In one of the nation’s largest wage recovery judgments, a Pennsylvania federal court awarded $35.8 million in overtime back wages and liquidated damages to 6,000 current and former workers employed by the operators of 15 residential skilled nursing, rehabilitation and assisted living facilities in western Pennsylvania that willfully denied them overtime pay.

The Trial

After a 13-day bench trial in the U.S. District Court for the Western District of Pennsylvania, the court issued a judgment in favor of the DOL and against 15 nursing facilities, their owner and the payroll office that the defendants used to oversee and implement their compensation practices.

How Did This Happen❓

It all started with an investigation by the DOL’s Wage and Hour Division. According to the DOL, their investigation uncovered the following FLSA violations:

1️⃣ Willfully failing to pay employees for all hours worked, including work done during meal breaks.

2️⃣ Failing to incorporate all promised compensation, including non-discretionary bonuses and shift differentials, when calculating overtime pay.

3️⃣ Avoiding paying overtime by incorrectly treating employees as exempt from the act’s overtime requirements.

4️⃣ Not keeping accurate records of hours employees worked and compensation due for those hours.

Apparently, the employer refused to resolve the violations administratively causing the DOL to file suit in federal court.

How Can Employers Avoid A Similar Fate❓

There are a few simple strategies employers can use to stay off the DOL’s radar.

1️⃣  Ensure Proper Overtime Calculation: Include all forms of compensation, such as non-discretionary bonuses and shift differentials, in the overtime calculation as required by the FLSA.

2️⃣ Avoid Misclassification: Regularly review employee classifications to ensure they meet the salary and duties tests for exemption from overtime under both federal and state laws.

3️⃣ Review Independent Contractor Classifications: Ensure that workers classified as independent contractors meet legal criteria and review compliance with both federal and stricter state rules.

4️⃣ Prepare for DOL Investigations: Always be ready to provide necessary records and cooperate with DOL investigations.

While there is no way to guarantee that an employer will not be the subject of a DOL wage and hour investigation, the foregoing are ways to mitigate the risk and hopefully prevent ending up in federal court.