Overtime (29 U.S.C. s. 207) (29 CFR Part 541)

• Overtime at the rate of time and one half times the employee's regular rate is required for all hours worked over 40 in a workweek for nonexempt employees.


• "Comp time" cannot legally be used for nonexempt employees because they must be receive time and one-half for all hours worked in excess of forty in each workweek. The one exception is "time-off plans" where an employer with a two week pay period can provide time off during the second week, at the rate of time and one half, for overtime worked during the first week.


• "Hours worked" is broadly defined. It generally includes all time when an employee is required to be on duty or to be on the employer's premises even if no work is performed.


• Overtime applies only after 40 hours "worked," not to paid time off such as holidays and vacations. However, paid time off can affect the "regular rate."
  
• The "regular rate" is the hourly rate actually paid the employee for the nonovertime workweek. It includes all remuneration paid to the employee, including commissions, regular bonuses and paid time off.


• Exempt employees typically fall into one of four classifications, all defined by regulations and must earn at least $684 per week (equivalent to $35,568 per year for a full-time worker).
  
  • Executive
  • Administrative
  • Professional
  • Outside salesperson (29 U.S.C. s. 213(a)(1)) (29 CFR s. 541.600)

• Docking salaried exempt employees for partial day absences may result in the employee being deemed by the Wage and Hour Division to be paid on an hourly basis and therefore to be nonexempt. (FLSA Overtime Security Advisor)


• On January 6, 2021, the DOL issued a Final Rule regarding a multifactor test for determining whether workers are independent contractors. This rule will take effect on March 8, 2021. Under the FLSA, an independent contractor is not considered an "employee," meaning the minimum wage and overtime provisions of the FLSA do not apply. The DOL adopted an "economic reality" test to determine a worker's status as an independent contractor. There are two "core factors": (1) the nature and degree of the worker's control over the work; and (2) the worker's opportunity for profit or loss based on initiative, investment, or both. These two factors are most probative. If both of these factors point towards the same classification, then there is a substantial likelihood that the classification is appropriate. The three remaining factors include: (3) the amount of skill required for the work; (4) the degree of permanence of the working relationship between the individual and the potential employer; and (5) whether the work is part of an integrated unit of production.


• No employer is deemed to have violated the overtime requirements by employing an employee of a retail or service establishment in excess of 40 hours if (1) the regular rate of pay is in excess of one and one-half times the applicable minimum hourly rate and (2) more than half of his compensation for a representative period (not less than 1 month) represents commissions on goods and services. (29 U.S.C. s. 207(i)) (29 CFR s. 779.410)


• Under the Fluctuating Workweek (FWW) rule an overtime eligible employee whose hours fluctuate from week to week and who agrees to receive a fixed salary covering all hours of work is entitled to a "halftime premium" for hours worked in excess of 40 hours per week - not a "time and one half" premium. Under a recent regulation the DOL clarified that employers may pay bonuses or other incentive-based pay without violating the FWW rule as long as an overtime premium is paid on such additional compensation. (29 CFR s. 778.114)


• Employees who are covered by the Motor Carrier Act of 1935 (49 U.S.C. s. 13102) are exempt from the Fair Labor Standards Act and therefore are not entitled to overtime, unless they fall under the small vehicle exception. (29 U.S.C. s. 213(b)(1))


• It is unlawful for an employer to discriminate against an employee for filing a Fair Labor Standards Act complaint. (29 U.S.C. s. 215(a)(3))


• An employer who violates the Fair Labor Standards Act is liable to the employee for the unpaid wages, an additional equal amount as liquidated damages and reasonable attorney's fees. (29 U.S.C. s. 216(b))


• If the employer shows to the satisfaction of the court that the act or omission giving rise to the action was in good faith and that it had reasonable grounds for believing the the act or ommision was not a violation of the Fair Labor Standards Act, the court may in its descretion award no liquidated damages or award any amount not to exceed those damages. (29 U.S.C. s. 260)


• An action under the Fair Labor Standards Act may be commenced with two years after the cause of action accrued except that a cause of action arising out of a willful violation may be commenced within three years. (29 U.S.C. s. 255(a))
  

   

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