September 2016

The Department of Labor recently paid $7 million to settle claims that it failed to pay DOL employees overtime for time they were “suffered or permitted to work,” dating back to 2006. The DOL is the government agency that enforces the FLSA’s requirements that employers pay minimum wage and overtime based on “hours worked.” Many private employers have been the target of stepped up efforts by the DOL in the form of audits and lawsuits in recent years. If misery loves company, however, the DOL has been accused of doing exactly the same thing that it regularly accuses employers of doing. The size of the settlement is no different than what many employers in the private sector have had to pay (and more) to resolve these sorts of claims, which typically are brought as class actions.

The settlement comes shortly before the DOL’s new rule on minimum salaries for white collar overtime exemptions is scheduled to take effect, on December 1, 2016. There was a considerable uptick in wage/hour lawsuits the last time the overtime rules were changed, and many are anticipating a similar surge in the wake of this new rule. Employees who are reclassified as non-exempt under this rule may be used to responding to emails or performing other work outside of regular hours and, as the DOL found out, allowing employees to work off the clock can be a costly mistake.

Speaking of the new DOL Overtime Regulations, they are being challenged in court as well as in the U.S. Congress. Twenty-one states have joined together as plaintiffs in a federal lawsuit in an attempt to block the rule. Interestingly, the lawsuit was brought in the U.S. District Court in Texas, “Sherman Division.” In addition to this lawsuit, the U.S. House of Representatives just passed legislation to postpone the effective date of the rule by 6 months. However, President Obama has promised to veto the bill which does not likely have enough support to override his veto. We will be paying close attention to these developments; however, employers are well advised to continue to plan on implementing any changes necessitated by the new rule, unless and until it is blocked in court or by the legislature.