Payday loans

December 3, 2012

What we can learn from First Republic Bank of San Francisco

Filed under: General HR Buzz3:34 pm

Recently the U.S. Department of Labor recovered $1,009,643.93 (to be exact!) in overtime back wages for 392 First Republic Bank employees in 5 states.  The reason?  It was found by the Wage and Hour Division that employees were wrongly classified as exempt from overtime, resulting in violations of the Fair Labor Standards Act with reference to overtime and recordkeeping.

Every week in the US DOL’s update, there are similar headlines.  This is a story that doesn’t seem to go away.  As such, I believe there are some lessons we can learn to be proactive and reduce the chances of this happening to our organization.

  • Audits are not going away.  We cannot keep procrastinating reviewing the exempt / nonexempt status of our employees.   Mark it on your to-do list with a deadline and commit to getting it done.
  • Just because a position is considered a “professional” position, it doesn’t mean it is exempt from overtime pay.  In fact, many of the positions at First Republic Bank were “professional”.  Remember, certain tests regarding job duties must be met in order to be considered exempt.  A “professional” title is not enough.
  • When calculating overtime, bonus payments need to be included in the regular rate of pay.  For some positions, bonuses could be paid frequently – every paycheck – so your payroll system must be set up to handle the recalculation of the regular rate of pay for overtime purposes.
  • Document, document, document.  That goes for recordkeeping also.  The number of hours that employees work must be recorded.

I close with a quote from Secretary of Labor Hilda L. Solis.  “As this investigation demonstrates, improper classification results in improper wages and cause workers real economic harm. It is essential that employers take the time to carefully assess the FLSA classification of their workforce.”  Duly noted.

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