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Two Employers Settle Claims Over FLSA Violations, Failures to Include Shift Differentials for Overtime Pay

Wage and overtime claims have become increasingly more common in many states across the U.S., prompting employers to perform their due diligence when calculating overtime pay for their workers. The need for compliance has been promoted by additional regulatory actions, including a March 7th proposed rulemaking notice from the Department of Labor to increase salary test thresholds for overtime exemptions – a rule which could potentially allow an additional million or so employees nationwide to be paid overtime.

While the Labor Department looks to clarify proposed rules, and employers continue to improve their practices and classification of workers in anticipation of more stringent regulations, two separate companies were recently implicated in a pair of settlements with DoL officials after it was alleged they had violated the Fair Labor Standards Act (FLSA).

Here’s a brief recap of what happened with those cases:

  • Two employers, a lighting manufacturer based in Connecticut and a health care provider out of Pennsylvania, agreed to settle allegations from the DoL that they incorrectly calculated employees’ overtime pay in violation of the FLSA.
  • Labor Department press releases state the Pennsylvania employer, a continuing care retirement home, paid nearly $40,000 in back wages and damages to more than 90 employees. The lighting company, which though based in Connecticut was implicated for alleged FLSA violations at a distribution facility in Georgia, agreed to pay roughly $138,000 in back wages and damages to over 800 employees.

According to investigations and claims from the Department of Labor, both employers failed to pay the full amount of overtime wages due to their employees because they did not include shift bonuses and shift differentials in their calculations. Both companies also violated the FLSA by failing to maintain accurate payroll and time records.

FLSA Violations Amid Rulemaking Shakeups

The pair of settlements come as the U.S. Labor Department is amending regulations over how employers must calculate workers’ regular pay rate for FLSA purposes, which in turn will impact overtime pay calculations. Under the FLSA:

  • Employees, unless exempt, must be paid overtime for any hours worked beyond 40 hours in a workweek at a rate no less than time and one-half (“time and a half”) their regular pay rate – which the FLSA requires to be at least $7.25 per hour, the federal minimum wage.

Under this requirement, employers can structure different workweeks for different workers or groups of workers, but cannot average hours over two or more weeks.

The “regular rate of pay,” which appeared to have been an underlying issue in both the recent settlements, generally includes all remuneration, with some exceptions. Among those are shift bonuses and differentials, which must be included when computing overtime pay. In early 2019, a federal court ruled “blended rates” which used a single pay rate for all hours worked by employees – be they non-overtime or overtime – violate the FLSA.

Houston Wage & Overtime Lawyers Serving Workers Nationwide

Bailey Cowan Heckaman PLLC has earned national recognition for our work protecting the rights of employees in matters involving the Fair Labor Standards Act (FLSA). From investigating employer violations related to FLSA rules to evaluating the correct rate of pay, employee classification, or other labor and employment law violations involving wage and hour disputes, our firm fights to help workers recover the money they’ve rightfully earned. We also represent employees in whistleblower / False Claims Act cases, and matters involving workplace discrimination, sexual harassment, wrongful termination, and more.

You can learn more about our services in FLSA cases on our website, or by calling or contacting us online to discuss a potential case. BCH is based in Houston, Texas, and proudly serves workers nationwide.

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