In an ironic twist, the United States Department of Labor (USDOL) has agreed to pay $7 million to settle claims that it failed to pay overtime to thousands of its own employees. The employees filed a grievance in 2006 and the case was in arbitration when it settled. The decade-old grievance accused the USDOL of failing to compensate misclassified employees overtime for hours worked in excess of 40. During the pendency of the case, workers who were classified as exempt under the Fair Labor Standards Act (FLSA) were moved back to hourly employees who were eligible for overtime.
While this settlement may be the cause of some satisfied grins on the employer side, it also highlights how difficult it can be to properly classify employees under the FLSA. Even the agency charged with enforcement can’t get it right!