This recent news story carries a lesson for every employer.
Levi Strauss Agrees to Pay More Than $1 Million in Overtime Back Wages to Nearly 600 Employees Following U.S. Labor Department Investigation
Overtime violations found at retail stores nationwide
SAN FRANCISCO — Levi Strauss & Co. has agreed to pay $1,011,413 in overtime back wages to 596 employees nationwide after the U.S. Department of Labor found that the company violated overtime and recordkeeping provisions of the federal Fair Labor Standards Act.
An investigation conducted by the San Francisco District Office of the Labor Department’s Wage and Hour Division determined that the San Francisco-based company misclassified several groups of workers, including assistant store managers of newly acquired stores, as exempt from overtime. Although their counterparts at previously existing stores were exempt from overtime compensation, the newly hired employees were not.
“Misclassification of employees has serious and adverse consequences for employees, as well as for corporations,” said Secretary of Labor Hilda L. Solis. “When violations of federal labor laws are discovered, this department will take appropriate action to ensure that workers receive the wages they deserve.”
The company failed to record all hours employees worked in its payroll system. Instead, the misclassified assistant store managers were required to work off the clock during late night closings, early morning openings, and staffing shortages. Various administrative employees working at the company’s headquarters also were misclassified as exempt from FLSA coverage and found to be owed overtime back wages.
This investigation covered back wages for time worked over a two-year period. Levi Strauss has agreed to pay the back wages and committed to upgrade its time and attendance system, as well as maintain future compliance with the law. The applicable employees are now treated as non-exempt under the FLSA.
Founded in San Francisco in 1853, Levi Strauss was the first company to manufacture blue jeans. Today, the company operates 164 retail stores and employs more than 4,000 workers in the U.S., and its global operations span more than 100 countries.
The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates of pay, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers are required to keep accurate records of all hours worked by covered employees. The FLSA provides an exemption from both minimum wage and overtime pay for workers employed as bona fide executive, administrative, professional and outside sales employees. It also exempts certain computer employees. To qualify, employees generally must meet certain tests described in the act regarding their job duties.”
Lesson Learned: Unless you have a legitimate business need for classifying employees as exempt, you’re far safer classifying them as non-exempt and adjusting their hourly pay so their take-home, including overtime, matches their exempt salary. We’d recommend that HR That Works use the Overtime Authorization form to reduce unauthorized or unnecessary OT usage.
