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Labor Department: Levi Straus misclassified employees, owes back wages

Bloomberg reports that the Department of Labor announced on Tuesday that San Francisco-based clothing manufacturer Levi Strauss & Co. will be paying around $1 million in back wages to 596 of its employees.

The announcement about Levi Strauss comes after a government investigation found that Levi Strauss misclassified some of its employers as being exempt from overtime when they really weren't. Among the misclassified workers were assistant store managers from newer stores. The announcement is part of a larger concentrated effort by the Labor Department to stop companies from misclassifying employees in order to avoid paying overtime wages.

The Labor Department's San Francisco district office announcement said that the company required its assistant managers to work off the clock until closing until late into the night, for early-morning openings, and during staffing shortages. The company reportedly failed to record all those hours in their payroll system.

Sources say the investigation is related to back wages for hours worked over a two-year period and that Levi Strauss has cooperated with the Labor Department's investigation.

Employee misclassification is not an uncommon problem. Because federal and state wage laws concerning employee classifications are often difficult to get a handle on, employers often struggle to correctly apply classifications. Nonexempt employees-those paid on an hourly wage-are entitled to one-and-one-half times their normal wage for every hour worked over 40 hours each week. Exempt employees can also be entitled to overtime wages if they fit into specific salary thresholds. Various other exceptions may allow an employee to be entitled to overtime wages.

Source: Bloomberg, "Levi Strauss cited for wage violations," Sam Hananel, 29 Mar 2011.

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