Don’t Let Unpaid Overtime Lead to Employment Lawsuits

February 7, 2014 § 1 Comment

Don’t Let Unpaid Overtime Lead to Employment Lawsuits

The number of unpaid overtime employment lawsuits is increasing. In this week’s blog, attorney Mark Briggs discusses how to protect yourself – and your business – from being a target.

Mark Briggs Unpaid Overtime

Employment lawsuits related to unpaid overtime have been in the headlines lately, with high-profile cases such as Family Dollar Store’s $35 million verdict in an overtime pay case, the 2012 class-action suit brought against Wal-Mart, and the suit against pharmaceutical giant GlaxoSmithKline that went all the way to the Supreme Court. In fact, across the U.S., the number of employee-initiated lawsuits over overtime pay has increased by more than 30 percent since 2008, says a report from USA Today. What lies behind this trend? More importantly, how can employers protect themselves from becoming the target of unpaid overtime employment lawsuits?

What Is The FLSA?

The first line of defense lies in familiarizing yourself about the issue. Let’s start with the Fair Labor Standards Act or FLSA. In 1938, President Franklin Delano Roosevelt signed it into law. It was designed to end child labor practices, establish a minimum wage ($.25 per hour at the time) and set a maximum workweek. The new law also required employers to pay overtime wages, or time-and-a-half, for hours worked over 40 per week. Of course, there’s a catch: FLSA applies only to eligible employees, or those classified as “non-exempt.” The contention lies in FLSA’s definition of who, exactly, is an eligible employee. Among other criteria, exemptions from the overtime requirements include employees who:

  • Perform executive, administrative or other “white collar” work that’s compensated at a salary of $455 per week or more
  • Are professionals whose duties include primarily work of an intellectual, creative, innovative or artistic nature
  • Work as highly skilled computer experts at a rate of $27.63 per hour or more
  • Work in outside sales away from the employer’s primary place of business
  • Other very highly compensated employees

Who Are Non-Exempt Employees?

In contrast, non-exempt employees, regardless of income, generally include:

  • So-called blue collar workers, or those who engage in manual labor
  • Police, paramedics, firefighters and emergency first responders
  • Paralegals
  • Licensed practical nurses

Here’s where it gets a bit tricky. Generally, those employed by local, state and federal government agencies, hospitals, nursing homes, care facilities, educational institutions and companies that bring in more than $500,000 per year are non-exempt. But bring in the exemptions to the non-exemption rule, and things get complicated. Employees of movie theaters, farm workers, employees without a high school diploma, and employees of certain petroleum distributors may be exempt, just to name a few.

Protecting Yourself from Employment Lawsuits

While FLSA’s regulations provide many protections, the overtime provision has raised a number of questions – and resulted in millions of dollars in lawsuits. Many employers say that the law is archaic and hasn’t kept up with the many changes technology has wrought in the workplace, such as employees who telecommute and have flexible schedules. The top employee complaints include:

  • Being forced to work “off the clock”
  • Being misclassified as exempt
  • Being required to work in their off time due to mobile technology

As a result, more than 7,760 unpaid overtime suits were filed in 2012, according to the Huffington Post, and the Department of Labor recovered almost a quarter of a billion dollars in back pay in 2011. The system is intended to protect employees (not employers), and the Labor Department has increased its investigatory staff by 40 percent in recent years. How can employers protect themselves?

  • Develop, distribute and enforce clear, consistent pay and overtime policies
  • Use automated attendance and time systems
  • Complete regular, well-documented pay audits
  • Keep careful, complete records
  • Work with an attorney to create job descriptions
  • Require employees to immediately report requests to work off the clock and paychecks that don’t reflect overtime

As evidenced by the spate of recent lawsuits, unpaid overtime can end up costing employers a lot more than just time-and-a-half. Taking preemptive steps to protect yourself can help you avoid costly employment lawsuits.

Photo Credit: Brian Turner

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