Unpaid Overtime: Employer Pays $293K in Back Wages – Plus $24K Fine

A residential construction company in Idaho learned the hard way that unpaid overtime adds up quickly – in this case, totaling $293,698 in back wages. 

What started as overtime missteps soon escalated when a federal investigation looked into the company’s wage-and-hour compliance.

Unpaid Overtime Violations Affect 56 Employees

An investigation by the Department of Labor’s Wage and Hour Division (WHD) determined that Speedy’s Framing LLC failed to pay overtime premiums to dozens of employees in violation of the Fair Labor Standards Act (FLSA).

Under the FLSA, nonexempt employees must receive overtime pay at 1.5 times their regular rate for hours worked over 40 in a workweek.  

In this case, the workers were paid straight time for hours worked in excess of 40 rather than the federally mandated overtime premium, WHD found.

On top of the overtime violations, the employer failed to pay travel time to one foreman who drove the employer’s vehicles between the facility and worksites, according to investigators. This resulted in additional unpaid overtime. 

Travel time is a common compliance pitfall in mobile workforces. Driving company vehicles or traveling between job sites during the workday can count as compensable hours.

“The U.S. Department of Labor is determined to hold employers accountable, particularly when they deliberately attempt to evade the law by denying workers overtime pay,” said Katherine Walum, WHD District Director in Portland, Oregon. “Federal law protects workers’ rights to be paid their full, earned wages. We encourage employers to contact us for compliance assistance so they can prevent violations.” 

Speedy’s Framing agreed to pay $293,698 in back wages to 56 employees, with payouts ranging from $90 to $32,047. The company also paid a $24,795 civil penalty and agreed to comply with FLSA overtime and recordkeeping rules going forward.

HR Takeaways: Where Employers Go Wrong on Overtime

This case points to several overtime compliance areas employers should review.

• Verify timekeeping for foremen and crew leads. Employers sometimes assume supervisory roles are exempt. If an employee doesn’t meet the exemption tests under the FLSA, all hours worked must be tracked and paid.
• Review payroll and timekeeping for compensable travel time. Driving company vehicles or traveling between job sites during the workday can be compensable under FLSA. Ensure payroll systems capture these hours accurately to prevent unpaid overtime.
• Audit how overtime is calculated. Straight-time payments for hours over 40 are a common payroll configuration error. HR should confirm that the payroll system automatically applies the 1.5 overtime premium to all nonexempt employees.
• Conduct periodic wage-and-hour audits. Construction companies with mobile crews face elevated risk because work occurs across multiple sites and travel is frequent.

HR technology can also help prevent time-tracking errors that lead to unpaid overtime. For example, one construction firm replaced paper time cards with a digital workforce platform that tracks hours through a mobile app and geofencing, significantly reducing payroll errors and compliance risks. Read more: HR Tech Case Study: How a California Employer Solved Payroll Problems.