Security Credit Systems Inc. in Buffalo has agreed to pay $14,500 to 63 employees to resolve complaints of unpaid overtime, the U.S. Labor Department confirmed Wednesday.
The company, a collection agency on Niagara Street, has agreed to pay the amount to cover unpaid overtime during a two-year period beginning in January 1997, officials said.
"This company did quickly come into compliance," said Michael Fitzgerald, assistant director of the Labor Department's Wage and Hour Division in Buffalo. "They cooperated with us during the course of the investigation."
The repayment agreement, an average of $230 per person, averts potential court action against the company, he said.
An employee said workers will receive checks for back pay on Friday. The agreement requires that payment be complete by Saturday, Fitzgerald said.
Unpaid overtime arose when the company required workers to put in extra hours in exchange for a paid holiday the following week, he said. Under the Fair Labor Standards Act, companies must pay time-and-a-half for hours worked beyond 40 hours in a seven-day week.
"It was an error we had made and corrected -- it was an innocent mistake," said James Schmit, attorney for Security Credit. Company officers referred questions to Schmit.
The company permitted some workers to put in extra hours during one week and take a day off the following week with pay, he said. "They thought they were doing the right thing" because employees requested the time off but didn't want to miss a day's pay, Schmit said. An employee said computer problems also contributed to the unpaid overtime. Workers were sent home early one week because of a system outage, then made up the lost time in a different week.
Schmit said that a computer outage may have been among the unpaid overtime incidents. The company's aim was to avoid giving workers a check for less than a full week, he said.
The employee said the company concentrates on collecting store credit accounts and student loans.
The case follows an $800,000 settlement of overtime by the collection company Great Lakes Credit Bureau Inc. in 1997. Publicity over that settlement has made collection workers aware of overtime requirements and spurred complaints, Fitzgerald said.