Sterling Jewelers, Inc., of Akron, Ohio, has agreed to pay $1.29 million in back wages to 16,820 current and former employees of its retail stores operating at 1,200 locations in 41 states.

The Department of Labor said the company, which operates under 14 retail names, including Kay Jewelers, failed to include incentive pay in the calculation of overtime and failed to pay employees for all hours worked, which employees had entered using the firm's electronic timekeeping system.

The department says that each of those violations contributed to workers being paid less than time and one-half their regular pay for hours worked over 40 in a single workweek as required by the Fair Labor Standards Act. The back wage payments cover the period from November 2, 2003 to February 25, 2006.

The department said Sterling voluntarily disclosed the violations to the department and worked cooperatively with the department to resolve the matter.