Human Resources News & Insights

Cardinal FLSA sin costs employer $18.3M in overtime case

To terminate FLSA accusations against it brought on by the DOL, oil and gas giant Halliburton Co. will shell out $18.3M. Its mistake is always No. 1 on every list ever assembled of things employers should not do when employing salaried workers. 

Three examples of such lists can be found here, here and here.

The mistake in question: making all salaried employees exempt from overtime, without considering their income or whether they pass the duties tests.

According to a report by Reuters, the DOL said Halliburton automatically exempted all salaried workers from overtime without considering their pay or duties.

That’s a massive no-no. Still, it’s one that the DOL finds pretty often.

This mistake was caught as part of an ongoing multi-year compliance initiative by the DOL to investigate major players in the oil and gas industry for violations of the FLSA.

According to a release by the DOL, the agency’s investigators found that Halliburton incorrectly categorized employees in 28 job positions as exempt from overtime.

Some of the positions incorrectly classified as exempt:

  • field service reps
  • pipe recovery specialists
  • drilling tech advisors
  • perforating specialists, and
  • reliability tech specialists.

This misclassification resulted in 1,016 employees not receiving the overtime compensation the FLSA said they were entitled to.

On top of that, Halliburton was also accused of failing to keep accurate records of the hours worked by employees in those misclassified positions. That is often the case when employers misclassify workers as exempt. After all, they feel there’s no need to track hours for exempt workers. But that’s a move that comes back to haunt employers in situations like this.

So what now?

Following the DOL’s investigation, Halliburton agreed to pay roughly $18.3M in back wages to those 1,016 workers. That averages out to about $18,000 per affected employee.

Halliburton claims it discovered workers had been misclassified during an independent audit and, as a result, had already started paying those workers overtime in line with FLSA regulations, according to the Reuters’ report.

Here’s what DOL Secretary Thomas Perez had to say about the case in the agency’s release:

“The Department of Labor takes very seriously its responsibility to ensure workers receive the wages they have earned. This settlement will put millions of dollars where they belong — in the pockets of hardworking people and their families. Employers who don’t pay their employees the wages they have earned don’t just hurt their workers, they undercut employers who play by the rules. That’s why we work every day to help level the playing field.”

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