Miscalculated Overtime: What a $56K Mistake Looks Like
Improperly calculating employees’ overtime pay can be an expensive mistake, as a Cincinnati-based logistics provider recently learned the hard way.
Here’s what happened – and what the DOL had to say about it.
Employer Shortchanged Workers on OT, DOL Finds
An investigation by the DOL’s Wage and Hour Division determined Liberty Hill Equity Partners LLC shortchanged 234 non-exempt employees by miscalculating their overtime. Specifically, the company didn’t include the employees’ non-discretionary bonuses in their regular pay rate when calculating the overtime they were owed.
In the DOL’s view, the alleged conduct violated the Fair Labor Standards Act (FLSA), which requires employers to include non-discretionary bonuses in non-exempt employees’ regular pay rates when calculating their overtime.
The affected employees worked at two locations: in Fort Wayne, Indiana, and Wayne, Michigan.
Ultimately, the DOL recovered $28,422 in back wages and an equal amount in liquidated damages for the 234 affected employees, which brought the company’s total payout to $56,884.
DOL: Overtime Errors Are Very Common
The DOL has since expanded the investigation and now plans to examine payroll records for all non-exempt workers at 10 locations in Michigan, Ohio and Tennessee.
“Inaccurate overtime calculations are among the most common violations identified in our investigations. Employers can avoid the costly consequences of their errors by contacting the Wage and Hour Division for assistance or by reviewing our overtime compliance assistance materials online,” Indianapolis Wage and Hour District Director Aaron Loomis said in a statement.
Compliance Help
As this case shows, employee bonuses can bring up some tricky compliance challenges.
For example, to comply with the FLSA, employers need to know the difference between discretionary and non-discretionary bonuses – because non-discretionary bonuses have to be factored into OT calculations.
Need specific examples of non-discretionary bonuses that must be factored into employees’ regular pay rates for OT purposes? Non-discretionary bonuses are “based on meeting production, sales or other performance standards,” according to employment attorney Bennet Epstein,
For more help (and examples) calculating bonuses and overtime, check out Bonuses, OT and Taxes: Keys to Getting It Right.
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