People's Law Guide
OVERTIME PAY: EMPLOYEES SUE WHEN NOT
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.
* 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.