McLane Co., Inc., has agreed to pay $1,559,316 in back wages to 570 current and former retail merchandising specialists after the Department of Labor accused the company of misclassifying the workers as exempt employees.

The Department of Labor said that McLane Co., a wholesale distributor of food and grocery products, erroneously regarded retail merchandising specialists as outside sales employees exempt from FLSA coverage. The department also accused the company of failing to keep records of hours worked.

The department says that the company cooperated with the investigation and has agreed to pay back wages in full.

The FLSA requires that covered employees be paid at least the federal minimum wage of $5.85 an hour for all hours worked, plus time and one-half their regular rates of pay for hours worked over 40 per week, unless otherwise exempt. The minimum wage will increase to $6.55 per hour effective July 24, 2008, and to $7.25 per hour effective July 24, 2009. Under the law, employers also must maintain accurate time and payroll records.

To qualify for the outside sales employee exemption, an employee's primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or the use of facilities for which a consideration will be paid by the client or customer; and the employee must be customarily and regularly engaged away from the employer's place or places of business.