LinkedIn's Labor Settlement

LinkedIn, the "World's Largest Professional Network", recently got caught by the Federal Labor Department for violating our countries standard wage laws. The professional social networking company will pay out more than 6 million dollars to current and former employees in New York, California, Illinois and Nebraska. The Labor Department stated that LinkedIn failed to fully compensate their workers for all hours worked and they violated the Fair Labor Standards Act: which says workers must be paid 7.25 plus overtime.

Although it is clear that this was just a complete accident on LinkedIn's part, it is a wonder how this could happen to such a company. According to the Labor Department LinkedIn has been described as 'eager' to work with them and fix this situation. But how could have this happened in the first place? Shannon Stubo, vice president of corporate communications, claims "This was a function of not having the right tools in place for a small subset of our sales force to track hours properly." I wonder what tools it was LinkedIn was missing that caused them to violate one of the most essential labor standards of the 19th century.

The Fair Labor Standards Act established in 1938 under President Franklin Roosevelt was what he called the most important piece of "New Deal" legislation. The standard would establish the forty-hour workweek, as well as a federal minimum wage and time-and-a-half for overtime.

It is hard to believe that a company who has made so many "Best Places to Work" list's for 2014 was found guilty for violating what would seem like the most basic labor standard. LinkedIn claims that this settlement was just a "technical error" and not in any way a "mischaracterization of employment status." Conveniently, LinkedIn claims that they had discovered and were in the process of reconciling this 'technical error' when they were contacted by the labor department.Of course, this is the depiction the professional social networking company will always attempt to portray in order to keep their reputation intact.

But no one seems to be placing any of the blame on LinkedIn; some sources citing that this confusion came about from the ambiguity of the Fair Labor Standards act. Apparently, under the Federal FLSA, some of their employees were exempt from overtime laws, but not under the conflicting state labor standards. The confusion comes from the separation of federal and state legislation: many state laws override federal depending on where the employee works. This set of fields makes sense when we consider the differences of local economies across the country. But it just goes to show that extremely large companies can overlook the most basic standards.

LinkedIn is just one example of how hard it can be for a large corporation to abide by such a wide range and variety of standards. A simple innocent mistake by one person in the company can lead to millions of dollars lost to stock holders. Such a simple standard should be easy to adhere to one would think; but due to a wide variation of standards in the labor subset, confusion can easily arise.