The Fair Labor Standards Act, commonly known as the “FLSA,” requires covered employers to pay their employees time and one-half their regular rate of pay for each and every hour worked over Forty (40) in a workweek.
Regardless of whether employees receive their wages through a salary, an hourly rate, a draw, a production rate (a piece rate), or commissions — or a combination of types of pay – the FLSA requires covered employers to pay overtime wages for each and every hour worked over forty (40) in a work week, unless certain exemptions are met.
For hourly employees, the FLSA requires the employer to track and compensate employees for all time worked. It is illegal for an employer to require hourly employees to perform work off-the-clock before or after their shifts or during unpaid meal breaks. Employers must provide a mechanism for tracking time spent on all job-related activities, including handling work-related communications such as emails, phone calls and text messaging, or work-related paperwork, even if this work is performed at home. Other examples of unpaid time may include booting up computer programs, attending training or safety courses, cleaning or inspecting equipment, undergoing security checks, and putting on and taking off gear or protective equipment. Unpaid lunch breaks must be uninterrupted and employees must be relieved of all work duties. Time spent driving from job site to job site must also be paid.
In addition, when calculating overtime payments, employers must include any commissions or non-discretionary bonuses earned by the employee in the overtime calculation.
Some factors that are relevant to whether an employee can be classified as an exempt manager not entitled to receive overtime include: whether the employee supervised two or more employees, whether the employee had authority to make hiring, firing, promotion and demotion decisions, whether the employee had the authority to set pay rates for other employees, whether the employee is required to follow company policies and procedures that dictate how the employee performs his or her job, whether the employee is relatively free from direct supervision by a higher level manager, and whether an employee exercises discretion and independent judgment as to important business decisions.
Severance or Arbitration Agreements
Employers sometimes require employees to sign severance agreements or other paperwork upon their termination in which employees waive their right to claim unpaid wages or overtime. However, these agreements are often unenforceable because claims to minimum wages and overtime cannot be waived by agreement. While it is always advisable to consult with an attorney prior to signing a severance agreement, for employees who have already signed them, Shavitz Law Group can evaluate your severance agreement to help determine whether it is enforceable.
Employers often require employees to sign arbitration agreements as part of their onboarding paperwork. Many employees either sign the arbitration agreement without understanding what it means or are given no choice but to sign them it and are told they must sign the agreement in order to be employed. Employers then use these agreements to try to prevent employees from bringing wage and overtime disputes as class or collective actions or to keep these claims out of court. Shavitz Law Group has represented thousands of employees whose employers had arbitration agreements and has experience defeating employers’ demands to arbitrate claims where they cannot prove there was a legally enforceable arbitration agreement.
The most common industries employing tipped employees are the restaurant and hospitality industries. The federal minimum wage is currently $7.25 per hour. Many states have their own minimum wage requirement that is higher than the federal minimum wage. Generally, employers of “tipped employees” are allowed take a tip credit towards their minimum wage requirements, meaning that tipped employees can be a paid an hourly rate that is lower than the regular federal or state minimum wage. If the employee does not earn enough in tips in a workweek to meet federal or state minimum wage requirements, the employer is required to make up the difference.
Employers can only take a tip credit if they meet specific legal requirements. Employers must not require that tipped employees share tips with employees who do not customarily and regularly receive tips (such as a restaurant including kitchen workers in a tip pool). In addition, if tipped employees spend more than 20% of their time at work on duties which do not generate tips, the employee is considered to have dual jobs and the employer cannot take the tip credit for hours worked that are non-tip producing. An example of this is a restaurant server who spends greater than 20% of his or her time performing sidework, such as rolling silverware or cleaning the restaurant. If the employer does not meet one or more tip credit requirements, the tip credit is lost and the employer has to pay the full minimum wage for each hour worked. In addition, under the FLSA, tipped employees who work over 40 hours in a workweek must be paid overtime based upon the full federal minimum hourly wage and not the lower subminimum wage.
Many workers who are classified as “independent contractors” are misclassified and are actually employees who are entitled to receive overtime pay. There are many factors that go into whether a worker can be classified as an independent contractor, some of which vary by state. Some of these factors include whether the employer has a high degree of supervision and control over the worker including when and how the worker performs the job, how the worker is paid, whether the worker provides his or her own tools and equipment, the investment of the worker into the business, and the duration of the employment. Shavitz Law Group can help you evaluate whether your classification as an independent contractor is lawful.