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8/5/2014
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LinkedIn Pays $6M For Overtime Wages Violation

Department of Labor investigation found LinkedIn failed to properly track pay records and compensate workers for overtime.

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Professional social networking company LinkedIn paid nearly $6 million to 359 current and former employees after an investigation found that it failed to properly compensate workers for overtime, according to the Department of Labor.

LinkedIn violated overtime and record-keeping provisions of the Fair Labor Standards Act, the Department of Labor said, which entitles nonexempt workers to the federal minimum wage plus time-and-a-half overtime pay after working 40 hours a week. The FLSA also requires employers to keep employee time and pay records.

LinkedIn failed to record, account, and pay for all hours worked in a work week at company branches in California, Illinois, Nebraska, and New York between 2012 and 2014, the Department of Labor said. The company will pay $3,346,195 in overtime back wages and $2,509,646 in liquidated damages.

In addition to paying back wages and liquidated damages, LinkedIn agreed to a set of policy updates to ensure compliance in the future.

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The social network vowed to provide training and distribute its policy prohibiting off-the-clock work to all nonexempt employees and their managers; meet with managers of affected employees to remind them that overtime work must be recorded and paid for; and remind employees of LinkedIn's policy prohibiting retaliation against any employee who raises concerns about workplace issues.

" 'Off the clock' hours are all too common for the American worker. This practice harms workers, denies them the wages they have rightfully earned, and takes away time with families," said Susana Blanco, district director for the Department of Labor's San Francisco division, in a statement. "We urge all employers, large and small, to review their pay practices to ensure employees know their basic workplace rights and that the commitment to compliance works through all levels of the organization."

A LinkedIn spokeswoman said the issue stemmed from "not having the right tools in place for a small subset of our sales force to track hours properly," and that the company had already began to fix the problem before the Department of Labor contacted it. The settlement was paid in the second quarter, LinkedIn said.

"This company has shown a great deal of integrity by fully cooperating with investigators and stepping up to the plate without hesitation to help make workers whole," said David Weil, administrator of the Wage and Hour Division. "We are particularly pleased that LinkedIn also has committed to take positive and practical steps towards securing future compliance."

Despite the $6 million payout, LinkedIn exceeded analysts' second-quarter expectations by $23 million, reporting $534 million in revenue. Sixty percent of its Q2 revenue came from talent solutions -- programs and tools it sells to help recruiters find employees -- while another 20% came from premium subscriptions.

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Kristin Burnham currently serves as InformationWeek.com's Senior Editor, covering social media, social business, IT leadership and IT careers. Prior to joining InformationWeek in July 2013, she served in a number of roles at CIO magazine and CIO.com, most recently as senior ... View Full Bio

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TerryB
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TerryB,
User Rank: Ninja
8/5/2014 | 12:30:01 PM
They have non exempt workers?
Amazed at number involved in this. You would not think they would not need many non exempt people, period.

I loved the "sales force" comment. Just how many sales people do you need to send spam type emails trying to get you to upgrade your account? Must be customer service type people, which you think would have set schedules and not have overtime problem.

Sounds like a wonderfully managed company.
progman2000
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progman2000,
User Rank: Ninja
8/5/2014 | 12:44:51 PM
Re: They have non exempt workers?
$3.3 million over a couple of years doesn't sound all too awful to me, I'll give them the benefit of the doubt that they had screwed up payroll practices that they're addressing.  I've found my last 2 jobs from LinkedIn and think they're pretty solid.  There are certainly other social media networks I'd hate on first before LI.
TerryB
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TerryB,
User Rank: Ninja
8/5/2014 | 12:55:22 PM
Re: They have non exempt workers?
I think "hate on" is a little strong. My point is you don't associate these web based social media companies with non exempt workers, you would think they are mostly software developers and mgmt. Not like they have an outside sales force making cold calls on your company. And those people are rarely non exempt either.

When I think non exempt, I think shop floor, A/P clerks, etc. Why would Linked In need any of that? That is source of my comment on mgmt. Sounds like someone is building an empire. A New Age product with old school implementation of the business.
Lorna Garey
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Lorna Garey,
User Rank: Author
8/5/2014 | 1:38:29 PM
Re: They have non exempt workers?
That was my very first thought also, what nonexempt roles could LinkedIn have? I suppose facilities, though you'd think they'd contract that sort of thing.
progman2000
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progman2000,
User Rank: Ninja
8/6/2014 | 6:54:07 AM
Re: They have non exempt workers?
Yeah thats a good point, I'm ntot sure what they would have N/E employees for.  Sounds like someone is following the Walmart business model...
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