Please, please keep track of your employees' hours. You don't want to suffer the same fate as LinkedIn, which has agreed to pay $6 million in unpaid overtime and damages to employees in California, Illinois, Nebraska, and New York.
The settlement with the U.S. Department of Labor came as the result of LinkedIn's failure to adequately track its hourly workers' overtime and pay them for that overtime.
What Happened at LinkedIn?
It's not entirely clear from the Department of Labor press release (or either Reuters or AP stories) what exactly happened at LinkedIn. We do know that hourly ("non-exempt") employees -- who must be paid 1.5 times their hourly wage for work beyond 40 hours in a week -- were performing "off the clock" work for LinkedIn and not getting paid for it.
Still, we don't know whether this was one of those "unofficial" policies or simply something that LinkedIn genuinely overlooked. A LinkedIn spokesperson said, "This was a function of not having the right tools in place for a small subset of our sales force to track hours properly" -- but that statement goes a long way toward not saying anything.
Whatever happened, LinkedIn was certainly contrite, cooperating with investigators and offering to train non-exempt employees as part of the settlement, Reuters reports. At least LinkedIn had the wherewithal not to fight the DOL on this one. With the company planning to lease all 26 stories of a new office tower in San Francisco, bad press is not something it wants, especially at a time when housing rights advocates are criticizing the effect the influx of tech businesses has on low-income residents of the Bay Area.
GCs, This Is Your Show
As general counsel, it goes without saying that the buck stops with you in terms of wage and hour violations. There's no reason why any company that can afford an in-house attorney can't also afford a timekeeping system.
But when LinkedIn's Shannon Stubo talked about "the right tools," she probably didn't mean a punch-clock. Managers have know that "nudge, wink" policies to work off the clock are not OK, and that any savings that might be had as a result of keeping payroll low can be easily undercut by DOL fines. Remember that in LinkedIn's case, it didn't just have to pay the back wages, but also penalties on top of those.
It's also not OK to creatively classify employees. You may recall last year, the San Francisco Giants had to pay $545,000 in back wages and damages, according to The Associated Press. You should be ensuring that any employee classified as "exempt" really should be exempt from overtime pay. These rules get especially tricky when it comes to computer and outside sales employees (possibly one of the issues that LinkedIn faced).
Remember: No matter how much the bottom line is affected by paying employees what they're owed, the damage inflicted by a DOL lawsuit is still worse.
- Guide to the FLSA (U.S. Department of Labor)
- 10 Big Overtime Pay Violators (CNN Money)
- Rite Aid Settlement: A Lesson in FLSA Overtime Laws (FindLaw's In House)
- More Workers Suing Employers for Wage and Hour Claims (FindLaw's In House)