Category Archives: FLSA

Overtime Pay Disputes

What Are Overtime Pay Disputes?

Overtime pay disputes are a specific type of wage and hour dispute. These are employment law disputes that involve the amount of wages an employee is paid, or the amount of hours they have worked. Wage/hour disputes are now the most common types of employment disputes, even more than discrimination or harassment claims.

Specifically, overtime pay disputes involve employees who work more than a regular work day or work week, which is usually 8 hours per day or 40 hours a week. Most laws require employers to pay their workers time and a half for overtime work.

What Are Some Examples of Overtime Pay Disputes?

Overtime pay disputes can involve a number of issues, such as:

  • The rate at which the worker is paid vs. the rate they are supposed to be paid
  • The number of hours worked
  • Whether or not the worker is entitled to overtime pay
  • Tax reporting and other administrative issues
  • Overtime exemptions that apply to certain employees

Most overtime pay disputes involve instances where the employer owes the worker back wages. This can happen if the employer failed to pay the worker their overtime hours, or if the hours were not billed as overtime. This can be caused by negligence, error, or even intentional conduct, such as harassment-related issues.

How Are Overtime Pay Disputes Resolved?

Resolution for overtime pay disputes may involve:

  • Discussions and clarifications with the company’s dispute resolution department
  • Agency investigations, especially if the dispute involves a federal issue such as discrimination
  • Mediation
  • Negotiations
  • Legal action in court

In some cases, overtime pay disputes can involve a class action lawsuit. This can happen if a large number of employees are all affected by the same pay policies. This may require extensive legal research and representation for the group.

Withholding Overtime Pay

What Are the Requirements for Overtime Pay?

Rules governing overtime pay are mostly covered in the Fair Labor Standards Act (FLSA). According to FLSA, employers must pay their employees overtime wages when they work over 40 hours in one week. Overtime wages can also be specified in an employment contract, so long as they conform to the minimum FLSA standards.

Also, under the act, employers must pay an overtime wage of 1 ½ times the amount of the employee’s hourly wage rate. So, if the employer is paid at a rate of $10/hour, they are entitled to be paid at 1 ½ times that rate. This amounts to $15/hour for every hour after they have completed 40 hours in one week. If, during the following week they work less than 40 hours, then they will not be entitled to overtime pay for that week.

What Are Overtime Exemptions?

The Fair Labor Standards Act contains many exemptions for certain employees who work in specified areas of commerce. This means that employers in these fields are exempt, or not required to pay overtime to their employees. Some commonly exempted jobs include certain retail positions, many jobs related to farming and agriculture, and certain sales positions. Check with an attorney to determine if you are exempt from FLSA overtime requirements.

What Is Considered a Violation of Overtime Wage Requirements?

In order to prove that an employer violated overtime rules, the employer must prove: 1) An employer-employee relationship actually existed; 2) they are not exempt from FLSA; and 3) the employer did in fact violated statutory rules.

Violations of overtime requirements can include:

  • Failure to pay overtime in general
  • Failure to pay the employee at the overtime rate (i.e., charging normal hourly rates for work done overtime)
  • Withholding overtime pay in order to coerce the employee to do something
  • Withholding overtime pay in retaliation against an employee who reported a wrongdoing

Employees can also violate overtime rules. For example, a common occurrence is when an employee falsifies their time sheets in order to collect overtime pay.

What Remedies Are Available for a Violation of Overtime Rules?

As a remedy, employees can usually obtain back pay if they are entitled to overtime pay but did not receive it as a result of an employer violation. Employees usually cannot immediately file a lawsuit against their employer. First, the employee will be required to file their claim with an administrative agency such as the Equal Employment Opportunity Commission (EEOC).

The agency will then launch an investigation into the incident and determine what the appropriate remedy is. In addition to back pay, the employer may also be required to adjust their policies according to overtime standards. Employees can only file a lawsuit if the agency’s remedy has been determined to be unsatisfactory.

Employees usually have a two-year time period (statute of limitations) in which to file their claim. If the employer has willfully withheld overtime pay, the statute of limitations for filing is extended to three years. After the statute of limitations has expired, the employee can no longer file a claim.

Are There Any Defenses to Overtime Violations?

The most commonly used defense is that the employee is exempt from overtime pay requirements under FLSA rules. Even if the employee is expecting overtime pay, they cannot collect overtime wages if they are subject to the FLSA exemption.

Some jurisdictions allow employers to claim a “good faith” defense. This means that in good faith, the employer honestly believed that the employee was only entitled to regular hourly wages. Courts will use a variety of factors to determine whether the employer was acting in good faith. The good faith defense is not available in all situations.

 

The “White Collar” Exemptions

The President finally take steps to update the FLSA’s “White-Collar” exemption regulations.

The federal Fair Labor Standards Act (the “FLSA”) generally requires that employees receive overtime premium pay calculated at 150% of their regular pay rate. The FLSA, however, exempts from this requirement employees who perform “executive,” “administrative,” or “professional” work. These exemptions are known as the “white-collar” exemptions.

The New Deal Congress that enacted the FLSA intended that the white-collar exemptions would be very narrow and would only cover high-level employees who were personally involved in actually running the business. One way of keeping the exemption from covering too many low and mid-level employees was to set a strict salary threshold that must be satisfied in order for an employee to even be considered an overtime exempt executive, administrator or professional. As the federal Department of Labor observed in 1940, the “most effective check on the validity of the claim for exemption is the payment of a salary commensurate with the importance supposedly accorded the duties in question.”

In 1975, federal regulations generally provided that an employee could not be covered by the white-collar exemptions unless his/her salary exceeded $250 per week.  As the Economic Policy Institute recently observed, had this $250 per week requirement merely kept pace with inflation, it would equal $970 per week – or $50,440 per year – in $2012.

Unfortunately, the white-collar’s exemption salary requirement has not kept pace with inflation. Today, the salary threshold stands at a mere $455 per week. That’s just $23,660 per year.

It seems absurd that an individual making only 23,660 per year could be the type of “executive,” “administrative,” or “professional” employee excluded from the Nation’s overtime laws. After all, the median household income in United States currently exceeds $51,000.

Earlier this year, President Obama issued a memorandum instructing the Department of Labor (“DOL”) to update the regulations pertaining to the white-collar exemptions. Why it took the Administration over five years to take the simple step is baffling. Regardless, the DOL now must go through the formal “rule making” process, which will take at least another year. Then, after the new rules are issued, companies surely will file lawsuits asserting that any new regulation exceeds the DOL rulemaking authority. This may cause even more delay.

If you believe that you have been misclassified as a white color worker and should be receiving overtime pay, please contact me to discuss your situation.