In this case, a contract Human Resources firm (you would think they would get this stuff right) believed that by raising its employees salaries high enough it exempted them from the FLSA and its overtime provisions. The result of this misreading of the law was a $1 million dollar settlement to pay back wages to 260 employees (this is on top of the $326,000 it paid out in 2012 – so it’s a repeat offender).
The Salary Myth
Whether an employee is entitled to receive overtime under the FLSA (or similar state laws) is a multifaceted question about job duties,method of compensation, and qualifications (e.g. professional degrees). Simply paying an employee a base salary does not exempt him from the overtime provisions of the Fair Labor Standards Act. Even the highly compensated exemption, employees that make over $100,000, still requires that the employee meet a minimum duties test.
The Consequences
Overtime violations can add up quickly. In a typical scenario if one employee is being paid incorrectly, chances are others are too. Sometimes the error is limited to employees with a particular job title, but it may be an error made with regard to many hourly employees, even misclassified salaried employees. For example, many companies today continue to pay only straight time for hours over 40 – conveniently not paying their employees the half-time premium mandated by the FLSA. Other companies – like the one in this case – assume a salary means that they do not have to abide by the overtime laws at all.
Violations cost an employer the amount of overtime owed multiplied by the number of employees multiplied by two for liquidated damages and then multiplied by the number of workweeks at issue. Then you add the cost of the employer hiring its own attorney and the attorneys’ fees of the it becomes obligated to pay the employees’ attorney..
(Unpaid Overtime Number of Employees 2 # of Workweeks)
Employer’s Legal Fees Employees’ Fees = $$$$
The FLSA can go back two years and even three years if the violations of willful. This may mean the difference between 104 weeks and 156.
Maduff & Maduff has handled numerous wage and hour collective actions for many hundreds of employees. If you believe you are not being paid correctly, have been misclassified, or feel that you are a victim of wage or overtime theft, contact Maduff & Maduff today.