WAGE AND HOUR
The Fair Labor Standards Act (FLSA) is the federal law guaranteeing most employees minimum wages and overtime pay. Many states have similar laws, but with greater employee protections. Unless exempt, an employee must generally be paid at least $7.25 per hour worked (higher under many states’ laws), and time-and-a-half of (1.5x) the employee’s regular rate of pay for hours worked over 40 in a workweek. These familiar and seemingly simple rules quickly become complicated when one considers issues such as the worker’s “independent contractor” or exempt status, or whether the employee has been paid for all hours worked, at the correct overtime rate.
Independent Contractor Misclassification
In recent years, many companies have misclassified their workers as “independent contractors” rather than employees. Employers often use the independent contractor model to save costs on payroll taxes, wages and benefits, even when doing so may well be illegal. This is especially so in today’s “Gig Economy.” But even though a company makes its worker sign an “independent contractor” agreement in which the worker "agrees" that they are not an employee, it is many times not actually the case that the worker is truly an independent contractor in the eyes of the law. Whether you are an employee (and thus entitled to minimum wage and overtime) is determined by the reality of your work relationship.
Just because an employee is paid a salary, it does not necessarily mean the employee is exempt from a right to be paid overtime for hours worked over 40 in a workweek. To be exempt, the employee must both: (1) be paid on a salary basis (which means he or she must be paid at least $684 per week regardless of the number of hours worked); and (2) have a “primary duty” which properly fits into one or more legally recognized exemptions.
The common “White Collar Exemptions” relied on by employers include the Executive, Administrative, Professional, and Outside Sales Exemptions. There are detailed conditions which the employer must meet to utilize any of these exemptions. If all conditions are not met, the employer may not rely on the exemption, and the employee may be entitled to overtime pay when they work overtime. Many types of employees who are classified as salary-exempt by the employer are not in fact exempt under the law. Common types of salaried employees who are misclassified include retail workers (assistant store managers), construction workers, emergency responders, salespersons, and healthcare workers.
Improper Calculation of Overtime
Sometimes employers improperly calculate overtime pay due their employees. For example, this might happen where the employee is paid a flat rate (i.e., a salary, piece rate or a day rate) and the employer fails to properly calculate the employee’s “regular rate of pay” for purposes of calculating overtime pay. The U.S. Department of Labor’s Wage and Hour Division has issued extensive rules concerning the calculation of the regular rate. For example, if a non-exempt employee is paid on a day-rate basis and works in excess of 40 hours, their regular rate of pay is calculated by dividing their day-rate compensation for that week by the number of hours worked. The employee’s overtime pay is then based on the regular rate calculation. Employers often are not in compliance with this rule.
Sometimes employees perform overtime work but the employer does not keep track of (and pay for) this time. This may happen where a construction worker must show up to the employer’s yard to load tools and equipment in a truck, but is not paid until the employee reaches the day’s construction site. Or, sometimes an employee is required to wear Personal Protective Equipment (PPE) to do their job, but is not paid for the time to “don” or “doff” the PPE. Further still, an employee might have time deducted for a “lunch break,” but still be required to perform productive activities for the employer. The Department of Labor even requires that any rest breaks (even if no work is performed) must be paid for if they are 20 minutes or less in duration. Any of these scenarios, and a myriad of others, could result in a claim for unpaid overtime against the employer.
First Responders, Firefighters and Law Enforcement
There are special and complicated overtime rules for first responders. As an initial matter, there is a strong presumption that anyone working as a First Responder (including EMS, firefighting and police) is not exempt from the right to overtime. On the other hand, the 40-hour workweek may not apply to some fire or police employees. Instead, under FLSA Section 7(k), work periods of up to 28 days may be set by the employer, in which the overtime requirement only applies to hours worked over 171 hours in 28 days (for police) and 212 hours (for firefighters). Often times, employers inappropriately apply Section 7(k) to those who are ineligible – i.e., those who are not trained in or do not engage in fire suppression, or those who work for a non-profit (as opposed to governmental) fire department. Other times, employers do not properly implement these 28 day cycles and thus improperly compute overtime pay. Still further, some employers improperly classify their first responders as completely exempt, paying them a salary and no overtime, even when they work beyond the applicable overtime thresholds for the 28 day cycle.