Farmers Insurance Inc., from Los Angeles, will be paying $1.52 million in a settlement with 3,459 employees to cover the overtime back wages after having been investigated by the Wage and Hour Division of the U.S. Department of Labor.
The investigation showed that there had been federal Fair Labor Standards Act violations of the provisions for overtime and recordkeeping that were both sizable and systemic. According to the Department of Labor, these violations happened within eleven of the insurer’s call centers, which were located in Texas, Florida, Michigan, Kansas, Oregon, and Oklahoma.
Hilda L. Solis, the Secretary of Labor, said that it is a violation of the federal law when a company does not provide its employees with adequate compensation for work before or after a shift. She added that the Labor Department is aiming to make certain that employers respect that law so that employees have some protection against being exploited. This way, employers that do comply with the law aren’t facing a competitive disadvantage as a result of their compliance.
To perform the investigation, employees were interviewed, and the payroll and timekeeping systems of the company were reviewed. Through this process, the Labor Department’s investigators discovered that Farmers Insurance was not accounting for the work that employees were doing before their shifts began. The employees of that company would routinely work for an average of a half hour ahead of their shift; a time which was neither recorded nor compensated. Tasks performed included turning on their computers, logging onto the telephone system, singing into various computer programs to prepare themselves for their duties in the call center.
The Department of Labor said that the employees were owed for this time at a rate of half of their usual pay for any hours that exceeded 40 per week. Farmers Insurance has agreed to pay back wages to its employees and to comply with proper time keeping of all hours worked in the future.