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Overtime and Comp Time – Generally
OLD UPDATE: Back on 8-23-04 was the day the Bush administration acted to weaken overtime pay rights for millions of workers. See AFL-CIO fact sheet on new overtime rules, See also Tim’s Rant about the new overtime rules (with more links about the new rules).
This article attempts to introduce you to some of the complexities of the overtime laws. I touch on the subjects of Exemptions, the problems faced by Salaried Workers, Compensatory Time and other substitutes for overtime pay.
Unpaid overtime claims are often worthwhile lawsuits. The law allows attorney fees, which helps attract lawyers. But the overtime laws and regulations are complex. It is often difficult to determine if an employer is required to pay you overtime. The laws are complicated enough that employers often wrongly conclude they don’t have to pay overtime. Employers wrongly classify a lot of people as “exempt” who do not meet the standards set down in the law. It all depends on the circumstances. If you want to explore your overtime rights, you have three main sources of information readily available to you:
FYI: The US Department of Labor has proposed sweeping changes in the Overtime laws that are bad for workers, in my opinion, and I tell you why in my article Tim rants about some proposed changes to overtime laws (opens in new window). Big Business and our Federal Department of Labor under George Bush want to eliminate overtime for millions of office workers, technicians and low level lead persons. This is worthy of a Rant. See if you agree. See also the much more extensive analysis and criticism of proposed changes to overtime laws and regulations by the fine folks at Workplace Fairness.
If you obtain enough information to determine that you may be entitled to overtime, you can contact a lawyer to consider filing a lawsuit. You can complain (respectfully and in good faith) to the employer or to the Department of Labor. No matter which action you take, the employer may be upset about your overtime claim and might want to retaliate against you. If your employer has a reputation for retaliating against complainers, you might want to consider calling a lawyer before you raise the overtime issue. If you file a lawsuit, or file a formal complaint with the Department of Labor, your protection against retaliation will be stronger than if you merely complain to the employer. If you get retaliated against, you may have a wrongful termination case. See my articles on Complaints and Retaliation for more info.
In an action in court for unpaid overtime, you can win the amount of the overtime, and an extra amount equal to the unpaid overtime as “liquidated damages” plus attorney fees.
In an action for retaliation for complaining of unpaid overtime, there are legal theories which, if the court accepts them, might entitle you to win compensatory and punitive damages, as well as backpay and attorney fees.
If an overtime dispute arises, one of the major legal battles in court is whether the employee fits within an “exemption” in the overtime law. NOTE: An exemption from overtime does not mean exemption from the minimum wage laws. Visit the Department of Labor web site, linked above, for more info.
A truly “exempt” worker does not have to be paid overtime, because they are exempt from the overtime laws. The Federal overtime laws specify a fairly long list of categories of workers who are exempt. Click the links at the top of this article and explore the listings provided by the Department of Labor to see for yourself. Here are a few examples: bona fide executives of the company, some categories of computer workers (but not data entry clerks), some categories of agricultural workers, some categories of recreational workers, and many other categories of workers.
Supervisory workers may or may not be exempt under the laws, it depends too much on the circumstances to offer any general rules or guidelines here.
Workers who are paid by some means other than an hourly rate or a salary (for 40 hours) may have trouble with an overtime claim; it all depends too much on the circumstances. Pure commission sales reps may be exempt. Those who are paid by the job, regardless of time spent, may be exempt. Those with bona fide employment contracts may have trouble making an overtime claim.
Sometimes the employer will structure your compensation deal so as to try to avoid paying you overtime. If you are otherwise in a category of workers who would have to be paid overtime, then the court might require you to be paid overtime anyway. It gets complicated.
Here are a few categories of workers that are usually not “exempt” from the Federal Overtime Laws: non-supervisory factory workers, non-supervisory office workers, non-supervisory workers who are paid an hourly wage for work on the employer’s premises, non-supervisory workers who are paid an hourly wage for work that is closely monitored by the employer, and “salaried” non-supervisory workers who work in factories or offices. Call the Department of Labor or visit their web site for more info.
Your employer’s opinion about your exemption status does not count for anything. Do not put any faith in the employer’s declaration that you are “exempt.” The Department of Labor and the Court decide who is exempt, not the employer. Employers often tell mere clerical workers they are “exempt” from overtime just because they are “salaried.” That’s not true. They might be exempt, but the employer’s opinion is not relevant to the analysis.
If you are a bona fide salaried worker, and if you should be receiving overtime pay, the employer may owe you much less overtime pay than you think. Most salaried workers are probably bona fide, in the sense that the employer is not trying to undermine the overtime laws by paying a salary. Some workers have jobs that do not fit well within an hourly pay scheme, so the employer pays a salary for all hours worked in a given week, and sometimes that will be less than forty and sometimes more than forty. (Whether you are a bona fide salaried worker is up to the court to decide). Workers enjoy some freedom to reach a salaried compensation deal with their employers, but the deal might reduce the employee’s overtime claim. It gets complicated, but I’ll try to explain how bona fide salaried workers can get ripped off by the law if they make overtime claims.
Here is the problem for bona fide salaried workers who are owed overtime: In determining your hourly wage for the week, the court will not divide your salary by 40; the court will divide your salary by the actual number of hours you worked even if more than 40. This reduces your effective hourly base rate. Then the court will assume that you’ve already been paid the base rate for each hour worked. So you are only owed 1/2 hour of pay for each overtime hour (using the lower base hourly rate).
Example with real numbers: Salary = $400 per week for 40 hours, or $10 per hour. Common sense says each overtime hour would be worth $15, but the overtime claims for bona fide salaried workers do not follow common sense. Let’s say the employee worked 50 hours one week and did not get overtime pay. The court will divide $400 by 50 to get the base hourly wage for that week of $8. Based on an $8 hourly wage, each overtime hour is worth $12 (at time and a half). Since the employee already received $8 for each of the overtime hours, the employee is only owed $4 extra per hour. Under common sense, the employee was owed $150 (10 times $15), but under the law and court decisions, the employee is only entitled to $40 (10 times $4). Sorry.
Unless you are really exempt from the overtime laws, your employer is probably violating the law by giving you “comp time” rather than overtime pay. The Federal labor laws allow police and fire departments to get away with “comp time,” but everyone else whose job is covered by the Federal overtime laws must actually be paid overtime. If you have received comp time, call me and let’s talk about it. You might have a worthwhile unpaid overtime lawsuit.
If the employer must pay you overtime, the law does not allow the employer to satisfy its obligation through special bonuses or anything other than the expressly designated payment of time and a half per overtime hour. If the employer pays you a bonus for overtime work, the Department of Labor says he still owes you the overtime pay even though he paid you the bonus. The Department of Labor wants to see that the employer cuts you a check saying (in effect) “For overtime pay of ___ hours, here’s a check for time and a half for each overtime hour in the amount of $____”. Even if you received a bonus worth more than the overtime pay, the Department of Labor says the bonus does not count. The Department of Labor insists that you get paid “overtime” and does not accept any substitutes. The reason for the Department of Labor’s harsh policy is that the Department wants to discourage any attempts to undermine the overtime laws, and it wants to encourage the proper tracking and paying of overtime hours worked.
Article written by | Tim Willoughby
Maintained by Attorney Phil Willoughby
Founded by Tim Willoughby, Esq. (1959-2013)
Phil is a Missouri employment lawyer who is licensed to practice in Kansas and Missouri, and primarily takes cases in Saint Louis and Kansas City. He is a member of the Missouri Bar Association and Kansas Bar Association. Additionally, he has practiced in the United States Federal Courts of Missouri in St. Louis and Kansas City. He has also practiced in the Kansas Federal District Court in Kansas City, Kansas.
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