I enjoy those cases where those (sometimes uppity) government agencies get a taste of their own medicine. I previously told you about the EEOC being sued for failing to accommodate its own employee’s disability, for example. Here’s another one – the U.S. Department of Labor, which is the federal agency that enforces the Fair Labor Standards Act (FLSA), including its overtime provisions, just agreed to pay $7 MILLION to settle a claim that it failed to pay overtime to its own employees!!!
Under the FLSA, employees who are not exempt from its minimum wage and overtime provisions (i.e. non-exempt employees) must receive an overtime rate of pay for all hours worked over 40 in a workweek. The overtime rate is 1 and 1/2 times the employee’s regular hourly rate. This obligation to pay overtime applies even if the employer does not specifically authorize the overtime to be worked, but knew or should have known that it was being worked.
This often comes up in “off-the-clock” work, when an employee works beyond his scheduled and recorded hours. Sometimes the employee is actually directed by his supervisor to clock out and then continue working. Other times, the supervisor turns a blind eye to the fact that the employee must do work beyond what is written on his timesheet in order to get the work done. In addition, with the increase in the use of smartphone technology, which enables employees to check and respond to work-related emails and text messages from outside the office, and telecommuting, non-exempt employees may be performing additional work outside the traditional workplace and outside their scheduled work hours, for which they should be compensated.
Another area of potential overtime liability exists when employees who should have been classified as non-exempt are incorrectly classified as exempt – and therefore do not receive overtime pay. The primary exemptions are executive, administrative, and professional employees – but not all employees holding such positions are necessarily exempt. In order to meet the exemptions, (1) the employee must be paid on a salary basis (meaning they receive the same amount of pay each week regardless of the hours worked), (2) the amount of weekly pay is at least $455 (although that amount will rise to $913 as of December 1, 2016), and (3) the employee meets certain “duties” tests specific to the applicable exemption. Most often, employees incorrectly classified as “exempt” do not in fact meet the duties tests.
(By the way, another way overtime liability arises is when employers misclassify non-exempt employees as independent contractors. This wasn’t an issue in the DOL case, but it is an area of deep interest to the DOL, which has gone after many companies for this!)
This settlement arose from a grievance that was filed by the union that represents some of the DOL’s employees, the American Federation of Government Employees Local 12. (Yes, many government employees are unionized). Back in 2006, the AFGE Local 12 filed a grievance that alleged the DOL had forced its employees to work off the clock, and had also misclassified some non-exempt employees as exempt (apparently, some of those employees were then re-classified as non-exempt during the course of the dispute). In a press release announcing the settlement, union president Alex Bastani said, “You cannot begin to imagine how difficult it was to challenge and then fight the Department of Labor for ten years over its own failure to adhere to these laws and failure to properly compensate its own employees.” (Well, in fact, as a management-side lawyer who has repeatedly defended companies in DOL investigations, I actually can imagine it. Some of those investigators….)
I know you’ll be surprised to hear that the DOL did not announce this settlement on its website with all the other overtime settlements it has obtained against various companies. And to give you a little perspective on how HUGE this settlement is, the DOL’s most recent overtime settlement announcements include the following: $160,000 from a flooring company, $1.8 million from a technology subsidiary of Citigroup, $2.4 million from a construction company, $1 million from a government contractor providing cafeteria services to the U.S. Capitol, and $259,000 from a construction company. So it seems that the DOL was the biggest violator of the overtime rules, by far! And, as the union’s attorney, Michael J. Snider, Esq. of Snider & Associates, said, “[T]his settlement will help ensure that the Agency follows the same laws it enforces.” Oh, the irony!