‘Getting It Wrong’ On Labor Law Can Prove Costly For Horsemen

by | 07.14.2015 | 10:42am

Trainer Steve Asmussen found himself in hot water at the end of June when the United States Department of Labor brought suit against him for the second time in three years. The department alleges Asmussen violated the Fair Labor Standards Act of 1938 by not paying overtime to hot walkers and grooms when they surpassed 40 hours of work in a week.

Asmussen isn't the first trainer to have to answer to complaints surrounding the Fair Labor Standards Act, and chances are he won't be the last. The laws governing work in the Thoroughbred industry, like so many other things about the racing world, are somewhat complicated.

“It's just challenging, being an employer,” said attorney Catherine Wright of Dinsmore and Shohl in Lexington, Ky.

The Fair Labor Standards Act sets forth a detailed list of requirements that most employers must adhere to in order to avoid exploiting workers. The trouble is that the typical workweek of a groom or hot walker doesn't easily fit into the Act's concept of normal working hours—which means that technically, some of them are putting in hours that should be eligible for a lot of overtime pay.

The Act requires that workers' time on the job be documented and not exceed 40 hours in a week without overtime pay (defined as one and a half times their regular hourly rate). The Act also dictates a federal minimum wage, which is currently set at $7.25/hour, but some local governments have passed laws taking that rate higher.  For example, the minimum wage in Louisville, Ky., is now $7.75.  In order to determine what an employee's regular pay is, however, Wright said employers must add up all the wages for an employee and divide by the total hours worked in a week. It sounds simple, until you get down to it. Pay can include the bonuses grooms or hotwalkers are paid when their horse wins, which isn't terribly predictable or consistent.  Wages can also include the cost of board and lodging customarily provided by the employer.

State laws are also part of the equation.

“You have to make sure you don't have any impermissible deductions taken from that wage,” said Wright of Kentucky's laws. “You're not allowed to include fines or breakage (unless it's a willful violation). You have to be very careful about what you deduct from someone's wages because it can take them below minimum wage.”

Another area impacted by state and federal wage laws is lunch and break periods. In Kentucky, workers should receive a half-hour unpaid lunch break, and paid ten-minute breaks every four hours of work. Lunch breaks require the employee be totally uninterrupted, meaning that if they're eating in the tack room and asked to hold a horse for the veterinarian, the lunch break doesn't count.

To make matters more confusing for trainers, the Fair Labor Standards Act does allow exemptions for certain industries, including agricultural workers, presumably because crops and animals do not recognize timecards. Based on the definition of agriculture in the Act's language, however, only work performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, including caring for livestock, are considered exempt from the overtime pay requirements. That means racetrack workers, even though they handle horses, are subject to the requirements of the Act.

Even in the exemptions section, Wright cautioned, the language is very specific: there are certain jobs on a farm, such as maintenance work, the Department of Labor may not consider exempt since they may not be primarily farming activities. Additionally, workers sent to a farm by a third-party labor agency are not considered exempt regardless of their daily duties because they are not hired by the farm but the agency.

“Just because you work on a farm doesn't mean you're entitled to an exemption,” said Wright. “Even if you read the statute, you get into situations where you have to look at the case law to see how it has been interpreted.”

(White collar workers are also exempt from the overtime rule in many cases, in case you've begun digging around your cubicle for a recent pay stub.)

For employers who opt to put their workers on salary to avoid the overtime pay requirements, things are about to get more expensive there, too—the Department of Labor is in the process of changing language in the Act that could more than double the minimum salary required for exemption for white collar workers from around $24,000 annually to just over $50,000.

Although it can be tempting to ignore these rules and hope for the best, Wright said mistakes are expensive.

“What's so challenging about these cases is that if you have made a mistake, essentially the Department of Labor can go back several years for backpay.” Wright said the Department can go back two to three years through records and require an employer to pay up — and even pay penalties associated with the law violation.  Some states, including Kentucky, go back even further (five years).

Without complete records of their workers' time, the case comes down to the employer's word against the employee's, Wright said. But an absence of those records is also a violation that makes the employer vulnerable to fines.

Cases like the complaint against Asmussen can come up either as part of a random audit of an employer's records, or if an employee files a complaint about a violation (the Act also requires posters be hung in the workplace to encourage reporting). Although some grooms and hot walkers may be nervous about speaking up due to their immigration status, Wright said in her experience, the Labor Department isn't interested in the complainant's status and isn't authorized to take action on deportation, etc. on its own anyway.

For employers with workers on the racetrack on an H2-B temporary visa, the rules governing their employees' jobs became more rigid earlier this year when the Department of Labor and Department of Homeland Security passed the 2015 Interim Final Rule. The rule lays out requirements that employers pay H2-B workers and non-H2B workers comparable salaries, and that H2-B workers be used only when there are no American-based workers available to do the job. It's a measure that hasn't been popular with employers — they're concerned it will make the visa program more difficult to use.

Add to all this a layer of safety rules from the Occupational Safety and Health Administration, and it's even harder to know what's legal when it comes to the work day. Wright's advice to horsemen and others in the business looking to avoid trouble with the Labor Department? Write everything down, and ask questions.

“If they have questions and don't understand, they really need to get some advice, because getting it wrong is very costly,” she said. “My advice is to  talk to an attorney to figure out what they're doing and if there is a problem, how to remedy it. You don't want to just keep doing something incorrectly and hope that it's never discovered because things do have a way of coming to light.”

  • KARL Bittner

    You know what this all comes down to? An employer that want’s to pay and do the absolute minimum they have to for an employee. If you pay a decent wage (Above minimum) and treat your employees right for the most part you will not have an issue. The Dept. of Labor did not go after Asmussem because they had a sneaking suspicion. They must have gone after him because the had a complaint and I’m willing to guess it was well more than just one.

  • Rachel

    You know why they have labor laws that speak to mandatory overtime after a 40 hour work week and mandated lunch periods and breaks?
    Exactly.
    Welcome to the 21st century racing industry.

  • Ernest Vincent

    This happens at the Pizza shop where one buys their slice and at WalMart.
    Last year Steve booked $12.5 million in purses. This year he ranks sixth today @

    • Allegations in a lawsuit filed by a government agency should not be blindly accepted as fact. Steve is at the top of the industry scale in paying all workers. No worker- groom, hot walker, exercise rider or foreman was ever was underpaid for 40 hours plus overtime worked in excess of 40 hours. The lawsuit was filed after Steve refused the government shakedown. Over the past several years the DOL has “investigated” numerous trainers and sent monetary demands for fines and back pay that most paid out of fear to avoid further government threats of sanctions and a lawsuit. To our knowledge no employee or former employee supports the governments case. The fact that Steve now stands to fight and defend with the truth should be admired not condemned.

      • Noval

        Amen. This is a by-product of last year’s PETA sting where they sent an employee to prostitute herself in order to make false claims against Asmussen. Funny, PETA is now howling to the moon after Sea World apparently sent an employee to infiltrate their activities. Pay back’s a…..

      • Ernest Vincent

        Hello Clark, and before responding, this writer acknowledges your expertise and experience as a prominent attorney. These are merely comments on a blog. Not readers advice.

        I think if you re-read my take, I’m a cheerleader of Steve in the matter. And I recognized and then noted to all that (read the elaborate article) the allegations brought on by an audit/suit can occur and do occur from a one man pizza shop to WalMart.

        It happens. All the time. Daily. All kinds of businesses. Every day the little shop on the corner gets audited just like Microsoft and Apple. Same laws apply.

        This, after noting comments of wholesale lumping Steve into ‘those bad trainer behaviors and this is an industry thing.’

        Readers: Just ask the guy that sells you pizza and subs next time.

        Now you say lawsuit. Is it not more like an OFCCP audit, OSHA inspections, Unemployment/Comp. audit, and this accordingly a wage audit. Compliance hearing.

        I have actually been the sole lead for companies in the conduct of agency audits as above. And just one Federal audit there was zero deficiencies.

        But IMHO, the odds (horse player and labor law b-ground) of the matter zeroing out with not one remedial implementation are low.

        Accordingly, and it was not said that “If”; so if:
        only the solutions would be necessary: respond in kind and note the minor oversight discoveries, the simplistic remedy to fix process in days, easy $99 implementation of materials/off the shelf payroll program (used by the Pizza Shop and a Walmart store), and good-faith effort people involved to create assurances for buzz-word digital real-time transparent compliance et yada. And a short time table spreadsheet.

        One does not have to fall on one’s sword if sums of money are involved (but it often plays well with auditors to lower penalty dollars where communication, cooperation and respect prevailed).

        Also this site’s Publisher called out/digital blast to other trainers to read the article and my comment was at large, and perhaps could aid a smaller barn trainer with ideas (not legal advice) to check/fix/install/process what he/she is doing.

        From my experience, where the Federal or state finds and then designates an individual paid as a non-employee, then as an employee; then back unemployment tax must be paid.
        As well as employer’s share of other mandated withholdings.

        Upon the oversight correction (if not contested) and unemployment taxes paid; the State involved then fines the employer for each employee that was not considered an employee by the company; and now defined as an employee on a retroactive basis.

        Specifically the State fines the employer for not having workers comp. insurance. Especially in track employment.
        Had not covered the risk. In New York the fine sums per employee not covered are draconian. And it is a new mess to finish with one agency and start-up with another. And one agency within the State cannot enjoin its work with the matter of the other.

        Two NY employees not comp covered for 3-4 months is about $22,000 fine.

        The speak on blogs threads, and forums are sometimes too condensed and short-hand.

        Wishing you both a well justified outcome.

        • Ernest, thank you. My reply was not intended to question your position or take issue with any point you addressed, it simply was to give some context to DOL tactics. To address your inquiry, yes a lawsuit was filed. Prior to the suit the DOL refused to identify a single underpaid employee and refused to cite any specific violation. After suit, the DOL lawyer won’t even return phone calls. It is not surprising that this same lawyer has handled litigation previously where the Federal judge awarded attorney’s fees agianst the Goverent based on an unsupported legal case. To ensure full compliance with the myriad of each State and all Federal Wage and Hour regulations Steve, several years ago, retained an independent accounting and payroll firm to collect time and payee information and issue payroll and withholdings. Steve insists on full adherence to wage and hour regulations. Contrary to some of the comments on this site he has always paid for all hours worked, including all overtime. He also generously gives bonuses to workers when the horses they attend to win, which is a custom in the industry.

          • Ernest Vincent

            Clark a pleasure to learn something new today and when it comes to horse racing as well.

            In another thread two weeks ago here, even after Steve was 100% vindicated, some were still doubting dudes and dudeses; to which I responded:

            “Just Google – PETA vs Asmussen – You can see it all first-hand from the/ on PETA ‘s webisite as expose.

            Steve and his entire stable of dedicated and tenured workers:: hot walkers, grooms, asst.trainers, feed tubers, AM riders, even the associated valets val-etts. – Unfounded and unsubstantiated after multi-level reviews.”

            Your elaboration of the discovery and Steve’s reputation throughout for his “insistence of adherence to payroll compliance displayed by it being conducted by an outside retained independent accounting/payroll firm”; provides adjudicators to recognize the past practice and performance.

            Finally, many, if not most, feet on the curb racing saviors never mention the amounts of money jockeys, owners and trainers take out of their own pocket daily, annually to provide housing, education and welfare to the barn. In addition to formal money streams.

      • j

        Can’t justify just because he supposedly pays upper industry scale because the industry scale is deficient, I’ve worked as a shedrow foreman most of my life and that job burns more hours than anyone in the barn so believe me you aren’t paid for the time you work.

      • KARL Bittner

        With all due respect I gather you are an attorney who is paid to defend his client at all costs. The article starts out saying the DOL brought suit against him which means they did an investigation and uncovered the violations. My personal experience is the DOJ does not go looking for these cases attempting to in your words to “shakedown” anyone. But if they receive enough complaints they will come calling. Then if they find something you had better watch out because they are relentless in there pursuit of more than what might actually be happening. But you can’t tell me he is completely innocent of all wrong doing.

        • My representation of any client is always with respect for the facts and the law. Your reference to a DOJ lawyer and your knowledge and experience of their practices is misplaced. The DOJ does not provide lawyers for the Wage and Hour Divison of the DOL. The investigation in the Asmussen case consisted of 2 short barn visits and a review of requested records. No employee other than the PETA operative made a claim or was the basis for the investigation. The investigator never requested or interviewed Steve or any member of the accounting/payroll firm that issued payroll. The DOL is notorious for demanding oultandish amounts for alleged payroll record keeping, or technical regulatory violations, without genuine regard for the interest of employees.

          • KARL Bittner

            Not trying to get the last word in or anything, but your response is very attorney like. It’s unfortunate that the employee busting his hump on the backside is not always afforded the representation that you provide in defending your client. You can pass this off as being a part of the PETA episode but I’m willing to bet there is more to it than what you state. You can yell it out from the top of the mountain “My Client is innocent” and I’m going to tell you that prison is full of innocent people.

          • Thank you Karl. It is true that innocent people have been wrongfully convicted but I don’t see the connection since the DOL is an admistrative agency and the case we are defending is a civil proceeding. I am confident that most reasonable people that are truly informed make just decisions. Steve will be fine when the dust settles.

          • KARL Bittner

            I don’t know Mr. Asmussen. I have always admired him as a trainer. All I was trying to point out is usually there is something that triggers the Feds into investigating. Besides the PETA incident I would bet someone else and I would hazard a guess it was more than one person had a complaint. That would prompt an investigation. And if any irregularity was discovered that usually prompts an even bigger attempt by whatever federal agency you happen to be dealing with to look deeper. From your perspective this is where I side with you. The feds have a way of coming after you and making up the rules as they go unless you can afford a room full of attorneys. And they are relentless because they have nothing but time to come after you. They are not in business to make money. I’m absolutely sure Mr. Asmussen will be fine as he should be. I’m for the little guy whichever side of the table he might be on.

          • Content Generating Machine.

            It’s unfortunate that the employee busting his hump on the backside is not always afforded the representation that you provide in defending your client.

            That’s why we have the Dept of Labour, thank muffins. Someone needs to look out for the little person, who can’t afford legal counsel.

          • Ernest Vincent

            This action was not instigated by disgruntled employees.
            It was not a random audit.

  • Ernest Vincent

    This happens in pizza shops and WalMart. Oversight or not. Steve A’s biz in 2104 was $12.5 mil in purses. Today, ranks 6th in trainers @ $5.65 mil. Trainers work 7 – 12 hour days. Employees say +/- 135. They need a $99 software program and more oversight on
    payroll employee status. Train the input person. Have his pro accountant check the checker for quarterly payroll reviews.

  • secondlife

    Why are they picking on this barn? I worked for 2 trainers as a hot walker where I’m pretty sure my pay worked out to less than min. wage based on the number of hours I worked. If they really wanted to enforce this, they would require a time clock in all barns.
    And I’ve never seen labor law posters in any racetrack barn. No first aid kits either, for that matter.

  • Content Generating Machine.

    Interesting. Where I worked we weren’t allowed to go over 39 hours. We had a program called COLTS, that we entered our time on computer.
    Being a field tech, our hours we wacky: 3am one day, 6am the next, et al.( We had to drive to farms to get there at the start of milking on different farms)
    When we did go over, a lot of it was entered as comp time.

    • Peyton

      That is standard manipulation of the system which is done by the Walmarts, Lowes, and all major retail employers now to get around the law. The intent of the law is you should have a defined work day. You probably have a claim concerning the drive time, depending on where your duty station is identified.

      • Content Generating Machine.

        Naw, it’s ok. We got paid from the minute we left our homes, and we drove company vehicles. Besides, I don’t work for them anymore. :)

      • Content Generating Machine.

        I should add: this was a famous vet university with an agricultural program.
        We were treated fairly and we did our own scheduling. I’d never put up with that cr*p from Walmart. I hate that place. I never shop there.

  • Southwest Dude

    I work at a race track and show up an hour and a half before the track opens , but my employer dosent let me clock in till the track is open, then we clock out as soon as the track closes but still have another half hour to work after its closed. No breaks or lunch for me. How do they get away with that? Tricky those track managements.

    • TJ Flasco

      The are getting away with that because you are letting them. Visit your local Labor Dept office and explain this to them. They will use their office and their attorneys
      to help you. Their attorneys are on the government payroll so you’ll have no attorney fees.

  • Bobf83

    The problem is trainers don’t want to be organized and use the excuses that their industry is different as to how the workers work. Well, that doesn’t work when it comes to the Labor Board. A job is a job.

    It’s a business and if they would run their stables as a a business they would have no problems but most trainers are hillbillies who don’t like to follow the labor code because they think they are still down on the farm.

    I don’t think I have ever seen a timeclock in a barn and I have never seen a trainer tell a hot-walker or a groom to go take lunch away from the barn.

    It’s very simple, if they start at 3:30 AM, they need to have a15 break somewhere and then leave the barn for a 1/2 for lunch at 7:30 A.M.. They just need to bring other guys in at 4:30 AM to provide for the over-lap.

    This is not rocket science. It’s just trainers being what they are, trainers.

    • B

      Well Said Bob!
      Most trainers have no life outside of the barn so expect everyone to be there all day – 7 days a week.
      What other industry requires employees to be there with no day off?
      The old school argument was that the help would notice any change in horses such as sickness or injury, a poor excuse for not insisting their help have a day off.

  • Lost In The Fog – Robert Lee

    The federal and state laws governing work in the thoroughbred industry are no more complicated than those that apply to countless other industries. Complying with those laws is a basic legal and ethical responsibility applicable to all employers – large and small – including horse trainers.

    • KARL Bittner

      Bottom line! Could not have said it better.

  • mary

    Its hard to compete with the visa population. If you get a 1099 at the end of the year, as an American your going to owe around 30% in taxes when your in the 15% tax bracket. Also there is a good chance you live off track so you pay your living expenses too. Have seen too many racetrackers just hurry up and get done. No passion for the business or horses, just a paycheck. Americans want to do this work, but can”t compete with the illegals and this is what the trainers want so they have more money. REALLY how much money will be enough. The racetrack has lost so much. Its hard to find Americans on the track anymore.

  • Rachel

    It’s sad to think some of these comments include folks who clock out and are then expected to work for free “or else”….the employer knows they’re either scared to lose the job or can’t afford to make a complaint.
    I see a lot of comments “check the guys who sell you subs and pizzas.”
    If you are a manager, or assistant manager, procurement, etc. and on a salary, like so many folks who work at these places, you are more than likely on a salary-exempt position, meaning they can work you pretty much all they want. It is a defined set of positions by law…you can’t just arbitrarily say “you’re salaried” it usually has to do with managing the business by hiring, firing, buying.
    Then there is a salary-non-exempt position where you get “x” amount for a set amount of hours after which you get overtime pay.
    If you have hourly positions you go strictly by the clock, after 40 hours in a week you get overtime unless you work on or in a government contract then it’s overtime after 8 hours in one day, double time after 12 and on Sundays!

    • Ernest Vincent

      Check the pizza shop owner means – the owner is in the same position as Steve Asmussen and the WalMart store and will have payroll situations arise via govt. audit or employee challenge. It happens and resolution takes place. And it’s not that the Pizza guy did it intentionally. It happens. Also, in Steve’s case he has a private company do his payroll an is under strict audit by the state jurisdictions he races in for wks comp., OSHA the whole deal.

  • Jan

    The racing industry has never had an hourly wage. Particularly minimum wage. It is per service in many instances. Independent contractors, the exercise riders, pony people, blacksmith’s ect have never come under fire unless they forget their taxes. Grooms, hot walkers and assistants have all had a paycheck of so much per week and have been aware of the hours involved. Not everyone at the groom or hot walker level goes over the limit every week. Rotation schedules for feeding at night and cooling out after racing exist. This person says” I’ll give you 10 if you feed for me tonight or 20 to cool this horse out for me.” Does that mean the trainer is responsible for overtime? A large majority of these individuals live on the grounds rent free, by choice, and many would have it no other way. I think we need to do some in depth education on the history of employment on the backside and the responsibilities that come with the job. Immigration visa’s are uncommon these days and my kudos to the trainers who are willing to take that extra step. Let a code word go out over the PA system and watch the shed rows empty in many of our tracks. In the white collar sector have the paralegals log their salary hrs. and the labor dept. go after that industry and see what they find.

    • Smile

      In California in the mid 1980 they did this hourly thing on the race track then most are up with the times even after mid 80s

    • McGov

      “I think we need to do some in depth education on the history of employment on the backside and the responsibilities that come with the job”

      Perhaps some education regarding being a job provider. Should workers be expected to work 60+ hour weeks and not be fairly compensated? Or is working for less than minimum wage ok because it…”comes with the job” ??

  • koghan

    What about changing an employee to an independent contractor for the trainers convenience. Same job, same wages……I know of several harness trainers who have done so from the grooms complaining and would assume the TB trainers do this as well.

    • Ernest Vincent

      A (company) employee arbitrarily changed to an independent contractor would then have to be performing under the state/federal definitions of an IC by definition.

      Can’t be in name only and for payroll purposes.

      • koghan

        Yes, but who investigates this change? Should be obvious to the IRS if they are looking and groom employees are changed from one year (or 29 years of employment for one groom) to the next as IC’s.
        I guess the complaining grooms should perhaps be notifying the labor board.

        • Ernest Vincent

          Hello Koghan,
          Just some comments to communicate here among us horse people. Not legal advice and binding. Provided as just.another blogger. And a step aside from the Steve case of this article topic as no one here is privy to the facts. And the case has not been heard. I’m not sure, but I believe it would be heard by an administrative law judge. Not going there.

          In General-
          The Dept of Labor in most instances would review a company’s records. This would usually be done at the/on-site of the employer. In this case instance, as the employer is interstate, in the conduct of business, the records/recordkeeping/payroll function are outsourced contracted-out: payroll/benefits/employment and taxes, fees custodian. A company hired to perform all the mechanics and stay current with rules and regs. Payroll clerks, bookkeepers and perhaps a CPA as owner for oversight.

          In General:
          A Dept of L auditor would go to the site, following a notice sent to the employer stating what the purpose of the audit was: specific charges by someone, group, or external source. But this is anonymous. Complaint vs random scheduled audit.

          As an aside, the IRS would be notified of the findings (after) of the audit and if there were any Federal taxes due, following their notification of the audit, the audited party would ‘get a bill’; a notification of what back taxes were due. Also, FICA – Social Security restitutions. State taxes and unemployment compensation, should there be employees who were misclassified or not on the payroll.

          If a private company pensions/401Ks are involved, again, back payments, perhaps interest and calculations of lost investment gains.

          If a union is involved, contract provisions for wages and benefits would also have to be incorporated.

          Once the information is reviewed at an Dept. of Labor office, it would send a formal document to restore all past non-compliance issues and establish dates for full compliance. If a company had to make restitution, it would have to show proof of same.

          About the classification of an employee as a non-employee:
          If one is hired and signs a confidential agreement, and has a duties and responsibilities description,, he or she does what the employer dictates. The employer pays FICA, state UEmp, ect. Perhaps there is benefits. Bonfide company employee.

          If the same employer outsources the work/job, the individual should at least have a DBA, a non-compete and confidentiality agreement between the parties to insure: pays their full self-employed taxes like FICA and income tax, and can perform work for other companies in likeness where the agreement is not broken.

          Again, this is a Broadbrush of the mechanics.

    • TJ Flasco

      An independent contractor would be allowed to work his own hours, charge his own fee, wear what he wants to at work, etc, etc. If he can’t have these choices, then he would be considered an employee in a civil court. There is no in between. The worker doesn’t have to prove he is an employee. The company( i.e. the trainer) has to prove that he is NOT an employee and that’s where it fails for the company.

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