The US Department of Labor (DOL) announced this week that a human resources service provider will pay $1 million in back overtime wages and damages to hundreds of employees. A DOL investigation found widespread violations of the Fair Labor Standards Act (FLSA). Read press release »

How did that happen? The employer relied on a professional employer organization or a PEO which made an erroneous assumption: salaried employees are not eligible for overtime pay. In this case, the employer was advised to raise salaries to avoid OT pay after 40 hours a week. The PEO failed to consider the duties test: The employees were NOT EXEMPT. The duties test and compensation test must both be met under the FLSA. Read more »It is worth noting that the mistake was made by an outsource HR provider, which illustrates how legally complicated these matters are.

Whether an employee is actually exempt under the law–and not determined by past practice or a job description–has enormous ramifications for a business. Here, an HR provider made a very costly error, which adds up fast with back pay, liquidated damages and attorneys' fees allowed under the law.

This is a good example that compliance with the law is best done with the help of lawyers.

Between the upcoming changes in the overtime rules and cases like this, committing resources to a comprehensive audit by Foley & Foley PC is a good investment. We can get your employment classification and wage and hour matters in compliance and you can go about your business. We can help. Contact us at 508.548.4888.