Costa Solutions LLC, a warehouse service provider to the HEB grocery chain, has agreed to pay $146,459 in overtime back wages to 63 current and former employees after an investigation by the U.S. Department of Labor’s Wage and Hour Division.

The investigation, conducted by the division’s San Antonio District Office, found that Costa Solutions violated the overtime provisions of the Fair Labor Standards Act by failing to pay overtime to a group of hourly supervisors and assistant supervisors, many of whom worked well beyond 40 hours in a workweek. The company also failed to include all earnings when calculating employees’ overtime rates. “Employers are responsible for knowing and applying the federal labor laws that govern their businesses,” said Cynthia Watson, regional administrator for the Wage and Hour Division in the Southwest region. “Failure to pay legally required overtime pay not only harms workers and their families, but puts companies who follow the law at a competitive disadvantage.”

Costa Solutions agreed to comply with all applicable FLSA provisions by correctly calculating and paying overtime for all non-exempt employees and ensuring that all legal requirements are met before considering employees exempt from overtime. The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour. Workers who are not employed in agriculture and not otherwise exempt from overtime compensation are entitled to time and one-half their regular rates of pay for every hour they work beyond 40 per week. The law also requires employers to maintain accurate records of employees’ wages, hours and other conditions of employment, and it prohibits employers from retaliating against employees who exercise their rights under the law.

Misclassifying employees as exempt can lead to financial troubles due to the failure to pay overtime.  In the case of Costa Solutions, LLC., the company was not paying supervisors and assistant supervisors required overtime.  While this case did not focus on proper classification of employees, there are a lot of employers who mistakenly believe that simply because someone is labeled a supervisor they are exempt.  As is made amply clear by the damages assigned by the DOL, these supervisors were considered non-exempt employees and entitled to overtime pay.

In addition to federal law, employers must be cognizant of state and other local laws that affect overtime pay.  For example, in California and Nevada, employers are required to pay non-exempt employees overtime when they work more than eight hours in a single day.  This differs from the federal scheme which only requires overtime when employees work in excess of forty hours in a week.  There are also some states in which strict guidelines are provided in terms of how the hourly rate is to be calculated.

Recommendations:

  • Properly classify exempt and non-exempt employees (webinar available at www.hhrwebinars.com)FLSA Fact Sheet.

  • Review employee handbooks to ensure proper description of overtime as well as exempt and non-exempt classifications

  • Make sure all managers are properly trained on these policies

  • Review payroll practices to ensure that all paystubs and methods for calculating pay are in compliance with federal and state laws.

We hope you found this information of value. Please do not hesitate to contact Holman HR with any questions you may have.