I am amazed sometimes at the things employers will do to avoid paying overtime. If this is done unintentionally, it is a sign of ignorance and lack of proper understanding of the requirements of the Fair Labor Standards Act. If this is done intentionally this falls into the category of wage theft. Below is a list of the ways that overtime is missed.
Acts of omission
Acts of omission are those that are done with no intention to cheat employees. They include:
- Paying employees a salary and thinking that nullifies the requirement to pay them overtime. There are two classifications of employees. Exempt employees must be paid on a salary basis. That, however, is not sufficient to avoid paying overtime. To truly be exempt the worker must meet the exemptions stated in the FLSA. Salary, however, does not equal There is any number of workers who, by the definition of their job, are nonexempt and thus must be paid overtime.
- Having an automated time system that automatically deducts for a lunch period. For a lunch to not be compensable it must be more than 30 minutes and the employee must be fully relieved of all duties. Many managers assume their employees are taking their lunch, so most time systems automatically adjust timesheets to deduct for the assumed lunch period. Without checking to verify that indeed the employee was fully relieved on their lunch period, time that could qualify for overtime may not be paid.
- Paying employees in comp time for any overtime worked. This type of arrangement is prohibited in the private sector. Governments can compensate employees with time, but private sector employers cannot.
- Having employees working for separate, but jointly owned, companies. If an employee works thirty hours for one company, then works another thirty hours for a second, but jointly owned company, the employee is likely owned 20 hours of overtime.
This list is in no way exhaustive, but these are four of the more common “mistakes” that are made. If you are making these mistakes you need to correct them and pay the required overtime to the employees. If you do not then you are committing an intentional act of “wage theft.”
Acts of commission
All of the unintentional acts listed above can become acts that are intentional if they are knowingly engaged in by an employer. There are other acts that will almost always be considered intentional. These include:
- Requiring workers to work off the This is not too much different than sticking a gun in their ribs and asking for their wallets.
- Only paying straight time for any hours worked over 40 in a week.
- Continually changing the definition of the work week in an attempt to avoid paying overtime. Employers do have the right to set the workweek and it does not even have to be the same for every employee. But once you set it and people are working that schedule you must be very careful in changing it. There must be good business reasons (other than avoiding overtime payments) for making schedule changes.
- Not paying employees who worked overtime without your permission. The law requires for you to pay for any time If you don’t want the employee to work that overtime again you must handle that as a disciplinary process.
Like the list above, this is not a comprehensive list. Employers have gotten very creative in ways to avoid paying overtime. That may save them money in the short-term but eventually, they will be caught. Settlements in the hundreds of thousands of dollars will more than make-up for any savings gained through cheating.
Be an ethical business. Pay what you owe, when you owe it. Don’t cheat employees.