Common Overtime Mistakes
We have found that these are the most common overtime mistakes that Employers make and deprive Employees of overtime compensation under the existing wage and hour laws.
- An Employee’s Fancy Job Title does not make them exempt:
The courts will focus primarily on the employee’s actual job duties in order to determine whether they are exempt. It doesn’t matter if the employee is called a manager, when the employee does nothing different than the employees they are “managing”
- Just because an Employee is Salaried, doesn’t mean that they are exempt
An employee must be paid a salary and must also past the duties test for a particular exemption in order to be considered exempt. For example, if a person is a dishwasher, a cook, or a landscaper, they are not exempt regardless of their salary
- Misclassification of Employees
Some employers know that the employee should receive overtime, but make the decision to classify them as exempt since: (a) the employee may never find out; and/or (b) the cost of having to pay unpaid overtime fees and attorney costs, if discovered, is cheaper than doing it the right way. Being misclassified and not getting paid overtime may result in the loss thousands of dollars in unpaid overtime.
- Making Employees work off the Clock
Employers may tell workers to clock out and finish their work, or may have employees work before their shift begins or attend a pre-shift meeting. Employers frequently fail to consider this additional time worked as “hours worked.” This practice enables employers to pay less overtime pay than what the employees are entitled to receive.
- Refusing to pay overtime that wasn’t Pre-approved
If an employer know or has reason to know that an employee is working overtime, the overtime must be paid whether or not the employer approves it. The employer cannot get the benefit of the employee’s work without paying for it.
- Assuming That if an Employee Quits or Gets Fired, the Employee isn’t Entitled To Receive His or Her Final Paycheck Currently
If an employee quits or gets fired, and doesn’t receive their final paycheck, the employee can pursue lost wages under the FLSA.
- Paying an Employee “Straight Time” Rates for Overtime Work
The FLSA requires employers to pay time and one-half for overtime. For example, if an employee normally makes $8 an hour, they must be paid $12 an hour for overtime.
- Automatic Lunch, Break, and Other Deductions
Employers frequently make automatic punch and lunch deductions to employees’ time cards whether if the employee worked early, stayed late, or worked through lunch. These deductions result in hundreds of unpaid hours per employee each year. Employers can’t avoid the obligation to keep accurate time at the expense of the employee.
- Compensatory Time is not Allowed in the Private Sector
Employers regularly tell employees they get compensatory time off at some later point if they work more than 40 hours in a workweek. For example, if an employee works 55 hour, the employer will say that they will get an extra 15 hours off instead of being paid the overtime. Employees subjected to this practice of “banking hours” typically lose thousands of dollars a year. The most troubling part, however, is that most employers do not keep track of these “banked hours” and typically don’t repay the “comp” time because they are too “busy.” Worse, employers that are fired or quit do not receive payment for the “banked time” when they leave.
- Failing to include other payments to the employee in calculating the rate of overtime owed
Many employers fail to include productivity bonuses or shift premium payments in calculating the appropriate time and one-half wage.
- Assuming an individual is an independent contractor, not an employee.
The FLSA's overtime and minimum wage provisions only apply to "employees," not "independent contractors." Therefore, employers often attempt to avoid the payment of wages by classifying their workers as "independent contractors." When courts look at whether or not a person is an independent contractor or an employee, they analyze the "economic realities" of the relationship. What this means, is that the courts analyze the true nature of the relationship based on the actual facts and not based on what the parties label the relationship. The factors typically considered include:
- The degree of control exercised by the alleged employer;
- The extent of the relative investments of worker and alleged employer;
- The degree to which the workers' opportunity for profit and loss is determined by the employer;
- The skill and initiative required in performing the job;
- The permanency of the relationship; and
- The extent to which the worker's services are integral to the entity.
If one or more of these factors is resolved in favor of finding an employer-employee relationship, the individual misclassified as an "independent contractor" likely is entitled to all overtime and minimum wages not paid. This can result in a significant payment of back wages not only to the individual, but to other individuals classified the same way by the employer.
For further information, please contact Jasmina de la Torre, who is one of the experienced lawyers of Bellas & Wachowski available to serve your legal needs.