Every manager should know that the Fair Labor Standards Act (FLSA) requires employers to pay overtime to workers who are not classified as exempt. Overtime (OT) is defined as pay at a rate of not less than time and one-half the worker’s regular rate of pay for every hour worked above 40 hours. There is no limit in the law on how much overtime pay a worker can receive. Managers and business owners, on the other hand, are bent on minimizing overtime hours as much as possible, which is understandable given the higher wage expense.
Over the years, we’ve seen a few clients’ attempts to dodge OT, all of which are against the law, and we’re listing these myths as caveats for those who use these tactics, and as help for new managers who may not be versed on this topic. In addition, if you’re a worker who has been impacted by any of these issues, you may have recourse to receive pay for back wages. Contact your local Wage & Hour agency of the Department of Labor.
Myth #1: The manager didn’t approve the overtime hours. Some managers mistakenly believe that it is the worker’s responsibility to notify the manager that she has rendered 40 hours of work in a work-week and receive approval for exceeding them. While this may be your company’s policy, and one with which we agree, don’t conclude that you can refuse to pay OT because approval was not sought or granted. If the worker worked it, the company must pay it. Period.
Myth #2: Change an employee’s classification to exempt. This will be the topic of another installment in this series, but for now, let’s review: specific guidelines cover the reasons to classify a worker as exempt. In the old days, making someone a supervisor or manager – even if they were the only employee in that dept! – was one trick clients used to get around the rules. Now, even management-level employees with a high wage are eligible for OT pay. Be mindful of the law so you don’t expose your employer to costly fines and payment of back wages.
Myth #3: Use only independent contractors (IC). ICs are, as the label suggests, independent; they are not your employees. Instead they work for themselves and lend their talent/efforts to your business in exchange for a payment. Because they’re ICs, they are outside the wage & hour rules of FLSA: they can work as many hours as needed, no OT pay is required, and the company does not contribute to any of the IC’s payroll taxes. Sounds like a great solution, right?? Wrong. Specific rules guide classification of workers as ICs; among them are: the absence of supervision, training or “bossing” since ICs are their own boss; the ability (nay, encouragement) to work for more than one company as an IC; the potential for profit/loss, among others.
Myth #4: Get all this work done & don’t exceed 40 hours. We like to call this the ‘See nothing, know nothing’ style of management. Basically, the supervisor explains that the employee must complete a certain amount of work and “we don’t pay overtime.” Workers, who don’t know better but feel a deep sense of responsibility, will work beyond the end of the work-day but reflect only 40 hours on the timesheet or clock out at the end of eight hours but continue working. If a manager knows or should know (e.g., because you see the employee working after hours, or working through lunch, etc.) that the timesheet or time-card is not accurately reflecting the hours worked, he or she must strive to correct the timekeeping. Counseling of the employee is also in order so he or she understands that time records are legal documents and must bear the actual time the work started and stopped.
Supervisors and managers must be versed in all aspects of HR laws so that they can protect their employers and employees. Join us next time as we move onto Part 2 of this Wage & Hour series and tackle minimum wage.