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Levi’s to Pay $1 Million in Back Wages

Department of Labor found that the company misclassified several groups of workers.

WASHINGTON — Levi Strauss & Co. has agreed to pay more than $1 million in overtime back wages to 596 employees after the U.S. Department of Labor turned up wage and hour violations.

This story first appeared in the March 30, 2011 issue of WWD.  Subscribe Today.

The Labor Department Wage & Hour division’s San Francisco district office said it conducted a two-year investigation and found that Levi’s misclassified several groups of workers in the company’s U.S. stores, including assistant store managers at newly acquired stores, exempting them from overtime. The agency said Levi’s failed to record all hours employees worked in its payroll system.

“Instead, the misclassified assistant store managers were required to work off-the-clock during late-night closings, early morning openings and staffing shortages,” the agency said.

In addition to the assistant store managers, several administrative employees working at the company’s headquarters were also misclassified as exempt from the Fair Labor Standards Act and owed overtime, according to the Labor Department.

As part of the agreement with the DOL, Levi’s has agreed to pay the back wages and made a commitment to upgrade its time and attendance system.

Employers are required to keep accurate records of all hours worked by employees who are covered by the FLSA. The law provides an exemption from minimum wage and overtime pay for workers employed as bona fide executives, administrative, professional and outside sales employees, as well as computer employees. These employees must meet certain tests in the law regarding their job duties.

“As soon as the Department of Labor contacted us, we worked cooperatively with them to review the data and address questions that were identified,” said a Levi’s spokeswoman. “The federal rules governing the employee classification process are complex and it’s common for companies to have issues with misclassification.”

Labor Secretary Hilda Solis said, “Misclassifications of employees has serious and adverse consequences for employees, as well as for corporations.”