay even when the employee worked fewer than 10 hours.
What Spread-Of-Hours Pay Requires
First, what the heck is spread-of-hours? Under New York law, it’s “all time working and time off for meals and any off-duty time during or between shifts” in a work day. It includes the time from the beginning to the end of the workday and also includes time when the employee is off duty, such as an unpaid meal break.
Under New York’s employment-law-related regulations, an employee generally must receive one additional hour of pay at the then-basic minimum wage rate for each day the spread of hours exceeds 10 hours.
For example, an employee who starts at 8:30 a.m., takes an unpaid one-hour break, and finishes at 7:00 p.m. has a 10.5-hour spread. The employee worked 9.5 hours, but the workday still exceeds 10 hours for this rule. The employer generally owes one additional hour at the applicable basic minimum wage rate.
This payment is separate from overtime. Spread-of-hours pay does not mean the employee worked an extra hour, and it doesn’t replace any overtime the employee is owed.
The applicable minimum wage depends on the employee’s location and the relevant wage order.
What The DOL Investigation Tells NY Employers
According to the DOL’s recent press release, the investigation began with an unannounced 2023 visit to a Marshalls store in the Bronx. After reviewing payroll records and identifying potential underpayments, the agency asked TJX to conduct a self-audit of its New York stores for August 2020 through August 2023.
The company cooperated and paid the resulting back wages. The announcement shows that an issue identified at one location can lead to a broader review of payroll practices across a company. It also reveals that the DOL can require a company to look back, identify, and report on data over several years, not just the year in question.
Check Your Full Workday In Payroll Records
A timekeeping report that totals only hours worked may not flag this issue. Review the start and end times for each workday, including split shifts and unpaid meal periods. For each day with a spread over 10 hours, confirm that payroll included the required additional hour of minimum-wage pay.
The calculation should use the basic minimum wage rate that applies to the employee’s location and work. If an employee is paid a rate higher than minimum wage – as many are – or is classified in a way that raises questions about coverage, get legal advice before deciding the rule doesn’t apply.
Audit More Than One Location
If your business has multiple stores, offices, or worksites, look for a consistent process across all of them. A payroll practice that works at one location may be missing the same payment everywhere.
Use a representative sample first, then expand the review if you find a pattern. Include historical records, shift schedules, time records, payroll registers, and the way your payroll system handles meal breaks and split shifts. New York employers generally must keep payroll records for 6 years under section 195(4) of the New York Labor Law.
Fix The Process And Address Any Shortfall
If your review identifies missed payments, correct the payroll set-up and determine the affected employees and pay periods. Keep a record of what you reviewed, what you found, and how you fixed it. Don’t assume that a small amount per shift is insignificant. A repeated error across employees and locations can add up quickly.
New York employers can review the DOL’s Wage Theft Hub for background information.
The Coppola Firm helps New York employers review payroll practices, address wage-and-hour questions, and correct problems before they grow. If you have any questions, please reach out at 716.839.9700 or email us at info@coppolalegal.com.
