Employer's Liability for Overtime Pay

The Fair Labor Standards Act inevitably provides a test of the employer's record keeping system. It is easy to be lulled into a sense of complacency until a challenge occurs, and record-keeping deficiencies could create problems.

What does the law require?

The employer must pay the mandated minimum wage. This is usually not as much a problem as overtime pay. One and one-half times the employee's straight time must be paid for all hours worked in excess of 40 per week.

Under the law, an employer does not have to pay overtime if an employee (1) is paid a regular salary regardless of how many hours worked each week, and (2) has a professional, executive or administrative position. Most problems arise in defining whether an employee is in an administrative position and thereby exempt. However, the regulations are very old and the test for making this determination is weighted in favor of the employee.

Please note that by convention, practice, or collective bargaining agreement, employers often pay overtime for hours worked in excess of eight per day. Except where required by the labor contract, these payments are not required by law.

While the burden of proof is upon the employee or governmental agency bringing a complaint, the realities of the situation are that the employer's records usually are the only ones available. The employer is required to maintain records, and the employer is often required, in effect to prove that it did not violate the statute.

How does overtime inquiry begin?

Usually overtime inquiries commence in one of the following ways:

  1. An employee or former employee makes a complaint.
  2. A follow-up investigation of an employer previously found not to be in compliance.
  3. Investigation of an industry where experience suggests a high potential for violations.
  4. Spot checks of industries as part of a general enforcement program.

Investigation of individual complaints often subjects the employer to a comprehensive review of his entire payroll records and practices.

Penalties for violations are severe!

The employee can sue in civil action. If successful, he or she is entitled to claim double damages as liquidated damages, and awards of attorney fees in addition are possible. The Secretary of Labor may bring an action with the same result, i.e. double damages and attorney fees. An injunction may be granted, prohibiting the practice of which complained. Criminal sanctions may be brought against the employer, including key officers.

If the employer's records or practices cannot stand scrutiny, corrective action should be begun at once.

Remember, many of your salaried employees, if they are non-supervisory, such as clerical and secretarial staff, are covered by these provisions of the law, in addition to your hourly paid personnel. Each situation is unique and our staff of legal professionals are available to provide more specific information or individual advices.

For more information contact William Boznos, one of the experienced lawyers available to serve your legal needs.