Overtime and Minimum Wage

Salaried Workers and Management

For most employees, a federal statute (the Fair Labor Standards Act or “FLSA”) mandates overtime pay (i.e., time and one-half pay) for all hours worked in excess of 40 hours per work week. However, the law provides a variety of exemptions for employers from the overtime pay requirements regarding salaried employees who fulfill the specific requirements established by federal law, such as “professionals,” “executives” and “outside salespeople” to name a few. In the past, many salaried employees working at a management level, who made over $23,660 per year were exempt from getting overtime pay. Effective December 1, 2016, if a management level employee makes a salary of $47,476 or more, they are exempt from receiving overtime pay.  Whether or not an employer is entitled to an exemption or is properly computing the amount of overtime pay is often the subject of dispute. The federal regulations applying the FLSA are extensive and can be confusing. You can read more here: http://www.dol.gov/whd/overtime_pay.htm

Working Out of the Office, off Hours

Regardless of your status as salary or hourly, many activities outside the workplace can be considered work, entitling and employee to overtime, for the purposes of wage and hour law.  For example, suppose your employer issues you a smart phone connected to your work e-mail.  If you are expected to check and respond to e-mails outside of normal working hours, from your portable device, you may be “engaged in work” and should be paid overtime for those activities.  Similarly, many employees are considered “on call” for certain jobs.  Even if you do not actually answer a call, you may be “working” depending on the expectations for being on call, the restrictions in activities and travel your employer mandates while “on call,” and your accessibility while “on call.”  Since these scenarios are vary fact specific, and we urge you to contact an attorney for legal advice.

Employer Avoidance of Overtime

A common way of an employer stealing wages from an employee is by falsely classifying a worker as an “independent contractor” instead of an “employee.” A good way to find out if an employer classifies you as an independent contractor is to see if it automatically withholds some of your income for income taxes. If your employer doesn’t automatically deduct some of your paycheck for income taxes, it may be classifying you as an independent contractor. An employer does not have to pay an independent contractor minimum wage, overtime, or any insurance benefits. However, just because your employer classifies you as an independent contractor, does not mean you are necessarily an independent contractor under the law.  There exists a multi-part test that evaluates your employment to determine if you are actually an independent contractor, or should be considered and employee.  If you feel that your employer is classifying you as an independent contractor even though you are an employee in order to avoid giving you certain benefits, your employer might be violating the FLSA.

Another common employer tactic to avoid paying overtime is to “move hours” so that, for payroll purposes, an employee never works above 40; regardless of hours actually worked.  For example, suppose in week 1 an employee works 46 hours; and in week 2 the employee works 34.  An employer may offer to pay the employee only 40 hours in week 1; and then 40 hours in week 2, offering the employee 6 hours of “paid time off.”  This is a clear violation of the FLSA and the employer should have paid the employee 40 hours of straight time in week one; plus 6 hours of overtime.  An employer cannot “move hours,” they must pay for all hours actually worked.

Additionally, meal breaks can be an occasion where employers fail to pay employees for all hours worked.  An employer does not have to pay you for your meal break, but you must be totally disengaged from working.  Thus, if you eat at your desk on an unpaid meal break, you are not responsible for answering the phone, checking e-mails or conducting employer business.  However, if your employer mandates that you continue to work on your unpaid meal break, an FLSA violation may have occurred.

Failure to Pay a Minimum Wage to Tipped Employees

Many employers, especially in the hospitality industry, are able to pay less than the minimum wage to employees who regularly receive tips.  Thus, bartenders, food servers and hotel luggage handlers receive less than the minimum wage from their employer, but make up the difference in tips.  This practice is legal, however, an employee should closely monitor their duties outside those that regularly generate tips.  If, for example, an employer pays a bartender tip wage to help re-paint the stock room, that may be a minimum wage violation.  Generally, if you are not performing work that generates tips, you must be paid the minimum wage.

Shorting wages through alternative pay methods

While many employers still use direct deposit or paper checks, many employers have switched to paying employees on pre-paid debit and credit cards.  Because those pay methods lack the “paper trail” associated with traditional paychecks, employers have been known to reduce the employee’s pay without their knowledge.  If you get paid on a pre-paid debit or credit card, you should be certain to ask for a pay stub with an explanation of all hours work, taxes withheld and pay received; and then check that amount against the balance on your pre-paid card.

If you think your employer has failed to follow the FLSA, do not wait to seek legal assistance. Generally speaking, you can recover amounts that you were improperly denied for two, and in some cases three, years prior to the date you sue. So don’t delay.