PERSONNEL MATTERS: Beware shorting workers on new overtime rules

WASHINGTON (April 27, 2016) — A U.S. Department of Labor (DOL) order that a human resources outsource provider pay $1 million in back wages — which comes shortly before expected new overtime regulations — shows no one is immune from an investigation by the agency, says an expert.

Last week's announcement by the DOL's wage and hour division that San Leandro, Calif.-based TriNet Human Resources Corp. must pay the million dollars comes just before the DOL's expected announcement in May of a final overtime rule.

TriNet said it disagreed with the DOL's assessment.

The DOL said TriNet must pay the $1 million for failing to pay time-and-a-half to 267 employees who worked more than 40 hours per week.

As a result, said the DOL, the company will pay back wages and damages to workers in amounts ranging from a few hundred dollars to more than $13,000 per worker. The division also assessed $58,000 in civil penalties for the violations.

In 2012, the company paid $328,000 in back wages and damages after the division found similar violations, according to the DOL.

“TriNet falsely believed that raising an employee's salary exempted them from receiving overtime pay,” said Susana Blanco, the division's wage and hour director in San Francisco, in a statement, “Hopefully, the company will now pay better attention to the rules going forward and pay its employees the wages they earned.”

TriNet said in a statement it is “fully committed to compliance with all of its obligations as an employer.” The company voluntarily cooperated with the DOL in a review of the overtime exempt classification of a job position at the firm.

“The DOL ultimately disagreed with our assessment that the duties in this newly-created position included a sufficient exercise of independent judgment and discretion for the employees to be exempt,” the firm continued. “The salaries of the employees at issue were increased commensurate with the employees' change in responsibilities, not for the purpose of contending they were exempt.

“TriNet voluntarily agreed with the DOL to compensate the employees for their previous work without any admission of liability. We expect this matter to be fully resolved this quarter.”

“The case shows that no employer is immune from a DOL investigation and significant liability if they don't handle their exemptions correctly,” said Robin E. Shea, a partner at Constangy, Brooks, Smith & Prophete L.L.P. in Winston-Salem, N.C. “It is likely to get even worse after the overtime rule is issued,” she said.

TriNet provides services for small and medium-sized businesses such as payroll processing, human capital consulting, employment law compliance and employee benefits, including health insurance, retirement plans and workers compensation insurance, according to its website.

Observers expect a final overtime rule to be issued by the DOL next month. In July 2015, the DOL announced a proposed rule that it said would extend overtime protections to nearly 5 million white collar workers within the first year of its implementation.

The DOL said failure to update the overtime regulations has left an exception to overtime eligibility that applies to workers earning as little as $23,660 per year, when in fact it was originally meant for highly compensated executive, administrative, and professional employees.

The proposed rule was in response to a presidential memorandum signed by President Barack Obama on March 13, 2014, that directed the department to update the regulations defining which white collar workers are protected by the Fair Labor Stand Act's minimum wage and overtime standards.

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This report appeared on the website of Business Insurance magazine, a Chicago-based sister publication of Tire Business.