Compliance with overtime pay labor laws include intent as was illustrated in a recent case with one company increasing salaries to exempt employees from receiving overtime.
A San Leandro-based outsource provider has been ordered to pay $1 million in back overtime wages and damages to hundreds of employees for widespread violations of the federal Fair Labor Standards Act (FLSA), according to the U.S. Department of Labor (DOL).
Proper Employee Classification is Paramount for Overtime Compliance
TriNet Group Inc. will pay $1 million in back overtime wages and damages combined to 267 employees of its subsidiary TriNet Human Resources Inc., the DOL announced Monday. The Department of Labor registered the case against TriNet Human Resources, the entity that is on the employees’ paychecks.
“TriNet is fully committed to compliance with all of its obligations as an employer,” TriNet said in a statement.
“TriNet falsely believed that raising an employee’s salary exempted them from receiving overtime pay,” said Susana Blanco, the division’s wage and hour director in San Francisco. “Hopefully, the company will now pay better attention to the rules going forward and pay its employees the wages they earned.”
“The DOL ultimately disagreed with our assessment that the duties in this newly created position included a sufficient exercise of independent judgment and discretion for the employees to be exempt,” TriNet said.
“The salaries of the employees at issue were increased commensurate with the employees’ change in responsibilities, not for the purpose of contending they were exempt. TriNet voluntarily agreed with the DOL to compensate the employees for their previous work without any admission of liability. “
Employee Mis-classification and Labor Law Non-compliance Can be Costly
According to the Department of Labor, the Fair Labor Standards Act (FLSA) requires that covered, non-exempt workers be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus one and one-half times their regular wages for hours worked beyond 40 per week.
In California, that minimum wage amount is currently $10.0 per hour for all hours worked.
The federal agency said employers also must maintain accurate time and payroll records and are prohibited from retaliating against workers who exercise their rights under the law.
In the case of TriNet, the company will pay back pay wages and damages to workers in amounts ranging from a few hundred dollars to more than $13,000 per worker, according to the Department of Labor.
The federal agency said it also assessed $58,000 in civil penalties for the violations.
Unfortunately for TriNet, this is not the first time they have run into compliance issues. In 2012, the company paid $326,000 in back wages and damages after the division found similar violations, according to the Department of Labor.
Getting Expert Help to Stay Up to Date and In Compliance
Having an updated payroll compliance strategy is essential for ensuring your organization meets its payroll and labor law obligations, while providing accuracy and timeliness. So take time to understand the laws, prioritize employee and manager salary changes, and maintain accurate record keeping. In this way, you will make compliance a sure thing.