Posted on July 13, 2010 by Tiffany Schmidt

U.S. Dept. of Labor Recovers $4.2 Million in Back Wages for 603 Oregon Workers

My law partner, Marylee Abrams has blogged in the past about the importance of properly classifying your employees. Not only is it important to properly classify your employees it is also important to pay them appropriately for the actual hours they work.

An investigation by the U.S. Department of Labor Wage and Hour division at the Umatilla Chemical Depot plant determined 603 employees involved in departments including maintenance, munitions, and warehouse work, were underpaid for their time in the workplace. “In some instances, workers were not relieved for their lunch time, resulting in inappropriate pay deductions for lunch breaks that could not be taken.” These pay deficiencies are violations of federal laws including the Fair Labor Standards Act (FLSA). This investigation has resulted in a payment of more than $4.2 million dollars in back wages and additional civil monetary penalties.

The Fair Labor Standards Act provides an employee must be paid for all of the time considered to be hours worked and all time that is hours worked must be counted when determining overtime hours worked. The FLSA defines the term "employ" to include the words "suffer or permit to work". If an employer knows or has reason to believe that the employees are continuing to work when they are supposed to be on break and the employer is benefiting from the work being done, it should be compensated time.

This was a very costly error in employee compensation. I’m sure the employer is not likely to make this kind of mistake again. The U.S. Dept. of Labor will not hesitate to take action against employers who violate the law. In addition to making sure employees are properly being compensated for all hours worked, the U.S. Dept. of Labor is also investigating if employees are appropriately classified.

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Posted on January 8, 2010 by Marylee Abrams

Two Steps to Insure You Are Paying Your Employees Correctly

It is being reported there has been a 77% increase in Fair Labor Standard Act (FLSA) claims against employers alleging wage and hour violations since 2004. A large number of the claims and probably the most expensive have been about disputes over underpaying or failing to pay overtime to employees due to job misclassification.

Most recently AT & T was sued for $1 billion dollars in two class action suits, alleging a new company-wide policy exempting first line managers from overtime, violated federal law. The first line managers claimed they fill low level supervisory positions, and they do not meet the standards established to qualify as “exempt” employees.

To avoid this type of costly FLSA claim:

  • 1. Conduct a comprehensive job analysis to determine if someone is an “exempt or a non-exempt employee.” Jobs are classified as non-exempt or exempt based on:
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  • Nature of the work performed,
  • The extent of the discretion exercised in the job,
  • Level of compensation, and the education, training, and
  • Credentials of the person filing the position.

2. Once employees are properly classified as exempt or non-exempt, do a check to insure employees’ wages and benefits match their federal FLSA exempt or non-exempt status. If their wages and benefits do not match their FLSA status, correct the problem immediately.

Astronomical claims by employees against their employers, and the wide-spread press coverage they receive are sure to lead to copycat cases against smaller and mid-size employers. Costly FLSA claims over job misclassifications can be easily avoided with a moderate amount of effort by employers.

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