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Wage/ Overtime Claims

Wage/ Overtime Claims

The laws of the State of Texas and the United States have specific rules about employees paid overtime, and at least minimum wage, for all the time the employee spends at work. Nonexempt employees are entitled to time and one-half their “regular rate” of pay, but employers do not have to pay overtime for truly exempt employees. These wage and hour laws can be extremely complex, and employers oftentimes drastically underpay their employees as required by law.  Some of the most prevalent mistakes are as follows:

Exempt v. Non-Exempt

The mistake that occurs most often is the employer’s attempt to classify employees as “exempt” from the overtime requirements, who are really nonexempt, often having them work more than forty (40) hours per week without additional pay. This can happen when an employee holds a fancy job title, but really performs clerical tasks, such as when a secretary is made exempt, or a computer troubleshooter is called a “systems analyst” And made exempt from overtime.   It can also happen when an employer pays an employee a salary rather than an hourly wage. Merely paying an employee on a salary basis does not make an employee exempt from the FLSA-overtime rules. To be exempt, an employee must not only be paid on a salary basis, but must also perform exempt job duties.

Generally, an employee is paid on a salary basis if he or she is guaranteed a minimum amount of money, with that amount not being reduced based on the “quality or quantity” of work performed. For example, a salary basis employee should receive the same base pay no matter whether he or she works 30 or 40 hours in a work period.  This is sometimes called the “no docking” rule. However, this “no docking” requirement does not apply to some of the “learned professions,” such as lawyers, doctors, schoolteachers, or computer professionals, as these jobs are exempt even if the employees are paid hourly.

The issue of exempt job duties is slightly more complex. A salary basis employee is exempt only if he or she performs relatively high-level work involving a good deal of judgment and discretion. Whether the duties of a particular job qualify as exempt depends on what they are, not the title. (A secretary is still a secretary even if s/he is called an “executive assistant,” and the chief executive officer is still the CEO even if s/he is called a janitor.) It is, rather, the actual job tasks that must be evaluated (along with where and how the particular job tasks “fit” into the employer’s overall operations). There are three typical categories of exempt job duties, called “executive,” “professional,” and “administrative.”  A brief summary of each is as follows:

  • Exempt Executive Job Duties:  Job duties are exempt executive job duties if the employee (a) regularly supervises two or more other employees, and also (b) is, as a practical matter, “in charge” of a unit or subunit of the organization when on duty. The supervision must be of other employees.
  • Exempt Professional Job Duties:  Employees are performing exempt professional job duties if their work involves the application of advanced, usually specialized, learning or credentials of the type commonly associated with the “traditional learned professions” such as medicine, law, accounting or engineering.
  • Exempt Administrative Job Duties:  Employees are performing exempt administrative job duties if they do (a) non-manual or office work, which (b) “supports” the overall business operations of the employer, and which (c) involves their exercising independent judgment and discretion on important matters. Administratively exempt work is limited to support or “staff” jobs, as distinguished from “production” or “operations” or “line” jobs.

These definitions of exempt employees are simplified for the purposes of this web site, and it is important to know that a proper analysis requires assessment by an attorney that specializes in this area.

Compensation For All “Work Time”

Another area where employers underpay employees is not paying for all the hours the employee is actually on the job.  All time spent by an employee performing activities which are job-related is potentially “work time” — and the employee must be paid for that time.  With only a few exceptions, all time an employee is required to be at the premises of the employer is work time, and all regular shift time is work time. This includes “breaks” (if there are breaks), and “nonproductive” time (for example, time spent by a receptionist reading a novel while waiting for the phone to ring). In addition, all time spent by an employee performing work-related activities that the employer “suffers or permits” is work time, whether on premises or not, and whether “required” or not. Work done “at home” or at a place other than the normal work site is work, and the time must be counted. “Voluntary” work is work, and the time must be counted. “Unauthorized” or “unapproved” work is work, and must be counted (provided that the employer knows or should know it is being done and permits the employee to do it). It is the privilege and responsibility of the employer to “control the work” of its employees. If an employer does not wish an employee to perform work, it must prohibit the employee from doing so, if it does not wish to include that work time in the required FLSA pay computations. An employer may not accept the benefits of work performed by its nonexempt employees without counting the time in computing pay. Time not worked includes leave time (for whatever reason), even if leave time is considered “work time” for some other purpose (such as pension accruals, or “overtime” pay due under an employer policy or collective bargaining agreement). Time not worked may also include meal periods (if there are meal periods), whether paid or unpaid, if the employee is actually relieved of active duties during the meal period.

“Off The Clock” Work

Many wage and hour lawsuits involve employers failing to include time spent by employees performing work activities outside of their normal shifts. Some employees, for example, may “come early” and start working before the official start time of their shifts. Such time counts as work time and must be included in
pay computations, provided only that the employer knew or should have known that the employee was beginning work early (and, of course, to the extent that the employee spent pre-shift time actually performing work activities). Pre-shift “roll calls” are work time. Time spent setting up equipment before the official start time of a shift is work time. Some employees may similarly “stay late” after shifts performing work, and this time must be counted as work time as well. Time spent by an employee cleaning equipment after the close of a shift is work time. Post-shift work time could also include time spent by an employee performing job-related activities “on the way home,” as for example a secretary who drops off the day’s mail at the post office or delivers some paperwork to a customer or supplier. Some employees take work home. That time may well be work time. Similarly, if an employee is contacted at home by telephone for work related reasons, the time spent is work time (and, of course, if an employee is “called back” to work, the time counts as work time).  Other activities that must be paid are travel time and idle time.

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