Overtime Is Expensive.. Not Paying Costs More

 

I’ve been putting off writing an article on overtime because I didn’t see it as necessary because, I assumed, that overtime was an issue that people generally understood. In my time writing, I’ve done the research on it and have seen it show up as a common personnel problem but still put it off as a subject. Today, while researching another issue, I ran across a number that caught my attention. Of all wage and hour violations, 42% are related to overtime; 80% of all Department of Labor, Fair Labor Standards Act (FLSA) lawsuits are related to overtime. The courts recognize two categories of employees when ruling on overtime cases, government employees and non-government employees. A government employee has the option to take compensatory time, or “comp time”, a non government employee must be paid for time worked. I’ll say it again because there are people who need to hear it, If you have a non-government employee who works overtime, that employee must be paid time and a half for hours worked, comp time is not an option even if you offer an hour and a half for each hour worked. It’ll only take one disgruntled employee for this painful and expensive lesson to be learned. 

The law limits the workweek to 40 hours and, at the same time, understands that the demands of business change. These changes sometimes require employees to stay and complete tasks, or avoid danger to others. The law expects these employees to be compensated properly for the extra time they work. Employers cutting corners like making adjustments to timecards, not paying the overtime rate, or offering comp time will get you into big trouble. It has been tried, challenged, taken to court and decisions have been made, usually in favor of the employee.

In most cases overtime policies are written in the contract or employee handbook detailing how overtime will be distributed, calculated and paid. These policies usually follow federal, state and local laws so follow them. In cases where overtime isn’t explicitly laid out in policy, create a clear practice, share it and apply it. Cases that cost companies the most occur because a manager decides to treat people they “like” better than people they don’t which brings me to a saying I like to repeat often, “You are everybody’s leader”. Even the people you don’t like. Leaders like to judge themselves using the opinions of people who like them. It is self affirming and it feels good but it is problematic because it is the people you don’t like that get you into trouble. Its the people you don’t like who are mistreated either intentionally or inadverdently that lay charges of discrimination, grievances, harassment. You are taken to court, sued, and your reputation is dragged through the mud based on your treatment of the people you don’t like so always consider your treatment of everyone. Also, keep in mind that employees are protected from retaliation by the FSLA, through Whistleblower protection laws. If someone makes a claim, look into it seriously and make adjustments that help you avoid future claims. Reducing hours for that employee, phasing them off of the schedule, firing them six months later, or frustrating them with work that is beneath their classification will open you to expensive lawsuits. 

Overtime payouts usually include back pay and legal fees for the employee, however the most expensive cases occur when there is a class action or a group of employees with the same claim. Walgreens, the largest drug retailing chain in the US with over 8600 locations, recently settled a very expensive class action claim. The case reached the US District Court for the Southern District of New York, and includes two classes of employees; assistant managers and line employees. 1075 employees who were employed between January 8, 2009 and November 3, 2016 filed claims that they were often required to work double shifts and work additional time before and after their scheduled shift. In many cases, employees were denied the overtime rate or are not paid at all. Managers asked employees to report early but not punch the clock until later, hours were taken off of their timecards, or they were paid strictly according to their schedule. Prior to the Walgreens claims, a list of the top 10 overtime cases was compiled. To that date, the top 10 overtime claim payouts totalled over $403 million, FedEx topped the list with a $240 million payout. Walmart ($62 million), Los Angeles Children’s Hospital ($27 million), Bank of America ($14 million), and Excel Direct ($13.5 million) rounded out the top five. Walgreens settled in 2017 for $13.7 million, cracking the top five for their mistreatment of employees with respect to overtime. 

The law does not protect you because of your personal or institutional feelings or beliefs about overtime, the law expects employees to be paid fairly. The law does not protect you because you don’t think the employee is worthy of overtime because of their past transgressions, the law expects overtime to be distributed fairly. What may not be common knowledge is that unapproved overtime must be paid too. If an employee works overtime without permission, making the decision without requesting it or working overtime despite your direction not to, they must be paid. What the Department of Labor expects is that you will discipline employees who work unapproved overtime. Write them up, demote, suspend, and even terminate, but pay the time. Keep in mind that you are everybody’s leader. Ask yourself, how would you treat your favorite person in this situation and do that. Treating people based on your personal feelings about them, no matter how you justify it to yourself, will get you into trouble. 

I have mediated a number of overtime claims and can say that the people who bring them didn’t feel comfortable talking to their supervisor about their concerns. In most cases, the claimants felt as if the distribution of overtime was not executed fairly based on their relationship with the supervisor compared to the supervisors relationship with other employees. My research suggests that the claims made things worse with managers retaliating against claimants adding discrimination/harassment/whistleblower claims. I’ll say it again, you are everybody’s leader, treat them like they are your favorite person and you will SOAR!

 

William A. Brown

January 19, 2020 

 

https://www.timesheets.com/blog/2016/08/wage-and-hour-best-practices-labor-law-compliance/

https://blog.tsheets.com/2016/business-help/most-expensive-flsa-overtime-lawsuits-2016 

https://www.overtimepaylaws.org/walgreen-overtime-lawsuit-lawyer/