$934,000 Recovered in Unpaid Back Wages from Connecticut Employer

Thursday, February 10, 2011

Note:  Incorrect classification of employees under the FLSA has become one of the largest sources of large judgments against employers.  Employers should train their supervisors in this area to avoid such problems!

The U.S. Department of Labor has recovered a total of $934,551 in overtime back wages for 479 employees of UnitedHealthcare and $104,280 in civil money penalties.

UnitedHealthcare is the largest single health insurance carrier in the United States. This action is limited to the company's Hartford location, which specializes in the IT, finance, actuarial and underwriting operations for UnitedHealth Group Inc.

"Employers subject to the Fair Labor Standards Act's requirements, whether large or small, must ensure all of their workers are properly classified and receive the wages they are owed," said Secretary of Labor Hilda L. Solis. "Workers deserve to keep what they earn. It is simply unacceptable that a multi-billion dollar company misclassified its employees and failed to abide by some of the nation's most basic labor laws."

After conducting 90 employee interviews and reviewing time and payroll records for 21,000 employees, investigators determined that UnitedHealthcare incorrectly classified employees in several different occupational categories as administratively exempt from FLSA, thereby denying them overtime compensation for all hours worked over 40 in a week. The company also failed to include certain compensation for employment in workers' regular rates, on which time and one-half should have been paid. Additionally, recordkeeping violations were uncovered, as records of the number of hours worked were not properly maintained for those who had been misclassified as exempt.

The FLSA provides an exemption from both minimum wage and overtime pay for workers employed as bona fide administrative employees. To qualify for this exemption, an employee must be paid on a salary basis at a rate not less than $455 per week, must perform work directly related to the management or business operation of the employer, and must be responsible for exercising independent judgment or discretion with respect to matters of significance. In order for an exemption to apply, an employee's specific job duties and salary must meet all the requirements of the Labor Department's regulations.

The amount of civil money penalties assessed was based on multiple violations of the FLSA.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour as well as time and one-half their regular rates for every hour they work beyond 40 per week. The law also requires employers to maintain accurate records of employees' wages, hours and other conditions of employment, and prohibits employers from retaliating against employees who exercise their rights under the law.

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