Overtime: What You Need To Know (Part II)

The previous blog post discussed the laws governing overtime and the importance of not running afoul of such laws. (read previous post) This post reviews some missteps and misconceptions regarding overtime.  Make sure you don’t trip up on these issues. 

1.         Background:   Overtime can be an emotionally charged issue for employees who resent being overworked and underpaid, or have come to count on overtime as a means of supplementing their income and making ends meet. Employers push their employees because they have production and sales goals that must be met or risk having their own heads on the chopping block, or simply because, to save costs in this challenging economy, they don’t wish to pay wages in excess of what is commercially and legally required.   The law tries to even the playing field between these two perspectives, although many believe in a clumsy manner.

2.         Common Missteps: 

(a)                Salaried Employees: Salaried employees are NOT automatically exempt from overtime, and job titles and job descriptions do not determine whether an employee is exempt. Rather, the employee’s specific job duties and salary must be scrutinized carefully to ensure that they meet the requirements of a particular exemption. Similarly, by definition, salaries of non-exempt employees can not include overtime.

(b)               Approval Unnecessary: Despite company policy or a written manual stating otherwise, a non-exempt employee is not required to seek prior authorization before being entitled to overtime. If a non-exempt employee works over 40 hours during a work week he or she is owed overtime. Period. An employer’s recourse is to commence the company’s standard disciplinary procedures against such (sometimes well-meaning) employee which may include written warnings and ultimately termination. Similarly, for purposes of determining eligibility or calculation of overtime, it is irrelevant if the employee is dishonest, lazy or incompetent, or if the quality of the employee’s work product is poor. 

(c)                Employees Can’t Waive Overtime: An employee can’t waive his or her right to receive overtime. Whether the non-exempt employee chooses to work on his or her “own” time to catch-up, or agrees that they will work overtime for straight pay to earn additional wages, such arrangements are not a defense to an overtime claim. 

(d)               Improper Deductions: Although not necessarily illegal, be mindful that automatic deductions for meal breaks, docking pay for absences due to inclement weather and other deductions have been the subject of employee claims and should be reviewed carefully. The FLSA provides a “safe harbor" for inadvertent, but improper, salary deductions if, among other things, the employer maintains a clearly communicated policy prohibiting improper deductions and incorporates a complaint mechanism.  

(e)                ­Independent Contractors: Independent contractors are not employees and therefore not covered by the FLSA. However, Federal and state laws limit the applicability of independent contractor status. This is a controversial issue that we will discuss in a future post.

(f)                 Poor Record Keeping: It is the employer’s responsibility to keep accurate records, not the employee. Poor record keeping is not a defense to overtime owed.

(g)                Other Compensation Models.   Compensation based on flat rates or “by the piece” versus hours worked should be reviewed carefully to determine whether overtime is due under such compensation methods.

(h)                State Law: Review the applicable State laws and any collective bargaining agreements which may grant employees rights in addition to what is provided under the FLSA. 

Again, if you have any experience you would like to share with our readers, please post a note below or email me at jcohen@homefurnishingslaw.com.

"This blog is intended to provide basic and useful information but not legal advice.  As legal advice must be tailored to the specific circumstances of each case, and laws are constantly changing, nothing provided in this blog should be used as a substitute for the advice of competent counsel.  We recommend you consult a lawyer to ensure that the information provided, and your interpretation of it, is applicable to your particular situation."