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Overtime and Hourly Underpayments: Getting a Fair Hour’s Pay for a Fair Hour’s Work

Wage and hour law has risen to the forefront of workers’ rights lawsuits against negligent employers. In 2006, more action was taken by underpaid employers with employment lawyers than for discrimination litigation. Wage and hour law, as presented in The Fair Labor Standards Act of 1938 (FLSA) and its amendments, protects workers’ overtime pay, prevents forced off-the-clock work, and guarantees breaks and lunches.

Violations of overtime payments and other wage payment laws can violate federal, state, and local working laws (see state minimum wage and overtime laws here). Increasingly, white collar workers, especially managers, computer workers, and those who work off commissions, are finding that they, too, are protected by FLSA to litigate for the recovery of their unpaid overtime (see “duties test” below).

Your work is a large part of your quality of life. If an employer has consistently denied you breaks, overtime payments, or paid less than a minimum wage, you may be able to sue for these lost wages. For more information, read the laws and case studies on overtime payment and wages below. For an employment attorney, contact the Consumer Justice Group.

Origins of Wage and Hour Law
Minimum wage was established in the U.S. with The Fair Labor Standards Act of 1938 (FLSA). This law also prohibits employer retaliation against employees who file legal complaints and requires employers to keep accurate records of all hours worked by employees. Recent amendments, national laws, and Supreme Court rulings have further defined who is exempt from overtime wages, when a workweek begins, and what is covered in an hour’s work.

FLSA also guarantees time-and-a-half for overtime in most wage work and the means to sue for unpaid overtime and other wages. Such lawsuits allow victims of withheld overtime or wages to recover both the lost income and an equal amount in liquidated damages (an award for contract violation). These lawsuits also provide for the payment of a wage and hour law attorney’s fees.

Most Wage Work is Underpaid, Calculating Overtime Hours
Many workers end up working overtime without pay. Sometimes pay is lost because employers purposely leave hours off the books, hedge (round down) an employee’s hours, or do not include work activities in an employee’s logged hours. In some instances (see Wal-Mart unrecorded pay below), employers simply misreport an employee’s hours worked. FLSA requires that the employer not the employee keep accurate records of all hours worked.

Federal standards hold that any nonexempt employee (see rules test below for some overtime wage exemptions) must be paid time-and-a-half wages for working more than eight hours a day and double-time wages for working more than twelve hours. Though these wage and hour laws are more strict in California, Florida, and other states (check out your state's minimum wage and overtime laws), these federal standards apply to every state and most wage occupations.

As a wage earner, your time is your pay. More recent wage and labor cases have found that you must be paid for time walking to and from the production floor after putting on or taking off safety gear (and, in some cases, also the time required to remove this safety gear). Additionally, your employer must record your time and pay your wage for travel between jobsites, for activities required by work, and for training. If you arrive before schedule or work later than scheduled hours and are “suffered or permitted” to work these additional hours, your employer is required to pay you for these hours and include them in overtime calculations.

Overtime pay is required for hours worked over forty in one week, though your forty-hours-a-week does not have to begin on Monday. A work week can begin on any day and at any hour of the day, and your work weeks may differ from other employees, but averaging of hours over two or more weeks is never permitted.

Note: Hospitals and residential care establishments are allowed the “8 and 80 Overtime System,” best explained by referring to the Department of Labor’s calculating healthcare overtime pay page.

Unfortunately, wage and labor laws do not require special pay for work on weekends, holidays, or other days of rest.

Courts and workplace lawyers consider several factors in determining lost wage payments. One major factor is the length of time at the job. The longer you’ve sustained mispayment, underpayment, and/or financial neglect, the more important it is to begin investigation with an attorney right away.

Major Wage and Hour Overtime and Underpayment Awards
Employers denying lunch breaks and overtime or otherwise underpaying their employees have recently found themselves faced with lawsuits under the wage and hour law. Many of these employers know their workers deserve overtime but continue to steal wages to increase corporate profits in the hope that no one files a wage and hour complaint.

116,000 Wal-Mart employees filing a class action were awarded $172 million by a California jury in late December 2005 for being denied the state-mandated 30-minute unpaid lunch breaks. The court found that there were both cases of explicit denial of meal breaks and coercion by Wal-Mart managers who pressured employees to not take their meal break. This was the first of nearly a hundred Wal-Mart wage and hour lawsuits to go to trial for such illegal work practices as denying overtime payments, work breaks, and “time-shaving" (cutting payroll costs by falsifying hours worked). More shocking, a recent New Jersey lawsuit claims Wal-Mart employees were often locked in the stores after they clocked out and coerced into working off the clock.

Citigroup brokers have also received substantial awards from the courts for overtime hours denied by their employer. Some brokers worked 70+ hour weeks. Though commissioned employees, Citigroup brokers at its Smith Barney branch were denied overtime payments, which later cost the company over $98 million in settlement fees. Over $150 million has been paid by other brokerage firms since these workers sought legal action for wages due.

Recently, drug representatives have also sought restitution for unpaid overtime wages. Nine major drug companies, including Eli Lilly and Pfizer, are being sued for tens of millions of dollars in back pay after falsely telling their drug reps that they were overtime exempt.

Duties Test for White Collar Worker Overtime
Overtime payments to salaried workers are not new, but the new FairPay rules qualify more employees (an estimated 6.7 million workers) for overtime pay. Under these FairPay rules, employees earning less than $23,660 per year (or $455 per week) qualify for the same overtime protections as wage laborers. Previously, as long as an employee was paid a salary, overtime protections and pay did not apply. Now for millions of workers, these overtime laws do.

(NOTE: Police and fire personnel and other “first responders” do not qualify for this “white collar overtime.”)

Duties tests are strengthened by these FairPay revisions to FLSA. Historically, certain job titles allowed employers to exempt employees. Employees labeled as “executive,” “administrative,” “professional,” or “outside sales” employees did not qualify for overtime. When every white collar employer for a company is a manager, this presents problems of underpayment for overtime. A duties test requires employees to have a specific role corresponding to their title in order for an employer to exempt them from overtime payments.

A management employee must earn over $455.00 a week and must supervise at least two persons and manage an enterprise or a department to not qualify for overtime protections. An administrative employee must also earn more than $23,660 per year and have direct influence in the business of his/her employer and discretionary powers in his/her duties to be exempt from the overtime pay provisions of the FLSA.

Additionally, some computer employees are exempt from overtime pay provisions only if certain FairPay work requirements are met. Unless you are paid $455.00 or more a week or $27.63 or more an hour and your computer work is skilled or semiskilled (such as work performed by a computer systems analyst, computer programmer, or software engineer), you qualify under FLSA for overtime pay.


Lawyers for Change.
For more on white collar regulations, see the Department of Labor’s page on FairPay. If you believe your employer has miscategorized you as exempt and you and others are due back pay for overtime and unpaid hours, contact the Consumer Justice Group. We have employment lawyers across the country winning for client the awards they deserved.


The Workers' Rights News is a service of the Consumer Justice Group.

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