Citigroup Affiliate Pays $1.9M in Back Wages After DOL Probe

Daily Labor Report® is the objective resource the nation’s foremost labor and employment professionals read and rely on, providing reliable, analytical coverage of top labor and employment...

By Ben Penn

Aug. 4 — Citigroup Technology Inc. paid 882 employees $1.9 million in back wages after a Labor Department investigation found the company misclassified them as exempt from overtime pay, the Wage and Hour Division announced Aug. 4.

The Tampa, Fla.-based company is a subsidiary of global bank Citigroup Inc. The investigation focused on the company's anti-money-laundering division.

The agency said CTI misapplied the Fair Labor Standards Act's job duties test. CTI classified analysts in that division as ineligible for overtime under the law's administrative duties test, but investigators found their job functions didn't qualify them for the exemption.

WHD Administrator David Weil said in a statement that the case should serve as an example for other businesses. “Employers must understand that simply paying an employee a salary does not necessarily mean the employee is not eligible for overtime.”

“The back wages and penalties paid in this case should cause other employers to take note, and to examine their pay practices,” Weil said. “The Wage and Hour division will continue its vigorous enforcement of the law, including the overtime regulations, to ensure that workers take home every penny they have rightfully earned.”

Converted to Overtime-Eligible

According to Citigroup's corporate headquarters, the vast majority of the 882 affected employees had already been converted to overtime-eligible prior to the department's involvement.

“We take our commitment to employees very seriously, and we conduct regular reviews to ensure compliance with applicable wage and hour laws,” Citigroup spokesman Kamran Mumtaz said in an Aug. 4 statement.

“As part of that process, Citi voluntarily reclassified certain jobs as overtime eligible, prior to the Department of Labor’s inquiry. We fully cooperated with the Department of Labor and are pleased to have resolved this matter,” the spokesman said.

DOL did find that 680 of the 882 employees had been reclassified as overtime-elitible in March 2015, just before the investigation began, agency spokesman Michael D'Aquino told Bloomberg BNA in an e-mail.

However, the company “did not pay any overtime due” for those employees until after the WHD investigation, he said. Those workers' job titles and duties didn't change in March 2015, only their overtime classification, D'Aquino said.

Citi Signs Deal to Prevent Repeated Violations

Following a 2015 WHD investigation that covered a period dating back to late 2013, the parties signed an agreement in March that requires CTI to review compliance for all its other analysts and notify the division if it finds additional back wages are owed.

In addition to nonpayment of overtime, the WHD said CTI did not keep accurate time-keeping records, another FLSA violation.

The employer also paid the WHD $97,680 as a civil penalty for repeat violations, the agency said.

Some Workers Affected by New Overtime Rule

The Wage and Hour Division is hoping to bolster workers' overtime protections through a final rule published in May and taking effect in December.

The controversial overtime regulation (RIN:1235-AA11) doubles the annual salary threshold below which workers are eligible for overtime pay to $47,476, from $23,660.

Many of the 882 Citi employees receiving back pay earned more than $47,476. But “clearly a good number” also fell below the new threshold, the DOL's D'Aquino said. Therefore, under the new rule, they would become automatically eligible for time-and-a-half regardless of their job duties.

Presently, workers may be exempted from overtime if they're paid at least $23,660 per year (or $455 per week) and perform administrative duties that show exercise of discretion and independent judgment. But this is not a bright-line test, leading to varying employer and court interpretations of when the duties standard is legally applied.

The DOL cited the need to remove this ambiguity when it issued the final regulation. The agency and other observers have argued that doubling the salary threshold removes the need for employers to assess job functions when determining overtime status for millions of new employees.

To contact the reporter on this story: Ben Penn in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.