LinkedIn agreed to pay nearly $6 million is back overtime wages and damages to employees after a U.S. Department of Labor investigation found the company violated federal labor laws.
The Labor Department said in a statement released Monday that LinkedIn violated the Fair Labor Standards Act, and “failed to record, account and pay for hours worked in a work week.”
LinkedIn said it has already begun remedying the issue, and the lapse in wages “was a function of not having the right tools in place for a small subset of our sales force to track hours properly,” a LinkedIn spokesperson told ThinkProgress in a statement.
Federal law requires companies pay covered employees at least the minimum wage for up to 40 hours a week and time and a half for extra hours worked. LinkedIn agreed to pay the $3.3 million in back wages and $2.5 million for compensatory damages to 359 employees in Illinois, Nebraska, New York, and its headquarters in California.
LinkedIn’s brush with federal labor regulators is the latest blemish in the tech industry’s image as a worker’s utopia full of perks like onsite dry cleaning and free transportation to work.
Earlier this year, major tech companies including Apple, Google, Intel and Adobe had to pay $324 million to settle a lawsuit accusing the companies of wage-fixing. Tech employees sued the tech giants after the U.S. Department of Justice uncovered emails between top executives in which they agreed not to poach one another’s employees.
While tech jobs are largely synonymous with high-paying salaries and relaxed work environments, the lawsuit made it so that employees weren’t able to get competitive wage increases. Entry-level programmers tend to make at least $50,000 a year, with some coming in at $80,000, Business Insider reported. By conspiring not to hire each other’s employees, Apple, Google, Intel and Adobe also vowed to stall wages, which kept employees from making more money at another company.
The wage-fixing lawsuit also spotlighted Silicon Valley’s widening polarization between the tech industry and its surrounding communities. With the influx of start-ups and expansion of established tech companies, the Silicon Valley community is starting to lack economic diversity. The area’s median income is $90,000, and people who make at least $100,000 a year are twice as likely to live in Silicon Valley than any other part of the country, The Washington Post reported. Sky-high real estate prices have made the region unaffordable even for mid-level tech workers making astronomical sums by national standards.
Meanwhile, lower income residents are being forced to move out of the area due to rising living costs. A fifth of Silicon Valley’s residents make less than $40,000 a year, and most of the region’s expected employment growth is in jobs that make less than $50,000 a year — which isn’t enough to actually live in the area.