The U.S. Department of Labor will require GTM Sportswear in Manhattan to pay 133 workers $97,762 in back wages as a result of an investigation by its wage and hour division. The investigation found violations of the Fair Labor Standards Act’s overtime and record-keeping provisions when inside sales representatives were found to be improperly classified as exempt from overtime requirements.
“One of the most common violations in the sales industry is improperly classifying workers as being exempt from overtime,” said Patricia Preston, the division’s district director in Kansas City, Mo. “The criteria for exemption from overtime are very specific to ensure workers are properly compensated for all hours worked.”
The investigation determined that GTM Sportswear failed to pay employees overtime compensation at time and one-half their regular rates of pay for hours worked beyond 40 in a week. Instead, employees were paid fixed salaries each week, without regard to the number of hours worked. Record-keeping violations were also cited during the investigation when the employer failed to keep time records for the employees improperly classified as exempt.
The violations affected employees from GTM Sportswear’s headquarters facility in Manhattan. GTM Sportswear customizes apparel with screen printing, embroidery and other personalization that is sold nationwide.
GTM President Dave Dreiling said the positions in question were largely for college-graduate-level individuals. “The understanding for all of our inside sales reps going in was that the fall would be really busy, and they’d work a lot of hours, and on average they would work about 43 hours per week,” Dreiling said. He said the decision to put them on salary was based on that. “Unbeknownst to us, the Department of Labor has some very specific and very unique rules for the compensation of inside sales reps,” Dreiling said
He said the back pay goes back three years, and added that GTM has worked with DOL to remedy the situation. He said the investigation started approximately in May.
The FLSA provides an exemption from both minimum wage and overtime pay requirements for individuals employed in bona fide executive, administrative, professional and outside sales positions, as well as certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week.