Is Unpaid Overtime Ever Permissible?
The legal framework for overtime is intricately tied to the Fair Labor Standards Act (FLSA), which governs hourly and salaried employees. The FLSA requires that employers in the majority of cases compensate all nonexempt employees at a rate of time and a half their regular hourly rate for any work that exceeds 40 hours in a week. Failure to properly pay an individual for the overtime they worked can therefore result in a significant damages recovery for that missed pay.
There are exceptions to this rule, however, as the FLSA also exempts certain types of workers from its coverage. For example, some employees may be classified as exempt due to their job descriptions or the duties they fulfill, while others may be covered by exemptions regardless of their duties or job titles. For example , some computer-related positions, sales staffs, teachers, farm laborers, and likewise employees may be exempt from the FLSA overtime pay requirement. The law can also be different for public sector employees or in relation to certain industries such as railroad transportation or air travel.
Despite the above exemptions, the reality is that the vast, vast majority of workers in the U.S. are required to be covered by the FLSA, and as such, it is exceedingly rare for unpaid overtime to be "legal." The FLSA’s exemptions are relatively narrow, and it can be challenging to classify an exempt employee. Because of this, businesses are strongly encouraged to assume that employees are covered by the FLSA unless it is clear otherwise.
Responsibilities Of Both Workers And Bosses
Employers are obligated to compensate their employees for all hours worked. To the extent additional time is worked by the employee, including overtime or anything else, the employer must also pay employees "listed fringe benefits" that it would have paid if they had worked the day/shift/hours in dispute. For instance, if an employee works through an unpaid lunch period, where the employer previously provided her with a 30-minute paid meal break, the employer has an obligation to compensate the employee for the ½ hour of straight time pay plus any paid fringe benefits her employment agreement or company policy would have provided her had she actually worked the non-compensated meal period.
This area of the law is complicated, and the penalties for its violation are high. At the most basic level, an employer that violates this law will be required to pay an employee for the unpaid work at the rate of pay the employee would have received had she worked the extra hours and any listed fringe benefits that would have been paid.
To take enforcement of the law to the next level, a prevailing employee can recover double damages, reasonable attorneys’ fees, and costs for the employer’s violation. There are time limits for filing these claims (one year) so it is important that employees act quickly.
It is important to note that although an employee may believe he or she has worked overtime for which he or she did not receive compensation, the fact that he or she just believes it to be true is not sufficient for the Court to hold that he or she has worked unpaid time for which there was no compensation. Rather, the law provides that although the employer is entitled to present its evidence and state what it believes to be true, at that point, the burden shifts to the employee. The employee must then prove that he or she worked the time he claims was unpaid. This shift is an important distinction that employers must keep in mind when faced with these types of claims.
After an employee files a claim for unpaid wages, overtime, and/or fringe benefits, the employer has a duty to respond to the employee and to document all time worked on a going forward basis. This documentation is important because, on the motion for summary judgment, the employer will have an opportunity to present its evidence to establish whether or not the employee actually worked the time for which he or she is claiming overtime or other pay.
Overtime Pay Myths
Despite the fact that the Fair Labor Standards Act is one of the most quoted, the history of overtime pay often includes a history of confusion. Unfortunately, this doesn’t just leave employers and supervisors confused; it also means that a lot of employees potentially wind up getting shorted on their pay.
Some common overtime pay misunderstandings include:
- Overtime pay is required only when the employee is actually working. The Fair Labor Standards Act makes it very clear on this point. Although you are required to pay for travel time from one job site to another or while on company business, you are also allowed to deduct time spent commuting from home to work and vice versa.
- Employers cannot avoid overtime pay requirements by designating an employee as "salaried" instead of hourly. Salaried employees generally must be considered exempt instead of non-exempt to be excluded from overtime pay protections. This means that many salaried employees are actually still entitled to overtime pay, particularly if they do not have management responsibilities and/or their primary work is not managerial.
- Non-exempt employees can be required to work overtime. Employers may insist that workers perform overtime as long as they pay the appropriate amount and allow employees the opportunity to opt out of working overtime. However, non-exempt employees may not work overtime without an employer’s consent. If they do so, the employer could claim that they are not entitled to overtime pay, but there have been cases where an employee was awarded compensation even though that employee violated their employer’s overtime policy.
- Employers cannot avoid paying employees statutorily required overtime pay just by offering them other benefits or compensatory time off. While there is nothing that prohibits an employer from offering employees compensatory time off during which they may make up the time they missed, this does not prevent the employee from requesting their overtime pay. In some cases, compensatory time off is a requirement, as in the case of law enforcement officers and fire department personnel. However, most employees are not.
- Employers that provide employees with the opportunity to access work or training materials online are not automatically entitled to deny employees payment for time spent reading or studying these materials. In recent years, courts have been weighed down by numerous lawsuits that directly relate to this issue. While it is true that employers can avoid paying employees for time spent accessing work-related materials online, they have to be able to show that the employee is engaging in an activity that does not involve work.
Consequences Of Not Being Paid Overtime
The consequences for failing to pay overtime can be severe for an employer. There could be legal penalties that involve fines or the threat of class-action and/or collective-action lawsuits. Fines are not unusual, and will often vary by state and federal law. Similarly, damages in class-action or collective-action cases can include penalties for punitive damages and attorneys’ fees.
In addition to the risks of legal action, an employer may also face a damaged reputation, as well as increased scrutiny by the Department of Labor. Cases of unpaid wages can attract media attention , and can result in damaged relationships between the employer and its employees.
Those employers who are in a unionized environment can face additional exposure if the union should find out about the lack of overtime being paid. The potential for grievances and strikes is always a possibility.
Even where there is no formal union organizing campaign in place, there could still be some issue with the National Labor Relations Board (NLRB) if it was to determine that the failure to pay overtime was in retaliation for particular protected activity.
What To Do If You Have Unpaid Overtime
Employees who suspect that they are unpaid for overtime have a few steps to follow – the first few of which are aimed at building a solid case for their unpaid overtime pay. The following Steps are employed by our unpaid overtime lawyers as they follow the FLSA guidelines for demonstrating unpaid overtime work.
1. Tracking
In order to prove you are owed unpaid overtime, it is best to keep a record of hours you have worked, particularly those you feel fit into the unpaid overtime category.
2. Boss
It is also best to address the issue with your boss, letting them know that you have noticed an inconsistency in either the hours you have worked or the hours that are on your paycheck.
3. DOL
If your boss does not respond to your issues or simply brushes it off, then the best way to address the situation is by filing a complaint with the Department of Labor (DOL).
4. Lawyer
If you do not wish to file a complaint with the DOL or you feel that talking to your boss did not render the appropriate results, then contact an unpaid overtime lawyer as soon as possible.
5. Lawsuit
A lawsuit for unpaid overtime pay can be filed after other options have been exhausted. This lawsuit is a process, however, so your attorney will guide you through the entire process and let you know what to expect.
Unpaid overtime situations happen often but they are not fair to employees or compliant with federal law. If you are facing an unpaid overtime situation, you should follow the aforementioned steps to seek the compensation you deserve.
Recent Case Studies And Judgements
A recent ruling from the 9th Circuit Court of Appeals nullified an employer’s efforts to have a multi-plaintiff case returned to arbitration, as the court found that the employees had a viable claim for unpaid overtime under the Fair Labor Standards Act (FLSA). Specifically, the workers were seeking compensation for time spent in relevant security screenings that took place, before and after shifts, for which the company never paid them. The lower court had ruled that they were not entitled to compensation for this time; however, the circuit court found that they were, and remanded the case with instructions for the district court to ascertain the amount of damages owed to the workers. An employee at a gig economy app firm for dogs recently filed a complaint with the U.S. Department of Labor, seeking approximately $45 million in damages for unpaid overtime. When the company terminated her employment , she claims that management failed to pay her for more than 21 hours of overtime work and intercepted calls from reporters to the company regarding her complaints. The DOL investigation is ongoing, though the company publicly dismissed her claims, arguing that federal laws do not require the company to pay for overtime, as independent contractors run their business from their phone and do not have to clock in and out for shifts like traditional employees. In another case, the Court of Appeals for the 7th circuit ruled that a company cannot lawfully deny overtime to a longtime employee who was reclassified as exempt and then demoted back to non-exempt. The Court ruled that since the employee was previously classified as non-exempt and paid overtime prior to the change in municipalities’ policies, he would be due overtime at his reclassified rate going back the last two years. Citing 29 C.F.R. § 778.217, the court found that the worker’s initial classification essentially voided his subsequent policies for determining overtime wages.
