Note: This article appeared first in the Amarillo Sunday Globe-News on August 24, 2008.
One of the trickiest areas of employment law that every employer has to learn to handle well is the overtime law.
The Fair Labor Standards Act is not at all intuitive, so if you don’t know the specifics of it, you need to educate yourself quickly.
Why bother learning the overtime law? Because overtime violations are one of the most common bases for employee lawsuits against companies right here in the Panhandle.
These cases are never limited to just one employee seeking a little back pay. They are routinely turned in class actions seeking two times the alleged overtime compensation due to each employee for up to three years past and, of course, the employees’ attorney’s exorbitant fees.
To explain all of the Fair Labor Standards Act requirements, I would have to write a book, not a newspaper column. But here a few danger areas that you should know about:
Bonuses: For safety sake, just assume that every bonus you pay to an employee must be included in the overtime pay calculation.
Breaks: If your employee takes less than 30 minutes for a break or lunch (yes, that means if they clock back in at 29 minutes), you must pay for the whole lunch, even if it causes the employee to accumulate overtime.
Travel Time: If your Amarillo employees are occasionally driving from their homes to a worksite outside of the Amarillo/Canyon metro area, it is highly likely that you owe them compensation for the travel time.
Before and After-hours Activities: If your employee is doing preliminary activities like filling out forms, fueling vehicles, donning uniforms or cleaning equipment to prepare for or wrap up his work for you, you must pay him for that time, even if it means you will owe him overtime.
“Comp time”: As a private business, you are not allowed to provide your employees with time off in lieu of overtime. You can’t average their time during a pay period either. Even if your employees agree to being paid that way, these practices violate the law. If an employee works more than 40 hours in any one workweek, you owe her overtime.
Managers and Administrators: The white collar exemptions that allow you to pay a manager or an administrator a salary instead of hourly and overtime pay are very narrow exceptions to the overtime laws. Do not decide for yourself that an employee is exempt without very careful research or a legal opinion. Most businesses I have audited are paying someone a salary as an exempt employee who does not fit the exception. That mistake is an express lane to litigation.