The recent U.S. Department of Labor Wage and Hour (WHD) investigation outcome of leading thoroughbred trainer Chad Brown has rocked the racing industry with the assessment of over $1.6 million in back wages and Civil Money Penalties (CMPs). This should serve as a wake-up call to all seasonal businesses that historically have struggled to find reliable seasonal labor.

Like many other trainers and seasonal employers, Chad was undoubtedly caught up in a perfect storm: (1) our current culture of unprecedented enforcement; and (2) the impossibility of perfect compliance with immigration and WHD regulations.

Now more than ever, employers must prioritize and review their current compliance practices to make sure that they meet all regulatory requirements under the Fair Labor Standards Act (FLSA) and corresponding H-2B regulations. In reality, perfect compliance is virtually impossible – especially for those employers that participate in the H-2B program. WHD violations can range from miscalculating overtime rates for employees, which is clearly a more serious offense, to seemingly insignificant violations for not having a screen door on worker housing.

For the racing industry, the problem is compounded by the fact that many trainers operate out of horse stables and do not have sophisticated time-keeping systems, payroll, or even I-9 compliance systems in place. For many years, compliance with Wage and Hour, I-9, and immigration regulations were somewhat of an afterthought. Backstretch workers such as horse grooms and hotwalkers have notoriously erratic schedules and often work long hours. This is difficult to manage. However, we have learned that anything other than perfect compliance is costly. As we hear of other audits unfold at racetracks across the country, many trainers and seasonal business owners could quite easily find themselves in a very similar circumstance.

We’ll examine the rules and how to ensure compliance in our next post.