The US Department of Labor (DOL) announced this week that a human resources service provider will pay $1 million in back overtime wages and damages to hundreds of employees. A DOL investigation found widespread violations of the Fair Labor Standards Act (FLSA). You can find the press release at https://www.dol.gov/newsroom/releases/whd/whd20160418-0 .
How did this happen? The employer made a common but erroneous assumption: salaried employees are not eligible for overtime pay. In this case, the employer raised salaries to avoid OT pay after 40 hours a week. The employees however were NOT EXEMPT because the criteria under the FLSA exemption were not met. (http://www.dol.gov/whd/overtime/fs17a_overview.pdf) Worth noting is the mistake was made by an outsource HR provider, which illustrates how legally complicated these matters are.
Whether an employee is actually exempt under the law—and not determined by past practice or a job description—has enormous ramifications for a business. In this case an HR provider made a very costly error, which occurs easily with back pay, liquidated damages and attorneys’ fees allowed under the Act.
Between the upcoming changes in the overtime rules (https://wordpress.com/post/workplacelawhelp.com/419 ) and cases like this, committing resources to a comprehensive audit by Foley & Foley PC is a good investment. We can get your employment classification and wage and hour matters in compliance and you can go about your business. We can help.