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Three Common Ways Employers Violate Wage-Hour Laws

Employers often run afoul of wage-hour laws in similar ways, three of which are discussed below.  Luckily, these errors can often be remedied, in a prospective manner, through a simple change in policy or practice.

Refusing to Pay for Unauthorized Overtime

Many employers require employees to seek approval before working overtime.  While that is an acceptable policy to have, employers get in trouble when they refuse to pay for unauthorized overtime.

I know, the idea of having to pay for unauthorized overtime seems at odds with a policy requiring advance approval of overtime hours.  However, it’s not inconsistent with the wage-and-hour laws requiring payment for that time.

How so?  The federal Fair Labor Standards Act (FLSA) defines the term “employ” to include the words “suffer or permit to work,” which essentially means that if an employer requires (or even allows) employees to work, the time spent is hours worked for which an employee must be paid.  As a result, time spent doing work not requested by the employer, but still allowed, is compensable time.

Treating Salaried Employees as Exempt from Overtime Pay Merely Because They Are Not Paid on an Hourly Basis

Some employers assume that all salaried employees are exempt from overtime. As discussed in a prior post (Some of Your Salaried Employees May Be Entitled to Overtime Pay), this is not true.  Salary ≠ exempt, and an employee must qualify for the applicable FLSA and state law exemptions in order for his/her pay to cover all hours of work in a workweek.

For employers who may have misclassified any positions as exempt from the overtime pay, and had those positions frequently work in excess of 40 in a workweek, the scary truth is that hefty back wages may be due those employees.

Interested in knowing more?  Click here for a fact sheet from the U.S. Department of Labor on the FLSA exemptions for executive, administrative, professional, computer, outside sales and highly-compensated employees.

Docking Hours of Certain Exempt Employees

Many of the FLSA exemptions require individuals to be paid on a “salary basis.”  Being paid on a “salary basis” means that an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis.  The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work.  This means that, under the FLSA, an exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked, subject to the exceptions below.  If an employer makes deductions to an exempt employee’s salary outside of these limited circumstances, the employer risks jeopardizing the employee’s exempt status.

Deductions from pay are permissible only:

  • when an exempt employee is absent from work for one or more full days for personal reasons;
  • when an exempt employee is absent from work for one or more full days due to sickness or disability, but only if a formal policy is in place governing paid sick leave;
  • when an exempt employee is absent from work for either partial or full days due to Family and Medical Leave Act (FMLA) leave;
  • to offset amounts employees receive as jury or witness fees, or for military pay;
    for penalties imposed in good faith for infractions of safety rules of major significance; or
  • for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions.

There’s one more exception to the requirement that an exempt employee must receive the full salary for any week in which the employee performs any work: employers are not required to pay the full salary in the initial or final week of employment.