Failure to properly classify employees under the Fair Labor Standards Act can result in significant liability for employers, as a recent settlement illustrates.

Wal-Mart has agreed to pay almost $5.3 million in back wages and damages in a settlement with the U.S. Department of Labor announced May 1.

Wal-Mart had incorrectly classified more than 4,500 current and former vision center managers and asset protection coordinators as exempt under the FLSA.

As a result, Wal-Mart agreed to pay:

  • $2.4 million in unpaid overtime for hours the employees worked beyond 40 in a workweek;
  • Another $2.4 million in liquidated damages; and
  • $486,000 in civil penalties, because the violations were repeated or willful.

The DOL is not just targeting large employers like Walmart in its enforcement efforts. The same day the agency announced its settlement with Wal-Mart, it announced a $478,000 settlement with a Minnesota-based landscaping company that also misclassified workers.

Employers that wish to avoid a similar fate can find guidance on XpertHR, including: