Issues relating to overtime pay are ripe with the possibility of a lawsuit. If an hourly non-exempt employee works over 40 hours in a work week, they are entitled to payment of one and one-half that employee’s normal hourly wage for that overtime. Sounds simple enough. Yet situations arise constantly between employers and employees that leave employers wondering what the employee is owed. These situations often result in the employee feeling that they were under paid and create discontentment, or even resentment, in that employee. While paying even a couple hundred dollars in overtime seems like a low risk, wage and hour statutes provide the employee with attorney fees if they win. This can turn a few dollars of overtime into a complex and expensive issue for the employer. The goal of this article is to highlight a few of the issues that regularly come up in order to help employers make sure they are properly paying overtime owed.
Hours Worked Without Approval: An issue that employers often deal with is when an employee either stays late, works on that employee’s days off, or otherwise works beyond 40 hours in the employer’s work week without permission. Employers often falsely believe that because they did not authorize to do so, or even if overtime was forbidden, that they, the employer, are not required to pay overtime for those hours. This is incorrect. And that mistake gives the employee a strong basis for a wage and hour claim. The issue here is not a wage and hour issue, but a disciplinary issue. It is advisable that the employer adopt a policy that employees must receive approval prior to working beyond their scheduled hours so that employer can protect themselves. Documentation will be key here.
Compensating Employees With Future Time Off: Employees and employers often like the idea of making a trade where the employee works overtime one work week and is then allowed extra time off from a different work week. This idea seems logical, but it is not permissible under the law. If the employee is not paid overtime for that specific week when the overtime occurred, then they would have a basis for a wage and hour claim. Trades as suggested in this example end up with the employer being generous with its paid time off policy but provides an employee a basis for a claim against the employer, strictly speaking.
Payment for Time Preparing to Work: If an employer requires an employee to be at work for a business reason prior to commencing their shift, then the employee must be paid for this time. Examples of this would include requiring employees to arrive before their shift to facilitate a smooth transition, performing activities to allow them to start work promptly, and other pre-work preparation activities. An issue arises when these extra chunks of time are added to an employee’s shift that is already 40 hours in one work week. If the shift is not adjusted, or if overtime is not paid, the employee has a wage an hour claim for that unpaid overtime.
These examples and general rules apply to employees paid on an hourly basis. Exempt employees, or employees paid on a salary basis, have different requirements. However, the difference between exempt and non-exempt can often be an issue and needs to be looked at on a case by case basis. If an employer classifies an employee wrongly, this can create significant problems as well. These examples are not designed to catch all possible scenarios, but rather to help employers think about the issues that may be looming out there. If an employer has any questions about payment of overtime or other employment related issues they should contact legal counsel or an HR professional.
