labor lawAdivision of labor law center

A Houston mortgage firm has paid more than$1.85 million in back wages after an investigation by the U.S. Department of Labor’s Wage and Hour Division.

Allied Home Mortgage Corp. has paid $1,855,518 to 588 branch managers, loan officers loan processors and clerks. The payout averages $3,156 per employee. Investigators determined that the employees, who were performing inside sales work, had not been properly paid.

“Among this department’s highest priorities is ensuring that workers are paid all the wages they have earned,” said Secretary of Labor Elaine L. Chao. “In this case, we have recovered almost $2 million in back wages for these workers, and their employer is on notice to properly compensate for overtime in the future.”

Over a period of more than two years, Allied Home Mortgage failed to pay overtime to commission-only employees.

Allied Home Mortgage is one of the largest privately held mortagege brokers in the country, with 700 offices in 49 states, plus Guam and the Virgin Islands. The company cooperated with investigators by conducting a self-audit and has agreed to comply with labor laws in the future.

The company has made written mortgages worth more than $15 billion, and writes about 12,000 new mortgages each month.

The Fair Labor Standards Act of 1938, or FLSA, requires that employees who work overtime be paid 1.5 times their usual rate for every hour in excess of 40 per week. When earnings are on a commission basis, the employer must pay the employee an overtime premium for each hour worked.

If a worker earns $500 in commission during a 50-hour week, he has averaged $10 per hour. He is entitled to an overtime premium of an additional $5 per hour for 10 hours, or $50 total, from the employer for the week.

In short, under this law, all commissions must be included in the employee’s average hourly rate. The employee must be paid 1.5 times the average hourly rate, for each hour in excess of 40 per week.

Under the FLSA, employees may be paid on a piece-rate, per hour, or salaried basis, but are still entitled to overtime payments. The FLSA does provide exceptions to the overtime provision for bona fide executive, administrative, professional employees, and for outside sales people. The exception does not cover inside sales people, such as those employed by Allied Home Mortgage.

The FLSA is the same law that requires employees be paid the federal minimum wage, which is currently $5.85 per hour.

A number of other prominent companies have had similar violations of the FLSA this year. Rather than face a federal suit, Wal-Mart agreed to pay $33 million in unpaid overtime wages to nearly 86,700 workers nationwide for violations of overtime laws.

That was just one of many cases of minimum wage and overtime violations that were revealed by the U.S. Department of Labor’s Wage and Hour Division. The company had wrongly declared some of its workers “salary-exempt,” even though they were entitled to pay for overtime. The company also admitted in some cases that it determined overtime pay according to the worker’s base hourly rate, not taking into account incentives and bonuses, as the law requires.

Some employers have the mistaken idea that all salaried workers are exempt from overtime. This is not true, except in cases of legitimate administrative, professional, executive, and outside sales jobs. They must meet certain job duty and pay guidelines to be overtime-exempt.

According to the Fair Labor Standard Act, most workers must get the minimum wage, which is now $5.85 an hour. They must also receive overtime pay – 1.5 times their regular rate – for every hour over 40 hours.

A total of 107 subcontractors of KBR, Inc. based in Virginia, were required by the Labor Department to pay roughly $1.5 million in back pay and benefits. The case applied to as many as 2,600 workers who were involved in Hurricane Katrina recovery. They were construction workers assigned to repairs at the Naval construction Battalion Center in Gulfport, Mississippi, and the Naval Air Station/Joint Reserve Base in Belle Chasse, Louisiana.

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