Collection Agency Sued by Labor Department Over Overtime Pay

A debt collection agency in Buffalo, N.Y. has been sued by the U.S. Department of Labor on behalf of 116 employees over what the government agency claims are violations of the overtime and record keeping provisions of the federal Fair Labor Standards Act (FLSA).

The Labor Department announced this week that it had filed a civil lawsuit in the U.S. District Court for the Western District of New York against Security Credit Systems, Inc., a collection agency specializing in student loan, healthcare, and financial collections. The suit is seeking the payment of back wages owed to employees in addition to damages.

The lawsuit alleges that Security Credit, and its owner Angelo Travale, required the 116 employees to work more than 40 hours per week but did not compensate the workers as required by law for overtime work at a rate of one and one-half times regular hourly pay. Additionally, Labor claims that the company did not keep accurate records of time worked by employees.

Labor said that it believes Security Credit had failed to pay its workers for overtime since April 2, 2005.

The suit was the result of an investigation by the Buffalo District Office of the Wage and Hour Division. John Chavez, a spokesman in the Buffalo office, told insideARM that Labor never comments on how investigations are started to protect those involved, including potential victims. All 116 employees are named in the lawsuit, however.

"Security Credit believes it is and has been fully compliant with the wage/hour laws and will vigorously defend any allegations by former, disgruntled employees to the contrary," the company said in a statement issued through its attorney, Jim Schmit of Damon & Morey LLP in Buffalo. Schmit confirmed this morning that the company was aware that an investigation had taken place, but noted that the company hadn't yet seen a copy of the complaint.

Chavez said that most wage and overtime cases are settled administratively. “After an investigation, the department will present the findings to the company and they typically comply and pay back wages to employees,” he said. “In this case, the company obviously did not agree with the findings of the investigation and a lawsuit was necessary.”

In addition to the payment of back wages and damages, the lawsuit is asking the court to “permanently enjoin the defendants from future violations of the law.”