Are you entitled to overtime pay?

Under the FLSA covered non-exempt workers are entitled to the following:

• Minimum wage of at least $7.25 per hour worked; and
• Overtime pay of 1.5 times the employee’s regular rate. This is for every hour worked in excess of 40 hours worked in a work week.  

The U.S. Department of Labor has estimated that 70% of employers regularly violate the FLSA.  Employers who violate this law do so in a number of ways.  We have prevailed against employers who attempted to avoid paying minimum wage and/or overtime in the following ways:

1. Misclassification of a worker’s position
   There are three “white collar” exemptions to overtime pay. First is serving in a bona fide “executive,” “administrator” or a “professional” capacity.  Next, simply labeling an employee’s position “executive” or an “administrator” does not establish exempt status.  Lastly, the legal test is whether the “primary duty” of the position is to perform certain white-collar administrative or executive functions. FLSA exemptions are always defined by what you do, not what you are called. The law sets out a series of factors to help courts determine whether an employee’s primary duty is the performance of exempt work.  These include the relative importance of exempt duties, the amount of time spent performing exempt work, the extent of the employee’s freedom from direct supervision, and the relationship between the employee’s salary and the wages paid to other employees. Misclassification often occurs in retail chains where the “manager” spends the majority of his work time performing non-exempt work. For example, unloading trucks, stocking shelves and waiting on customers.  Although the “manager” may spend an hour or so each day filling out forms, the real “management” of the store is handled at corporate headquarters.  Under these circumstances courts have found that these “managers” are actually non-exempt employees who are entitled to the overtime provisions of the FLSA.We also see misclassification frequently with respect to office workers. Those that are labeled as office managers or administrators.  When we are able to show that the vast majority of the work is actually the performance of paperwork and that their actual discretion is limited, we have been successful in obtaining overtime compensation for these workers.
2. Salaried employees
   Some employers tell their employees that they are not eligible to receive overtime because they are paid a salary.  This is a widely held misconception.
3. FLSA exemptions are always defined by what you do, not how you are paid. One element of the traditional “white collar” FLSA exemptions is that the employee in question be “genuinely salaried.”  It is not, however, the only element of these exemptions.  Put another way, a salary, by itself does not create an overtime exemption.  We have obtained overtime pay form dozens of non-exempt salaried employees.
4. Compensatory time
   Employers sometimes offer employees “comp time” (i.e., paid time off in a future work week) in lieu of overtime pay.  This is another widely held misconception.  Under the law, only government employers can offer comp time — and then only under a narrow range of circumstances.  It is illegal for private employers to provide comp time in lieu of overtime pay to non-exempt employees.
5. Workweek expansion
   For most employers, the FLSA overtime rules operate on the basis of a seven-day workweek.  If you work more than 40 hours in a seven-day workweek, you’re entitled to overtime pay for that week. Regardless of the dimension of the actual pay period, you deserve to be paid.  If your employer pays you biweekly, for example, the employer may not “average out” the employee’s work time.  If you worked 50 hours in the first week and 30 hours in the second week of a 14-day pay period, you are entitled to 10 hours of overtime pay for the first week.
6. Undocumented workers
   Anyone who performs non-exempt work, including an undocumented immigrant, is covered by overtime pay requirements of the FLSA.  Many employers in Atlanta hire undocumented workers (e.g., as dishwashers, cooks, maids, landscapers, fabricators, etc.) and then fail to pay them the FLSA minimum wage, overtime or both.  The courts are not hesitant to require employers to pay undocumented workers for the work that they have performed according to the FLSA.  We have successfully pursued dozens of minimum wage and overtime cases for undocumented workers.
7. Waiver
   Some employers go so far as to require workers to sign a document that purports to waive their right to receive overtime pay.  We get calls from time to time from lawyers representing employers we have sued telling us about these waivers.  We then tell them about the law.  According to the United States Supreme Court, an employee cannot effectively waive his FLSA rights without the express prior approval of either the Department of Labor or a federal court.
8. Working “off the clock”
   Employers sometimes try to avoid paying overtime by forcing employees to continue to work after clocking out.  In a recent case that we took to trial, an employer kept “card time” up to 40 hours for each employee and “paper time” for work time over 40 hours and then unlawfully paid the employees at their regular rate for the paper time.  This turned out to be a very expensive decision by that employer.  Some employers insist they cannot pay overtime but thank employees profusely for working for free.  This, too, is a violation of the law.
9. Incomplete records
   We often come across employers who have incomplete records of work times or compensation.  The FLSA requires employers to “make, keep and preserve records” of employees and of their “wages, hours, and other conditions and practices of employment” – this applies to exempt and nonexempt workers.  For non-exempt employees, records must include the hours worked each day and week; these records must be preserved for three years.  An employer’s failure to create and maintain legally required records has a legal consequence: the employee’s reasonable approximation of his work time will be the best evidence of that work time.
10. Independent contractors
    Employees are entitled to overtime pay; independent contractors are not.  Employers, therefore, often label a worker as an independent contractor in order to avoid paying overtime under the FLSA.  This is yet another widely held exemption.
11. FLSA exemptions are always defined by what you do, not what you are called. Like the “white collar” exemptions, the determination as to whether a worker is an independent contractor or an employee is done by the examination of a series of factors.  The most important factor in an independent contractor/employee analysis is the amount of control that the employer exercises over the worker. In most of the cases that we have handled, the courts have found that the independent contractor label was wrongfully applied.
12. Multiple Employers
    As a general rule, companies with annual earnings of $500,000-plus are subject to the FSLA. Employers who operate with multiple corporate identities sometimes try to avoid paying overtime by paying from two different companies (e.g., an employer may pay employees from more than one account so that no one paystub shows more than 40 hours a week).  The law, however, sets out criteria for when multiple corporations will be considered a single employer under the FLSA (related activities, unified operations or common control, and a common business purpose).  In a recent case, the employer had two corporations, one for his landscaping business and one for his landscape lighting business.  We were successful in obtaining overtime pay because the two companies had sufficient connections to be considered a single employer under the FLSA.
13. Manipulation of the Tip Credit
    Employers of waiters, bartenders, busboys and other traditionally tipped employees are effected by a niche in the law called the tip credit.  The tip credit allows the employer to reduce the minimum hourly wage paid to tipped employees by $5.12 per hour.  This results in an effective hourly wage of $2.13 (i.e., $7.25 – 5.12 = $2.13).  Employers sometimes require that the tipped employees participate in a “tip pool”.  A tip pool defeats the tip credit (resulting in a $7.25 per hour minimum wage) under the following conditions:
      a) If the tip pool is paid to an employee who is not traditionally tipped (for example, dishwashers, janitors, chefs, washroom attendants, managers).
      b)If an employer takes anything out of an employee’s tips other than a lawful tip pool.
    If either of the above occurs, the employer is liable to the employee for the value of the tip credit ($5.12 per hour), a like amount as liquidated damages, and the employee’s attorneys’ fees. Sometimes employers miscalculate the tip credit when paying overtime hours.  The overtime rate at the minimum wage is $10.88 ($7.25 x 1.5).  For tipped employees, the correct overtime rate is $5.76 (i.e., 10.88 – 5.12).  Many employers mistakenly inflate the tip credit to $7.68.  (i.e., 5.12 x 1.5) resulting in the incorrect overtime rate of $3.20.  This, too, can be a very costly mistake for an employer.
14. Commission-Only Pay Plans
    Inside sales employees, mortgage brokers and other inside employees often work on a commission-only pay formula.  If you make no sales in a week; you will earn no compensation.  Employers who pay on this basis risk FLSA exposure if a commissioned employee (other than an “outside salesperson”) earns less than $7.25 for each hour worked in any given week or if the commissioned employee works more than 40 hours in a week.FLSA exemptions are always defined by what you do, not how you are paid.
15. Auto-Deducting Lunch Breaks
    Many employers track employee work time through the use of computerized systems.  Some employers program their computers to deduct a one hour lunch period each day.  If you are not actually relieved from duty during an auto-deducted lunch break, the  time should be added back n order to determine if you have cleared the forty-hour weekly overtime threshold.  If the employee is never allowed to take a lunch break and the time is nevertheless auto-deducted, the employer may face substantial exposure for backpay, liquidated damages, and attorneys’ fees.
16. Less Than Fifteen Employees
    Some employers mistakenly believe that they must employ fifteen people before the overtime rules apply to them.  Coverage under another federal employment law, Title VII of the Civil Rights Acts of 1964 and 1991, requires fifteen employees.  Coverage under the FLSA, however, is not dependent on the number of employees.  We have successfully brought overtime cases where there were as few as two employees.  That can be a very expensive way for an employer to learn about the FLSA.
17. Tips Only
    Some employers hire employees (usually waiters, waitresses and/or exotic dancers) on a tips-only basis.  When challenged, they often attempt to label these workers as “independent contractors”.  Courts tend to find, however, that the employer was merely trying to fly below the FLSA radar.  Employers who take this approach are often found to be liable for the full minimum wage (i.e., no application of the tip credit) overtime pay, liquidated damages and attorneys’ fees and costs.
18. Portal to Portal
    Some employers attempt to stop and start an employee’s work time throughout the day. They do so to correspond to the times when they are actually engaged in revenue-producing activities.  Using an intermittent workday to determine compensable time can be a very expensive mistake.  Generally, all time within the period between the commencement and completion in the same workday of an employee’s principal activity or activities is compensable time.  It includes all time within that period, whether or not the employee engages in work throughout the period.  The only exception is for recognized breaks. Then the employee is free of all duties, including the duty to respond to calls.
19. Retaliation
    Some employees are reluctant to pursue their rights under the FLSA. This is because they fear that the employer will retaliate by firing them.  The FLSA, however, contains a strong anti-retaliation provision.  Requesting overtime, pursuing a grievance over overtime, and filing a lawsuit over overtime are FLSA-protected conduct.  An employer who takes action against an employee in response to legally protected conduct often increases its exposure to include equitable remedies.