Javascript Menu by

People's Law Guide


Overtime Pay: Employees Sue When Not Paid Time-And-A-Half



      Denying overtime pay to employees not among managerial and professional ranks is a widespread practice which can wind up costing employers far more money than initially saved. Each year, tens of thousands of people complain to the federal government that they are not being paid time and a half when working in excess of 40 hours per week. Investigators have determined that about 60% of those lodging complaints are entitled to receive overtime pay, according to John Fraser, Deputy Administrator for the U.S. Department of Labor’s Wage and Hour Division.

      Federal law dictates that virtually all private employers having  $500,000 or more in gross revenues annually pay overtime to workers who perform work outside managerial or professional duties. Frequently, even the smallest of employers are also bound by other rules which require them to pay overtime wages.

      When defending against claims brought by the U.S. Department of Labor or individual lawsuits, employers often unsuccessfully cite these reasons to justify why the didn’t pay overtime wages:

      * We’re Not Involved In Interstate Commerce: Although many small employers grossing under $500,000 yearly are exempt from paying overtime wages, many engage in activities involving persons in other states and countries. Accepting credit card payments, sending or receiving products to locations outside Florida, and working with out of state customers or clients are forms of interstate commerce which obligate firms to pay overtime wages. Also obligated to pay overtime wages are those employers servicing or repairing “instrumentalities of commerce” such as public roads, pipelines, communication systems, waterways and private warehouses sending or receiving goods between states or countries.
      * They’re Managers, Not Subordinates: Courts frown on employers who  mislabel employees as managers or compensate non-supervisory personnel with salaries instead of hourly wages.  Applying a “common sense” test, courts evaluate whether the type work is actually managerial by considering if those seeking overtime had among their duties interviewing and hiring workers, administering discipline and setting pay rates and work schedules. Even when management duties exist, only those persons regularly supervising at least two full-time employees or the “equivalent” are exempt from receiving overtime pay.

      * Calling Employees Independent Contractors: Numerous employers misclassify workers as independent contractors to evade liability for unemployment compensation, workers compensation insurance, tax obligations, and overtime pay. Courts rarely recognize a person working solely for one business to be an independent contractor, even when there’s a written contract stating otherwise. Judges closely scrutinize exemptions sought for independent contractors.

      Employers engage in a high-risk, high-stakes gamble when not compensating employees for overtime work. In disputes, employers, not employees, have the obligation of proving work schedules, including introducing into evidence paperwork verifying hours actually worked. When losing lawsuits, courts typically require employers to also pay fees to attorneys representing workers. When finding that overtime laws were willfully violated, courts also require employers to pay workers double the overtime wages owed.

      Employer liability can become quite large, especially for longtime employees. When calculating wages owed for “salaried” workers entitled to overtime pay, the legal principles divide the total weekly “salary” by 40 (the number of hours lawfully worked in the absence of overtime pay) and then multiply that amount by one and a half (for time and a half pay). For example, a non-manager paid with a $500 weekly “salary” would have an hourly wage of $12.50. Multiplied by time and a half, the overtime rate would be set at $18.75 for each hour worked in excess of 40 hours per week. If found to have wilfully violated the law, the employer of the $500 per week worker would be liable for liquidated damages, an amount of $37.50 for each hour of overtime worked. A claim of ten hours per week of unpaid overtime over one year’s time would result in a liquidated damage award of $19,500. Employees claiming that they were victimized by willful violations may seek reimbursement for as long as three years. Otherwise, workers can collect up to two years of unpaid overtime.

      When businesses lack money to reimburse workers for unpaid overtime, owners and certain high-level managers can be held personally liable for paying the workers.

« Prev   |   Next »