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Wages and Overtime Pay

Overtime Pay

A federal law entitled the “Fair Labor Standards Act (“FLSA”)” provides that employers must pay any of their non-exempt employees a certain amount of wages when they work more than 40 hours during a given work week. The amount of wages that an employee receives for working more than 40 hours is called “overtime pay.”

The FLSA also sets the guidelines for overtime pay requirements. The law states that employers must pay out overtime wages at a rate of at least “time and a half” of an employee's regular salary. This means that if a worker is normally paid $20 per hour for their work, then their overtime hourly pay rate would be $30 per hour (i.e., $20/hour x 1.5).

To expand on this scenario further, suppose this employee worked 50 hours in one week at their regular rate of $20 per hour. They would receive $800 for the normal 40 hours (i.e., $20/hour x 40 hours), and $300 for the amount of overtime hours worked (i.e., $30/hour x 10 hours overtime pay). Therefore, their final paycheck would come out to $1,100 for the entire 50 hours worked.

Employees Entitled to Overtime Pay

As previously mentioned, certain employers are obligated to pay non-exempt employees for any overtime work performed in accordance with FLSA standards.

Generally speaking, an employer may be covered by the FLSA if they make $500,000 or more in yearly sales, or if their employees conduct business between different states (e.g., employees who make phone calls or ship packages to other states).

Therefore, a non-exempt employee who works for an employer that is covered by the FLSA is entitled to overtime payment if their work week exceeds 40 hours.

However, these extra wages will only apply to the hours worked for that particular week. So, for example, if a non-exempt employee works a 12-hour shift on one day, but does not work a total of more than 40 hours for their entire standard work week, then they will not be eligible to receive overtime payments.

Additionally, some states, such as Nevada, also have a daily overtime pay standard required by their state employment laws. Thus, in returning to the above example, a person employed in Nevada would be entitled to four hours of overtime pay for working a 12-hour shift, even if they did not exceed 40 hours of labor during their standard work week.

Lastly, in states that have a daily overtime standard built-in to their laws, an employee may be eligible to receive both the state and federal overtime wages if they meet the proper qualifications set out under these laws.

Employees Who are Exempt from Overtime Pay

There is one major exception to overtime pay and it applies to employees who are considered exempt according to FLSA guidelines. Basically, the FLSA separates workers into two categories: non-exempt and exempt employees. Exempt employees cannot collect overtime pay.

Some examples of employees who are exempt from overtime payments include:

  • White collar jobs such as executive, administrative and professional that based on a salary; 
  • Independent contractors;  
  • Volunteer workers;
  • Outside sales personnel; 
  • Certain computer specialists;
  • Workers of amusement parks or county fairs; 
  • Employees of organized camps or religious conference centers; 
  • Employees of certain small newspaper;
  • Newspaper deliverers; 
  • Workers in fishing operations; 
  • Babysitters; and 
  • Criminal investigators. 

The FLSA classifies exempt employees based on whether or not they are employed on a salary basis, and if their job duties fall into one of the five main exemption categories.

While there are also some miscellaneous exceptions, the most common exempt employees are the so-called “white-collar” workers. These are employees who typically make more than $100,000 per year and do not perform any tasks that would be considered manual labor (e.g., “blue-collar” work tasks).

Overtime Pay Requirements

The Fair Labor Standards Act (FLSA) sets the guidelines for overtime pay requirements. Generally, when an employer permits or requires an employee to work overtime, they are obligated to pay the employee for the overtime work. Employees that fall under the FLSA must receive overtime pay for hours worked in excess of 40 hours. The FLSA does not require overtime pay for hours worked on weekends or holidays. 

There is no set limit specified in the FLSA on the number of hours to work in any workweek. However, different workweeks can be formed for employees or groups of employees. The overtime requirement cannot be waived by agreement between employer and employees. Furthermore, an employer cannot block an employee from working overtime and cannot require an advance authorization for any work done overtime. 

The employer cannot refuse to pay for any work done overtime if it falls under the FLSA; the employees have a right to compensation that they worked for. Overtime pay must be calculated on the basis of the average hourly rate derived from the earnings worked for during the workweek. Earnings may be based on a piece-rate, salary or commission. 

The United States Department of Labor (DOL) issued new policies regarding overtime pay effective as of January 1, 2020. These policies will help more than a million Americans receive overtime pay. One of the major changes included increasing the minimum salary requirement for FLSA overtime exemptions. It also increased the annual compensation requirement and allow employers to use the nondiscretionary bonuses or incentive payments to satisfy the required salary standard for exempt executive, administrative and professional employees. 

Lastly, it altered the special salary levels for workers in US territories and motion picture industries. However, laws vary from state to state, therefore it is useful to research the local applicable guidelines for overtime pay and minimum wage. 

Standards for Minimum Wage

In order to prevent injustices regarding wages and work conditions, each state sets its own  standards and rules for them. The federal minimum wage set by the FLSA is currently $7.25 per hour. However, each state has set their own minimum wage laws and the employee is entitled to receive the higher one depending on federal or state. 

Some local cities and counties have “living wage” laws that set a higher minimum wage. These laws apply to the companies that are contracting to do business in the local area or government. In this case, the employer must pay the highest minimum wage whether its federal, state or local. Although minimum wage determines the hourly rate, employers do not need to pay employees by the hour. As long as the total amount paid divided by the total number of hours worked is equal to at least the minimum wage it is legally compatible. 

However, not all employers need to pay the minimum wage. There are two requirements set forth in order for the employer to pay its employees minimum wage. First, under the FLSA, your business must receive $500,000 or more in annual sales. Second, if your employees work in “interstate commerce” which generally means doing business between the states. 

Furthermore, the following are employees that are exempt from receiving federal minimum wage:

  • Independent contractors;  
  • Outside salesperson;
  • Workers on small farms;
  • Switchboard operators employed by phone companies with no more than 750 stations; 
  • Workers of seasonal amusement or recreational business;
  • Employees of local newspapers that have a circulation of less than 4,000;
  • Newspaper deliveries; and
  • Students and learners defined by law. 

Employees may still be covered under the state or local laws if not federal. Therefore, it is useful to do more research on them in the local state to determine if the employee is exempt from minimum wage. For employees who earn tips the minimum wage guidelines can vary. The federal law allows for employers to pay a different hourly rate to those employees regularly receiving tips. However, these tips must be enough to meet minimum wage requirements. 

Unpaid Wages Claims

Unpaid wages claims are claims that are brought by an employee against their employer when the employer has not paid all of the wages earned by the employee. In short, an employee's wages are based on the number of hours that an employee works multiplied by their hourly rate of pay.

The Federal Fair Labor Standards Act (“FLSA”) is the federal law that regulates and requires employers to pay employees appropriately for all time worked. The FLSA also includes the right for employees to receive a minimum wage, as well as requiring employers to pay employees overtime pay for any time worked over 40 hours in a work week.

In addition to federal laws, there are various state laws that also regulate and require an employer to pay a certain minimum wage or overtime pay. State laws often provide more protections for employees for wage and hour disputes, including a higher minimum wage or setting time limits within which an employee must be paid when a wage and hour dispute is made. Thus, it is important to know not only the federal laws on unpaid wages, but also your local state laws on the subject.

Minimum Wage Violations

As noted above, the Fair Labor Standards Act created a federal right to a minimum wage. A minimum wage violation occurs when an employer does not pay an employee the federally required minimum hourly wage. As of June 2020, the federal minimum wage is set at $7.25 per hour, which has been the federal minimum wage since 2009. Once again, state or city laws may require a higher minimum wage than the federal standard.

If you did not receive the required minimum wage, you may be able to collect unpaid wages from your employer. For example, if you were paid $6.75 an hour for 10 weeks, you can make an unpaid wages claim against your employer for the difference of $.50 per hour ($7.25 – $6.75) for 400 hours (40 hours x 10 weeks), which is a total of $200.00.

Once again, if your state or local jurisdiction requires a higher minimum wage, such as the $13 per hour minimum wage in California for employers with over 26 employees, then you can make an unpaid wages claim for the difference between that minimum wage and the wage you were actually paid. For example, if you were only paid $6.75 per hour for 10 weeks in California, you may make an unpaid wages claim for $2,500.00 ($6.25 x 400 hours).

Another common minimum wage violation by employers is failing to pay an employee that receives tip the minimum wage. Importantly, employees who regularly receive tips may be paid a lower minimum wage, so long as they earn enough tips to make the minimum wage for each hour they work. Thus, an employer may pay you $3.00 per hour, as long as after tips, you make the required $7.25 per hour federal minimum wage.

As a tipped employee, you must still make the federally required or state required minimum wage. If you did not make enough tips to reach the federal minimum wage, then your employer must pay you the difference. If the employer fails to pay you the difference, then you may make an unpaid wages claim against them.

Common Violations of Wage Laws

In addition to failing to pay an employee for time worked or failing to pay an employee the required minimum wage, employers may also violate hourly wage laws in other ways. Common violations of wage laws may also include the following:

  • Failing to pay an employee for time worked off the clock (i.e. requiring an employee to work before or after clocking in without pay);
  • Failing to pay an employee for paid meal and rest breaks;
  • Failing to pay an employee for required training classes;
  • Failing to pay an employee earned bonuses or commissions;
  • Making unauthorized deductions from an employee's paycheck, such as for business expenses;
  • Failing to pay an employee for required periods of travel;
  • Withholding overtime pay from an employee; or
  • Withholding salary or failing to pay an employee on time for work performed. Once again, the state you work in may set the time frame in which you need to be paid by. In most states, an employee must generally be paid at least bi-weekly.

Making an Unpaid Wages Claim

The Fair Labor Standards Act is enforced by the Wage and Hour Division (“WHD”) of the Department of Labor. If you believe that your employer has not paid you the wages you are entitled to, you may contact your local Wage and Hour Division office. After contacting the local WHD office, they will investigate your employer and the documents you submitted (pay stubs, work logs, tax documents, etc.) and determine whether or not they have violated the law.

If the employer is found to have violated the FLSA, the Labor department may initiate a civil lawsuit against the employer for payment of the employee's unpaid wages, as well as liquidated damages, if the employer is found to have willfully violated the law. If the employee is not satisfied with the results of the investigation, they may then bring a private civil lawsuit against their employer for payment of all unpaid wages, liquidated damages, and attorney fees.

Once again, there are state laws regarding unpaid wages claims. For example, in Texas, an employee would file a claim for unpaid wages with the Texas Workforce Commission (“TWC”). The TWC would then conduct an investigation into the employer, determine if they violated local wage laws, and then help the employee recover any wages owed.

Alternatively, an employee may also bring a private civil lawsuit against their employee based on violation(s) of state wage laws. There are various requirements as to when an unpaid wages claim must be brought; therefore it is very important that you bring your claim for unpaid wages as soon as possible.

What Makes a Wages and Overtime Pay Case Strong? What Makes it Weak? 

Some factors that can make a case for wages and overtime pay stronger include:

    • Providing solid evidence of the payment dispute or violation, such as financial records, employment documents, and testimony from other workers;
    • Hiring an employment lawyer to represent the worker in court and to inform them of their rights under the law;
    • Preparing a persuasive argument and creating an organized case strategy; 
    • Obtaining a letter to sue from a government agency that proves the issue was investigated prior to filing the lawsuit;
    • Confirming that the worker is covered by relevant wage and hour laws, as well as is eligible to receive overtime payments; and/or
    • Proving that a substantial amount of the employee's wages or overtime payments went missing, were lost, or their employer refused to pay them.  

Some factors that can make a case for wages and overtime pay weaker include:

  • Miscalculating the amount of wages earned;
  • Not checking whether the employee is covered under wage and hour laws;
  • Destroying valuable evidence or not having enough to support a claim;
  • Not hiring a lawyer to present the case in court; and/or
  • Not filing a complaint with a government agency first or waiting to receive a notice to sue letter before bringing a lawsuit.

Dos and Don'ts for Wages and Overtime Pay Cases 

Some dos for wages and overtime pay cases include:

  • Do hire a lawyer to assist with a wage and overtime pay case;
  • Do review company policies and other employment materials (e.g., employment agreement, employee handbook, etc.); 
  • Do keep track of all hours worked; 
  • Do treat all parties to a lawsuit with respect, including those employed by a court (e.g., a judge, bailiff, court clerk, etc.);
  • Do retain copies of pay stubs, timesheets, and other work-related financial statements;
  • Do preserve other evidence related to the overtime pay case (e.g., conversations with supervisors that take place over email or text messages);
  • Do speak to human resources or a supervisor before submitting a complaint to a government agency or filing a lawsuit; and
  • Do remember to ask a lawyer questions about the case (e.g., how long it will take, the potential remedies a worker can recover, possible consequences, etc.).

In contrast, some don'ts for wages and overtime pay cases include:

  • Do not bring a lawsuit without consulting a lawyer first;
  • Do not behave disrespectfully towards an employer during the case, even if they did violate the law;
  • Do not schedule a meeting with human resources or file a complaint with a government agency before reviewing company policies, the employee handbook, and/or the worker's employment contract first;
  • Do not lie about an employer's conduct or falsify payment documents (e.g., the employee's timesheets or pay stubs);
  • Do not destroy or throw away any evidence, even if it might hurt the case;
  • Do not ignore the payment issue and assume it will go away on its own; and
  • Do not steal from an employer to make up for missing payments.

How Can A Lawyer Help Me With My Wages and Overtime Pay Issues? 

Lawsuits concerning disputes over wages and overtime payments can become fairly complicated. Such matters often depend on the facts and legal issues in a specific case. Wage and overtime pay issues may also require extensive knowledge of both federal and state employment or labor laws. Thus, given the complex nature of wages and overtime pay issues, you will most likely need to hire a local employment lawyer in order to resolve your dispute. You will absolutely need a lawyer if your wage and overtime pay issue can be filed as a class action lawsuit. For instance, if you and many of your colleagues are experiencing the same payment issue in the workplace, then you may be able to bring a class action lawsuit against your employer. 

Generally speaking, an individual typically cannot represent themselves pro se in a class action lawsuit or bring one on behalf of their class members without legal representation. Therefore, you will need to hire an attorney to file this type of case. In addition, you will also need to hire a lawyer if there are outstanding issues that only affect you (e.g., as an individual worker) after the class action lawsuit is settled. Alternatively, you may also need to hire a lawyer if you attended mediation and it failed to resolve your issue. In such cases, a lawyer can explain to a court why it is necessary to have a judge intervene and can provide representation in court if the case goes to trial.

Finally, you should hire a lawyer if your wages and overtime pay issue involves a dispute over unpaid overtime wages that results in employment retaliation. A lawyer who has experience with handling employment matters can ensure that your rights are protected and that your employer does not retaliate against you for trying to claim unpaid wages. Also, if your employer does retaliate against you, your lawyer can help you get your job back and possibly recover damages as well.

If you believe that your employer has violated federal or state wage laws, you should first immediately contact your human resources department to attempt to resolve your issue. If the human resources department is unable to assist you in recovering your lost wages, you should then contact the federal or state department responsible for enforcing the wage laws in your area.

If the federal or state departments are unable to assist in recovering your lost wages, then it is in your best interests to consult with a well qualified and knowledgeable employment law attorney in your area. An experienced employment law attorney will be able to help you gather up the required evidence necessary to prove your unpaid wages claim, as well as initiate a civil lawsuit against your employer for unpaid wages. Finally, an attorney will be able to represent you in court at any necessary hearings.

Call our office today at 212-994-7777 or complete the convenient online contact form to set up a consultation.