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April 21, 2005
Internal Audit Reveals Misclassifications at Principal

Principal Financial Group has paid $237,490 in back overtime wages to 53 salaried employees who were misclassified as exempt from the overtime requirements of the Fair Labor Standards Act (FLSA), according to the Department of Labor.

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The department says Principal Financial, based in Des Moines, Iowa, identified the misclassifications during a corporate-wide review to determine its status of compliance with the new FLSA Overtime Security regulations that became effective in August 2004.

The department's Wage and Hour Division investigated the company's pay practices covering a two-year period from November 2, 2002 to November 1, 2004. The department says the investigation confirmed the results of Principal Financial's internal review and supported the employer's recent re-classification of various positions to comply with requirements of the new regulations. After the company's review, certain employees who had not been paid overtime are now eligible for overtime.

"Prompted by the department's efforts to promote compliance with the new overtime security regulations, Principal Financial examined the exemption status of various employee positions," says Percella Maupins, district director for the Wage and Hour Des Moines office. "The company's internal audit identified some positions that were misclassified as exempt prior to the implementation of the new regulation. As a result, the company has now reclassified the employees and, most importantly, has gone back and properly compensated those workers."

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