Donald F. Fontaine : Attorney at Law
Phone

97 India Street 
Portland, ME 04101 
dff@fontainelaw.com 


Federal Overtime

The Fair Labor Standards Act (“FLSA”) was passed in 1938. It is a Federal law that applies throughout the United States. The purpose of the FLSA is to establish a minimum wage, and to deter employers from requiring employees to work more than 40 hours per week. This latter purpose is accomplished by requiring the payment 1–1/2 times the “regular rate” of pay for hours worked over 40.

Hours Worked (What if the employer did not give permission to do the work?

Hours that are worked for an employer must be paid for even if the employer did not order or request the work. Time that is spent for the benefit of an employer, with the employer’s knowledge, is “hours worked” within the meaning of the Fair Labor Standards Act. The employer must pay wages if the employer “suffers or permits” a person to work. It does not matter where or when the work is performed. Even work done at the worker’s home must be paid for.

Hours Worked – Unauthorized Work

If the employer does not want the work done, the employer must stop it from being done. The employer cannot accept the benefit of the work being done and then refuse to pay the worker for it. This is true even where workers did work that they didn’t expect that they would be paid for. Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 295-6 (1965).

Work at Home

It does not matter whether the work is performed at the job site or somewhere else. If a worker takes files home and works on them, and the employer knows this and does not object, the worker must be paid for that work. Hogue v. National Automotive Parts Association, 87 F.Supp. 816, 818, 820, 9 WH Cases 336 (E.D. Mich. 1949).

Hours Worked/Training Time

A worker must be paid for time spent attending training programs sponsored by the employer. There are exceptions – training programs that are voluntary, during non-work hours, and not specifically related to the worker’s present job need not be counted as “work time.”

Hours Worked/Travel Time

Travel time during the workday and travel time which is a part of the worker’s “principal activities” is work time. This must be paid for. However, ordinary home-to-work travel is not work time. Even when a worker has to travel for hours a day from a central location to the work site, the travel time to get to the site of work is the result of where the worker lives. It is not work time. Unless the travel time directly benefits the employer, or helps the job to get done, it is not work time.

Hours Worked/”Down Time”

When a worker is not actively working for the employer, but rather waiting, eating, sleeping, or being “on call,” the question is the same: how free is the worker to spend that time primarily for the benefit of himself/herself? If it is spent primarily for the benefit of the employer, it is work time.

Split shifts/layover time

Some workers have time in the middle of a workday between the two time periods when they must work actively. If the time in the middle of the day is long enough for the worker to effectively use the time as he/she wishes, and if the worker understands that he or she does not have to return to the workplace until a definite specified time, the break in the middle of the day is not work time.

Meal Periods

Bona fide lunch or meal periods are not considered to be work time. 29 C.F.R.§785.19(a). However, for the meal time to be bona fide, it must last for at least 30 minutes, and the worker must be completely relieved from duty, both active and inactive. If workers are required to remain on the premises, this does not necessarily change the meal period into work time. However, if office workers are required to eat at their work stations, that time spent eating must be treated as work time; or, as often happens, if meal periods are frequently interrupted by calls to duty, the entire period must be counted as work time. This is common in nursing homes where nurses’ aides must answer bells even during their meal periods.

Sleeping Time

A worker must be paid for the time spent sleeping if the employer’s rules permit sleeping during the shift, and if the shift is less than 24 hours. This is so even if the employer provides facilities for sleeping, and even if the employee can sleep many hours while on duty. 29 C.F.R. §785.21. This is a common arrangement for workers who care for handicapped individuals within group homes.

If the shift is 24 hours or more, the sleeping time may be excluded from work time and not paid for. However, adequate sleeping facilities must be furnished by the employer, and the worker must be able to get at least five hours of uninterrupted sleep, or the entire sleeping time will constitute work time. Persons working for periods greater than 24 hours in length can make reasonable agreements with the employer, which will be enforced, regarding how much compensation would be received for sleep time (those working less than 24 hours cannot make such agreements; sleep time is work time).

Who is the Employer? (Independent contractors and others)

Under FLSA, a worker is employed by the business entity and the person who economically controls the worker. This is known as the “economic reality” test. It does not matter what the worker is called (leased employee, temporary worker, independent contractor, etc.). Nor, does it matter what the employer is called.

Temporary Employees

Businesses are, more and more, contracting with agencies for temporary or leased employees. Such workers are often paid by the temporary agency, but directed by the business to which they are assigned. If the agency does not know that an employee worked overtime, who must pay? Who must keep records? The Courts say that both the agency and the business must pay.

Joint Employment

A worker performing services for two different employers should learn whether the employers are “joint employers.” Normally, if a person has two jobs or two different employers, each for 40 hours per week, there is no overtime payment due. However, if the worker is employed by two “joint employers,” the work for both of these employers during a week is considered as one employment. Joint employment exists “where the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek.” Thus, the worker above who worked 80 hours per week would have to receive 40 hours of overtime pay.

Joint employment exists when one of the following things is true:

• The two employers arrange to share the employee’s services;

• One employer acts in the interest of the other employer in relationship to the worker, such as supervising him/her for both employers; or

• The two employers are not completely dissociated, so that one employer controls the other in some way.

Both joint employers are responsible for all of the wages owed to the employee by both of the employers 29 C.F.R. §791.2(a).

Independent Contractors

Employers, sometimes, rather than hire employees, contract with another business entity to perform portions of the work of the business. Employers, however, are not free to set up false independent contractor relationships that violate the FLSA. They cannot, for example, merely fill out a paper calling a particular employee an independent contractor. This is a technique used in the past to violate the FLSA, particularly its overtime provisions.

No matter what the legal document between the company and the worker says, the courts will evaluate several factors to decide if a particular worker is an independent contractor or an employee.

Determining How Much You Are Owed

All workers covered by the Fair Labor Standards Act must be paid 1 ½ times their “regular rate” of pay for all hours worked over 40 in any given work week.

The “Regular Rate”

The Fair Labor Standards Act (FLSA) requires that all employers pay their employees 1½ times their regular rate of pay for all hours worked over 40 in any given work week. Therefore, it is absolutely essential to determine what the worker’s “regular rate of pay” is. This term “regular rate” has a special and particular meaning in FLSA. It is the key concept to understand overtime compensation. Moreover, many violations of the overtime law are not caused by employers’ simple refusal to pay time and one-half for hours over 40. On the contrary, many employers pay overtime for all hours worked over 40, but fail to pay enough money. The reason is the employers fail to accurately calculate the “regular rate” upon which the 1 ½ multiplier is made.

The “regular rate” is the “hourly rate actually paid the employee for the normal, non-overtime work week for which he is employed.” 29 C.F.R. §778.108. Where the employer does not pay the employee an hourly rate, such as salaried or piece work employees, the employer must nevertheless convert the employee’s wages to a rate per hour. For example, a piece worker’s “regular rate” is the total earnings the worker earned during a work week divided by the number of hours worked in that particular week. Therefore, if a piece worker worked a total of 50 hours in a week, that worker must be paid during the 10 hours of overtime 1 ½ times the rate that the worker actually achieved during the week. Thus, one piece worker might have ended up earning $6.71 per hour, but a faster piece worker might have earned $11.21 per hour. Their overtime rates of pay during the 10 hours of overtime would therefore be proportionally higher, specifically: $10.07 and $16.82.

Retroactive Pay

Retroactive pay increases must be included in the regular rate. A pay increase that takes the form of a lump sum payment must be pro-rated over the hours covered to determine the regular rate for that period of time. §778.303.

Commission Employees

Commissions are included in a worker’s regular rate of pay in the same fashion as any other wages are included: they are added up to calculate the regular rate of pay. If the commission salesperson also receives a salary or some other form of payment, all of the wages are added together to reach a weekly total. If commissions are paid in a frequency other than weekly, this does not excuse the employer from including this payment in the worker’s regular rate. Deferred payments, when received, will be apportioned back to the week in which they were earned, and the regular rate will be modified. All of these earnings will be then divided by the total number of hours worked in a particular workweek to determine the hourly rate of pay. This determination of the hourly rate of pay must be done in the case of every worker in order to determine the correct overtime pay rate. A worker’s overtime hours will be compensated at 1 ½ times the commissioned rate of pay he or she has achieved during that week. §778.117, 118.

Bonuses – Inclusion in Computing the “Regular Rate”

Bonus payments made to workers are included in the “regular rate” upon which overtime payment must be paid if they are part of the regular compensation system of the worker. This is also true with regard to prizes and awards intended to compensate workers for the amount or quality of their work. Bonus payments are excluded from the regular rate only if both the fact that payment is to be made and the amount of the payment are determined at the sole discretion of the employer, at or near the end of the period, and not pursuant to any prior contract, agreement, or promise which would cause the worker to expect such payment.

Collective Bargaining Exceptions from the Requirements of the FLSA

The employer cannot make an agreement with a union or an employee that conflicts with the requirements of the Fair Labor Standards Act — unless the agreement is specifically allowed in the FLSA itself.

The Fair Labor Standards Act trumps collective bargaining contracts. This means that private contracts, customs, and practices between an employer and an employee, even practices that are industry-wide, do not change the obligations imposed by the FLSA. Workers may be paid properly under the contract, but they still may win back wages under the FLSA. Statutory rights are in addition to contracted rights. Barrentine v. Arkansas-Best Freight System, 450 U.S. 728, 24 WH Cases 1284 (1981).

There are, however, exceptions. A collective bargaining contract will supercede the general requirements of the FLSA, but only where the FLSA specifically allows the agreement to do so.

Incidental activities performed in unusual locations & others

Changing clothes or working…………………………………………………………………§203(o)

Shift swapping (public sector)……………………………………………………………….§207(p)(3)

Preliminary or postliminary activities……………………………………………………§254(b)

Sleep time and mealtime on 24-hour shifts………………………………………………29 C.F.R. §785.22

Employee living on employer’s premises or working at home……………………..29 C.F.R. §785.23

Compensatory Time Agreements (public sector)………………………………………29 C.F.R. §553.23

Sleep time, mealtime (police and fire)……………………………………………………..§533.222(c)

Agreement as to how the “regular rate” is established

Board, lodging (excluded from wages when agreed upon in a collective bargaining agreement)…..§203(m)

1040/2080 plans…………………………………………………………………………………§207(b)

“Belo” contracts permitting certain guaranteed weekly salary arrangements for fluctuating work weeks………….§207(f)

Piece rate overtime agreements……………………………………………………………..§207(g)(3)

Collective bargaining agreements excluding board, lodging, and other facilities from wages………….29 C.F.R.§531.6

Tip pooling agreements…………………………………………………………………………29 C.F.R.§531.54

“Basic” rates used instead of “regular” rate……………………………………………….29 C.F.R.§548.200

Half-time overtime where employee working fluctuating hours for a fixed salary covering all hours worked..29 C.F.R. §778.114

Attorney Fees – There are None

Employers who fail to pay wages in a timely manner must pay double damages. The FLSA allows 2-3 years of back wages. Maine law allows six years. The attorney’s fees of the worker are usually paid by the employer who loses the case in court.

“White Collar” Exemptions

It is customary for most employers to employ certain “white-collar” employees who are paid by salary. The employer need not pay these types of employees 1 ½ times their regular rate of pay, if two conditions are met:

a) They fit into certain definite definitions of executive, administrative, or professional employees; and

b) They are actually paid “salary” within the meaning of the federal regulations.

See White Collar Exemptions for more information.

Other Exemptions

The Fair Labor Standards Act gives other employers a variety of exemptions from paying overtime. That means that their workers do not have overtime protection under the Federal law.

However, it is important to know that even when it looks like certain types of workers may not be covered by the Federal overtime law, they may still be entitled to overtime pay because of two other requirements:

a. A state’s law may make the employee’s eligible for overtime; or

b. The employee may have done some other work – besides the exempt work – during the same week, which destroys the exemption.

A lawyer should be consulted about all exemption questions because they require careful analysis.

Different Occupations

There are many occupations whose status under the overtime provisions of the Fair Labor Standards Act (FLSA) is not as obvious as most. These occupations are listed below. Each is followed by a description of the rules that apply to that occupation.

Agriculture

There are broad Federal and State exemptions, both from minimum wage and overtime, for farm workers and other workers who work in agriculture. However, the exemptions are very complicated. Frequently people who work on farms, horticultural, tree harvesting, and other agricultural pursuits are entitled to both minimum wage and overtime. The exemption is described in 29 CFR §780. A typical state regulation appears in the Maine statute at 26 M.R.S.A. §663.

Computer Professionals

Technical support workers who are knowledgeable with computers frequently have has as their primary duty installing and/ or maintaining computer software and hardware. These kind of computer workers are not exempt from overtime law, and must be paid overtime. For a computer professional to be exempt from overtime pay two conditions must be met: 1) Their primary duty must be highly sophisticated in the area of design, development, documentation, analysis, creation and testing of computer systems; and 2) They must be paid not less than $27.63 per hour. Sometimes computer professionals are involved in the administration of a business as part of management. When that is the case, they must be paid a salary of not less than $455 per week; and be performing highly sophisticated computer work. Many persons who are very knowledgeable in the installation and maintenance of computer systems are not exempt. See White Collar Exemptions.

Real Estate Brokers

Real Estate employees, even though they may have their brokerage license, are frequently called upon to do work within their brokerage office not immediately connected with sales that they are responsible for. For example, they frequently have to answer the telephone, do filing, and care for the office. This is particularly true of new employees to a brokerage firm. Thus, they spend a good portion of their week doing something other than the work of an “outside” sales person. They are entitled to overtime pay.

Restaurant Workers

Restaurant workers are covered by the Federal minimum wage and overtime law. However, if they are “tipped”, the employer need only pay them $3.02/hour, if their tips are sufficient to make up the Federal minimum wage. They must however be allowed to keep all of the tips that they earn. They cannot be required to share them with any other employees unless the other employees are also tipped by customers.

The employer can lose this partial exemption if he violates this provision or if he does not tell the employees in advance about how their compensation is figured.

State laws also affect tipped employees because the State minimum wage law is frequently much higher than the Federal minimum wage law. If tipped employees work overtime, they must be paid time and a half the State or Federal minimum wage, whichever is greater, since states frequently have higher minimum wage provisions. For example, Maine’s minimum wage law is as of October 2005, $6.75. The computations to be made between the federal and the state provisions are complicated.

Sales/Commission People

“Inside” sales people are covered by the minimum wage and overtime laws, unlike “outside” sales people. Employers of “inside” sales people have a kind of exemption from overtime law, but only under certain conditions. First, only if the amount of money that they are regularly earning equals 150% of the minimum wage rate and only if more than half of their employer’s sales are made within the state where the business is. It is quite difficult for an employer to establish that “inside” sales people are exempt from overtime.

However, it is not at all difficult for the employer to establish that “outside” sales people are exempt. The employer only has to meet two requirements to get the exemption: 1) The sales person must be making sales or obtaining orders customarily and regularly away from the employer’s place of business; and 2) The sales person does not spend more than 20% of the workweek doing work other than sales.

Truck Drivers

Most truck drivers are exempt under the federal Fair Labor Standards Act from overtime pay. That is also true of drivers, helpers and people who load their trucks. However, some state laws do cover truck drivers. For example, the Maine law covers truck drivers even if they are transporting goods that have traveled in interstate commerce, so long as they work more than 40 hours within the State of Maine. See 26 Maine Revised Statutes §664 (3). Also, there is a possibility that even interstate drivers may be covered by the Federal law if they are operating vehicles of less than 10,000 pounds.

Working Foreman

The regulation describes two types of “working foremen” who are not exempt. The first type works alongside his subordinates performing the same kind of work as the subordinates. Such work must be counted as non-exempt. If the amount is substantial (more than 20 percent), the executive exemption does not apply, even though the foreman is supervising other people all day long. The second type of working foremen who is not exempt is one who spends a substantial amount of time in the work week in ordinary production work or other routine tasks which are a regular part of his duties, although not performed by his subordinates.

Peperissa v. Coren-Indik, Inc., 298 F.Supp. 34 (E.D. Pa. 1969), is an example. In a textile manufacturing plant, the employee was a “Head Carder” in charge of a “carding room,” but he also did mechanical repair work on ran three card feeders. He received instructions from a higher supervisor regarding the production that was expected from the carding room crew. Id at 36. He had to adjust and set up the cards, make sure that the employees worked properly, and assure that production was performed. Id. He had limited authority over hiring and firing. Id at 37. The Court ruled he was not exempt.

 



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