Ten Common Violations of Overtime Pay Law
Not paying overtime to field service workers:
Companies in many industries, including the oil and gas industry, employ “field service engineers,” “mud engineers,” “tool pushers,” “ technicians,” “tankermen” and other field service workers who provide service to the company’s clients or assist the company in its operations. Sometimes, the company pays those workers a “fixed salary,” a “day rate” or a “per job rate,” with no overtime pay. In many cases, however, field service workers do not fall within the exemptions from overtime pay, and are legally entitled to be paid overtime when they work more than 40 hours a week. More oil and gas industry jobs may be affected.
Not considering bonuses or other extra pay in an employee’s overtime pay:
In most cases, employers pay an employee a bonus for work performed in the past. If that’s the case, then the bonus may need to be included in determining your overtime rate. Some employers fail to do this. For example, if an employee works at $20 per hour for 50 hours, then the employee would be typically owed a total of $1,100. That’s because $800 (40 hours times $20 per hour) plus $300 (10 overtime hours at $30 per hour) equals $1,100. Now, what if an employer gives a non-discretionary bonus at the end of the week, or month, or year? In that case, the bonus should be figured in and your hourly rate of $20 per hour should be adjusted upwards, which means the overtime rate would be even higher. Many employers give bonuses at the end of the week, or month, or year. Yet, they fail to go back and readjust their overtime payments for that period of time. This means they underpaid their employees. If you received a bonus and received overtime, you may very well have a claim.
Treating workers as independent contractors in order to avoid paying overtime:
Bona fide independent contractors are not entitled to overtime pay under the The Fair Labor Standards Act (FLSA). Only employees are. But just because an employer calls someone an independent contractor does not make him one. If the worker is in business for himself, then he really is an independent contractor. But, if the worker is economically dependent on the company, then he is really an employee entitled to overtime pay when he works more than 40 hours in a work week.
Not paying overtime to assistant managers:
Some businesses pay a salary to their assistant manager-level employees without paying them overtime. But in order to qualify for the “executive exemption” from overtime pay, an assistant manager must meet each of the following three tests: (1) his primary duty is management of the enterprise or of a customarily recognized department or subdivision; (2) he must customarily and regularly direct the work of two or more other full-time employees or the equivalent; and (3) he must have the authority to hire or fire, or make suggestions and recommendations as to hiring, firing, advancing, promoting, or other work status changes that are given particular weight. In stores where there are typically a manager, assistant manager, and a few hourly employees on duty, it is unlikely that both the manager and the assistant manager will quality for the exemption. If the assistant manager’s job responsibilities do not meet the “executive exemption” tests, then he is entitled to overtime pay.
Not paying hourly paid employees for all hours worked:
Employees are entitled to be paid for ALL hours they work, whether they are at their regular work stations or not. Suppose an hourly paid employee clocks out every day at 5:00 p.m., but spends time working at home on his Blackberry or through remote computer access. He is entitled to be paid for that working time. Or suppose an employee has to boot up his computer and pull up software applications before beginning his job duties each day. Again, the employee is entitled to compensation for that time.
Not paying overtime to IT employees:
One of the exemptions from the requirement to pay overtime is for employees who are computer professionals. Computer professionals are employees whose primary duties involve the design and development of computer systems or programs. Standard IT personnel involved in troubleshooting, installing equipment, and help desk-type work typically do not meet the requirements of the exemption. These types of IT employees are entitled to overtime pay.
Overuse of the administrative exemption:
The law recognizes an exemption from overtime for administrative employees who support their employer’s business operations. But for that exemption to apply, the employee’s primary duty must include the exercise of discretion and judgment with respect to significant matters. In other words, they have to be able to make important decisions that bind the company. Sometimes, employers improperly lump employees who lack such authority under this exemption. Examples of commonly misclassified employees include secretaries, dispatchers, inventory clerks, HR clerks, administrative assistants, and various employees with titles including the words “analyst,” “coordinator” or “technician.” In addition, employees whose primary duties involve selling financial products or mortgage loans do not qualify for the administrative exemption.
Reclassifying employees from exempt to non-exempt status, without paying any back-pay to the employees:
Sometimes, employers realize that they have been improperly denying overtime to a group of employees and correctly change their status to “non-exempt,” switching them from salary to hourly and paying them overtime when they work more than 40 hours in a workweek. But if those employees were wrongly classified as exempt from overtime to begin with, then the employer owes them back-pay for the overtime they previously worked. Additionally, the employer usually must pay the employees double the amount owed them for what’s called “liquidated damages.” Yet some employers reclassify employees from exempt to non-exempt status without making such payments.
“Docking” employees’ pay based on the quality or quantity of their work:
To lawfully treat an employee as being exempt from overtime, as a general rule, the employer must (among other requirements), pay the employee the same minimum salary each workweek, regardless of the quality or quantity of their work. So, if an employer has a practice of “docking” or making deductions from its exempt employees’ guaranteed minimum salary based on the quality or quantity of their work, they may be violating FLSA. In such cases, the employees covered by the policy may be entitled to overtime pay during the entire time the practice was in effect.
Failing to pay overtime to salespeople:
The FLSA exemption from overtime relating to sales is limited and specific: the exemption applies only to employees whose primary duties involve making sales at the customer’s place of business, a practice known as “outside sales.” The outside sales exemption does not apply to an employee who makes sales from any of his employer’s offices, or even from the employee’s home office, nor does the exemption apply to sales conducted by mail, telephone, or the Internet. Many employers ignore these limitations and improperly classify anyone in sales as exempt.