Understanding Overtime & Protect yourself from a Wage and Hour Class Action

Overtime violations are one of the most come causes of a FLSA Class (Collective) Action law suit. Understanding overtime pay for employers is essential to ensure compliance with labor laws; fair compensation practices, and might just be the difference in whether you and your business is sued in an wage and hour class action.

The Fair Labor Standards Act (FLSA) governs how overtime is calculated, who qualifies, and the penalties for non-compliance. In this article, we'll explore how the FLSA regulates overtime pay, common employer mistakes, and how workers' rights are protected.

What Qualifies as Overtime?

Under the FLSA, overtime refers to any hours worked beyond the standard 40 hours in a workweek. Employees who work more than 40 hours must be paid at a higher rate for those extra hours. The law mandates that eligible workers receive overtime pay at "time and a half" their regular pay rate. For example, if an employee earns $20 per hour, their overtime rate would be $30 per hour for any hours worked over 40 in a week.

It's important to note that the FLSA defines the workweek as a fixed, recurring period of 168 hours (seven consecutive 24-hour periods). Overtime is based on hours worked in this workweek, regardless of whether an employee is paid weekly, biweekly, or monthly.

States such as California offer more protection under state law. In California any shift longer than 8-hours the employer is required to pay overtime (time and a half); If it's longer than a 12-hour shift then it's double time (e.g $20 regular pay then it'd be $40 double time). It’s always a good idea to check with your state laws and consult an employment attorney to better understand state wage and hour laws.

Exempt vs. Non-Exempt Employees

Not all employees are entitled to overtime pay under the FLSA. Workers fall into two categories: exempt and non-exempt employees.

- Non-Exempt Employees: These workers are eligible for overtime pay and must be compensated for any hours worked beyond 40 in a workweek. Most hourly employees fall into this category, as do some salaried workers, depending on their job duties and earnings.

- Exempt Employees: Exempt employees are not entitled to overtime pay, regardless of how many hours they work. Common exempt employees include those in executive, administrative, professional, and outside sales roles. To qualify as exempt, an employee's job duties and salary must meet certain criteria. For example, exempt employees must generally earn a salary of at least $844 per week (as of July 1st, 2024) and perform duties that involve significant decision-making or independent judgment.

Common Misconceptions About Overtime and Exemptions That Typically Lead To FLSA Class Actions

There are several common misconceptions surrounding overtime pay and exemptions, leading to potential misunderstandings and non-compliance.

1. Misconception 1: All Salaried Employees Are Exempt

This is false. Just because an employee is paid a salary does not automatically mean they are exempt from overtime pay. The employee's duties must also meet specific criteria under the FLSA for them to be classified as exempt.

2. Misconception 2: Overtime Only Applies to Full-Time Employees

Both full-time and part-time employees are eligible for overtime pay if they work more than 40 hours in a workweek. There is no distinction between part-time and full-time workers when it comes to overtime rules.

3. Misconception 3: Employers Can Avoid Paying Overtime by Averaging Hours

The FLSA requires that overtime pay be based on hours worked in a single workweek. Employers cannot average hours over multiple weeks to avoid paying overtime. For example, if an employee works 35 hours in one week and 45 in the next, they are still entitled to 5 hours of overtime pay for the second week.

4. Misconception 4: Comp Time Can Replace Overtime Pay

In most private-sector jobs, offering compensatory time off (comp time) in place of overtime pay is not allowed under the FLSA. Employers must compensate non-exempt employees with overtime pay for extra hours worked.

Penalties for Failing to Comply with Overtime Regulations

Employers who fail to comply with FLSA overtime rules face significant penalties. Common violations include misclassifying employees as exempt, failing to pay overtime, or not accurately tracking work hours.

- Back Pay: Employees who were wrongfully denied overtime pay can recover unpaid wages for up to two years prior to filing a complaint (or three years if the violation is deemed willful).

- Liquidated Damages: In many cases, employers may be required to pay an additional amount equal to the back pay owed as liquidated damages.

- Civil Penalties: The U.S. Department of Labor (DOL) may also impose civil penalties for repeat or willful violations. These fines can reach up to $2,074 per violation, with higher amounts for serious offenses.

- Legal Action: Employees can file lawsuits against their employers to recover unpaid overtime. Additionally, the DOL can bring lawsuits on behalf of employees to enforce overtime rules.

Conclusion

The FLSA's overtime regulations are designed to ensure that workers are fairly compensated for their time and effort. By understanding the difference between exempt and non-exempt employees, avoiding common misconceptions, and staying compliant, employers can protect themselves from costly penalties and FLSA Class (Collective) Actions.

Whether you are an employer or an employee, knowing your rights and obligations under the FLSA is essential for navigating the complexities of overtime pay.

If you have questions or would like to protect your business from a Wage and Hour Class Action please call us today at (888) 713-4337 or message me directly to set up a consultation.