Everything you thought you knew about overtime may be wrong.
The U.S. Fair Labor Standards Act mandates time-and-a-half wages for any hours worked beyond 40 a week. The FLSA exempts “white-collar” workers who make more than $100,000 a year, but calculates those earnings on a weekly basis. Someone working on commission only may go a week or two without earning anything – and bam! A wage-and-hour lawsuit is born.
In 2004, the U.S. Department of Labor revised the FLSA to clarify which workers are exempt from overtime laws. Iin doing so, it boosted the number of protected employees. In 2006 the department collected $172 million in back wages from employers – up 3.6% over its “take” in 2005.
What’s your “wage and hour” IQ?
The $23,660 Rule
If your employee doesn’t make $455 a week ($23,660 a year) they are eligible for overtime, even if they would otherwise fit an exempt category.
“Executive” Assistant
One frequent miscategorization assumes that an executive assistant who is paid on salary is automatically exempt from overtime rules; after all, the title sounds like the FLSA exempt categories “executive” or “administrative.” Here’s a good rule of thumb: If an employee doesn’t have “change of status” power over at least two other employees, he or she probably doesn’t qualify for an executive exemption. Likewise, an assistant isn’t an executive just because he or she has “control” over access to the CEO; if that assistant actually has the power to sit in meetings and make decisions in the CEO’s place, then the exemption is more likely to hold.
Extra Hours
Can an employer establish a 50-hour work week? No and yes. Employees can set any length of workweek; the FLSA doesn’t enforce a legal minimum or maximum number of hours. But if an employee is nonexempt, their boss must pay overtime past 40 hours. If they are exempt, however, an employer can require the additional hours at a set salary – and dock t heir pay if they don’t comply. But their check can’t dip below the $455 a week threshold without potentially invalidating their exemption.
Telecommuting
When an employee is paid hourly, any 7.5 minutes of work must be rounded up to 15 minutes and paid. So if an executive assistant is tapping away on a company-supplied BlackBerry or sending work-related e-mails from home, that is considered “on the clock” and should be compensated. Electronic discovery is common in overtime lawsuits, so the back-and-forth of e-mails or phone discussions can establish a record of non-exempt employees working away from the office.
— source: Fortune Small Business Magazine, February 2008
This is an excerpt of an article appearing in “FSB” magazine’s February issue. It is included in this newsletter as a starting-point to an interesting and timely topic and is NOT intended as legal advice. For more information on this subject, visit fsb.com.