Finance News & Insights

The ‘common’ Payroll mistake that cost this company $165-plus

Even if the DOL acknowledges a company made a minor, “common” mistake regarding overtime calculations, it doesn’t mean the agency will let that company off the hook.

And that’s a lesson Ide Management Group LLC learned the hard way.

What about bonuses, shift differentials?

According to a DOL investigation, the Indianapolis-based healthcare management company failed to include nondiscretionary bonuses and shift differential pay its overtime calculations. This oversight led to employees being paid less than they were legally owed under the FLSA.

It also let to a visit by the feds.

When everything was said and done, the company wound up agreeing to pay $165,379 in back wages to a total of 594 employees for miscalculating their overtime pay.

What about bonuses, shift differentials?

Following the agreement, the DOL said:

“Failing to include shift differentials and bonuses — such as those paid for attendance and retention — when computing an employee’s regular rate of pay is a common overtime violation.”

The DOL tends to go after the common FLSA mistakes it sees time and time again, so you can bet this issue is on its enforcement radar. What’s more, it’s an easy mistake to make. After all, time-strapped Payroll pros can easily forget to include non-regular payments in their overtime calculations.

That’s why you may want to get your payroll manager to hold some refresher training on calculating overtime correctly when things like bonuses and shift differentials are included.

Remember: Nonexempt workers must be paid one-and-a-half time their regular rate for all overtime work. To determine this rate accurately, employers must divide the total compensation for the week by the total number of hours worked.

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