In the settlement announced by the United States Labor Department on Monday, the California-based social networking company was directed to pay nearly $3.3 million in retroactive overtime wages and nearly $2.5 million in damages to 359 current and former employees, who, according to the Labor Department, were not properly paid for extra work between February 2012 and February 2014.
The labor department, during the course of its investigation, found that the company had violated provisions of the Fair Labor Standards Act, or FLSA, as it failed to record the total work hours put in by its employees in a number of different offices and compensate them accordingly. FLSA rules demand that non-exempt employees be paid a minimum hourly wage of $7.25 for all hours worked and one-and-half times their hourly rate for overtime work.
Shannon Stubo, vice president of corporate communications at LinkedIn, told Reuters that this was caused by an inadvertent technical error.
"This was a function of not having the right tools in place for some employees and their managers to track hours properly,” she said, adding that the company had made “every effort possible” to rectify the error and ensure that the affected employees were properly compensated.
In a statement released Monday, David Weil, administrator of the Wage and Hour Division at the labor department said LinkedIn had cooperated fully with investigators while Susana Blanco, district director for the division in San Francisco, said that the practice of off-the-clock work was “too common” in the U.S.
“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,” she said, in a press release from the department.
LinkedIn, which currently has over 300 million members, had, in its earnings statement released on July 31, reported $534 million in revenues -- an increase of 47 percent against $364 million in the second quarter of 2013.
In Monday trade, the company’s shares rose by 0.36 percent and closed at $202.50.