For many employers, properly calculating overtime can feel like an unending process. Factoring in break times can be complicated. Some employees who may seem exempt from overtime may actually be entitled to it under the Fair Labor Standards Act (FLSA). Unfortunately, miscalculating overtime can be extremely costly for companies in terms of fines and lawsuits.
Despite what it calls limited resources, the US Dept. of Labor has been actively pursuing claims of FLSA violations and more employees are filing lawsuits against their employers claiming they were not paid what they were owed.
Figuring out overtime can be more complicated than it may seem at first. Employees eligible for overtime are to be paid at least one-and-a-half times their regular rate of pay for the time they work that is more than 40 hours in a week. Many employees are “exempt” from overtime, and the 40-hour per week rule doesn’t affect what they are paid, regardless of the number of hours they work in a given time period.
Some employers may assume that any employee who is salaried, rather than hourly, is exempt from overtime. That is not necessarily the case. The DOL looks at job duties, rather than payment type, when deciding whether an employee is eligible for overtime. But even when companies have properly classified employees as not exempt from overtime, they can still make mistakes.
Staying compliant with FLSA
In order to avoid these types of fines and lawsuits, employers who have not taken a close look at the FLSA standards and their current practices should take the time to do it now.
• Regularly review overtime policies: In order to make sure that overtime policies are accurate and enforced at every level and location, companies should consider creating a team to regularly review overtime standards. This team should include either inside attorneys or outside counsel, along with Human Resources personnel.
• Educate managers: Companies should also regularly train their managers and supervisors about FLSA and overtime issues and then implement a zero-tolerance policy for violations. When employees have concerns or questions about whether they are being properly paid overtime, they should know who to approach with their questions. Companies should clearly explain how employees, managers and supervisors can report potential violations up the chain of command.
• Stay informed: Employers should be aware of new policies and priorities from the DOL, such as the Bridge to Justice program. They should keep an eye on emerging trends in lawsuits. For example, some plaintiffs’ lawyers have begun claiming violations of the Racketeering and Corrupt Organizations Act (RICO), along with FLSA violations.
• Donning and doffing issues: Employers often struggle to figure out when exactly non-exempt employees begin their shifts. According to the DOL, employees should be paid for the time they spend “donning and doffing,” or putting on and taking off protective gear. In June, Tyson Foods paid $500,000 in overtime back wages and agreed to a nationwide injunction that required its poultry workers to be paid for the time they spent donning, doffing and sanitizing their equipment. Similar claims have been made at numerous other companies with costly results for those employers.
Overtime issues can be complicated, and companies who violate or allegedly violate state and federal laws can find themselves under the microscope of regulatory agencies or plaintiffs’ lawyers. To avoid these types of lawsuits and investigations, employers should be proactive to ensure they are protected from charges of FLSA or state wage and hour violations.
Richard Alaniz is senior partner at Alaniz and Schraeder, a national labor and employment firm based in Houston.