Overtime Pay Revisited

5 minutes

Over on Reddit, I came across a post from an new employee working a summer job at her school. She was wondering about their pay. Apparently, her employer told her that because she had worked more than 40 hours, the employer could not pay her the full amount she was owed that week. She was wondering if this was legal.

Short answer: almost certainly not.

Slightly longer answer: there is almost no chance a summer job at a college campus rec center is exempt from overtime. Given that, if she works over 40 hours in a week, her employer owes her time and a half overtime pay. It doesn’t matter if they were saying they would pay her the money at some point in the future, or if they were saying they weren’t going to pay it at all. Either way, not cool. And not legal.

Unfortunately, she got a lot of confusing (and somewhat contradictory) answers from the people who responded. If she’s confused, and the people trying to answer her are confused, it seems likely many people out there might be confused by overtime rules. So let’s try to set the record straight!

Unapproved overtime

One person responded with a question as to whether the overtime was authorized or not.

But it doesn’t matter if the overtime was authorized or not. The law says, if the employee does the work, you have to pay for the time. It doesn’t matter whether you approved the work ahead of time.

So what are your options if you have a policy that requires people to get approval before they work overtime?

If you have people who fail to get permission for the overtime they work, your normal disciplinary policies still apply. So you could give them a verbal or written warning, place them on suspension, or even fire them (depending on your normal disciplinary process), but you still have to pay them for the time they worked.

So, in the Redditor’s case, the employer can’t argue they didn’t authorize the overtime and use that as a justification to not pay (or delay paying) the overtime.

“Suffered or permitted to work”

I have seen a couple of court cases where employers were able to successfully argue they shouldn’t have to pay overtime, because they didn’t know their employees were working overtime. In legal terms, they did not “suffer or permit” their employees to work those hours.

To be clear: in most cases, this argument doesn’t work. Simply saying that employees didn’t tell you they were working overtime is probably not going to be sufficient to get you off the hook. If you’ve scheduled the hours, obviously you should know your people are working. If their time records reflect their actual arrival and departure times, you know your people are working. If they send you emails that are time stamped after hours, you should know your people are working. If you or your supervisors can see them on-site, you should at least suspect they’re working.

The only times I’ve seen companies successfully argue they didn’t “suffer or permit” their people to work were cases where the employees didn’t record the time, didn’t report or complain to anyone they had worked “off-the-clock,” failed to use established company channels for reporting off-the-clock work, possibly even actively concealed the fact they were working, and/or were working the sorts of jobs where the company didn’t necessarily have a good way of knowing they were working. (For instance, people who worked remotely or mobile employees who weren’t necessarily under the direct observation of a supervisor for much of their day.)

In the case of the Redditor, obviously the employer knew she had worked the time, because they knew she’d worked over 40 hours. They just didn’t want to pay for the overtime (at least not right away).

State versus Federal laws

Several responders asked what state she was in, and noted the laws vary from state to state. While it’s true that different states have different rules in some respects, and state laws sometimes vary from federal rules, in this case it wouldn’t matter. Here’s why:

When there’s a difference between the state and federal regulations, the law says whichever one is more advantageous to the employee “wins.” So, for example, the federal regulations set the minimum wage currently at $7.25 an hour. Some states have passed laws setting their state minimum wage higher than the federal minimum. In those states, employers have to pay the higher state minimum. A state could pass a law setting a minimum wage lower than the federal rate, but it would have no effect, because in that case the higher federal minimum wage would apply.

The Fair Labor Standards Act (FLSA) also sets the overtime threshold at 40 hours per week. Some states have set more restrictive rules. For instance, in California, employers have to pay overtime if employees put in more than eight hours in a work day. This means that in California, you could owe overtime to an employee who works only nine hours a week — if they put in all nine hours on one day.

But just as with the minimum wage rate, states cannot pass rules that are below the threshold set by the FLSA. So a state could pass a rule that says employers don’t have to pay overtime unless an employee works more than 50 hours in a week. But the rule would have no effect, because the FLSA has already set the threshold at 40 hours per week. The threshold that’s better for the employees prevails.

In this case, the employer specifically told the worker the reason they “couldn’t” pay her the full number of hours owed was because she’d worked over 40 hours in a week. Clearly, they know the applicable threshold.

No comp time (at least, not yet)

Sometimes employers may want to offer their workers comp time in lieu of paying the out-of-pocket costs of overtime. And sometimes workers might value additional time off more than a few extra dollars in their paycheck. Unfortunately, as the law stands right now, only public-sector employers (such as a city or state government) have the option of offering comp time in lieu of overtime pay.

As of this writing, a bill has passed the U.S. House of Representatives that would allow private-sector employers to offer comp time as an option for overtime-eligible employees. Employers would have to compensate workers with time-and-a-half comp time: if an employee worked one hour of overtime, they’d get an hour and a half of comp time. Both the employer and the employee would have to agree to the comp time arrangement, and employers would not be allowed to mandate that employees accept comp time.

However, the bill has not yet passed the Senate. And until it does and is signed by the president, you still do not have the option of offering comp time in lieu of overtime pay.

Conclusion

If you are a private-sector organization with overtime-eligible employees, you need to know how many hours they work so you can pay them overtime when necessary. While tracking time is a challenge for distributed offices, telecommuters and mobile workers, services like AcroTime can make it easy. Employees can enter start and stop times over the web, with a smartphone app, and even using a traditional landline phone, while administrators can access these records and process timesheets from virtually anywhere. If you’d like an easier and more flexible way to track time in your workplace, visit the AcroTime website for more info or to schedule a free, no-obligation demo.

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