Fair Labor Standards Act – Atlanta Overtime Lawyers

The Fair Labor Standards Act (FLSA) was passed by Congress in 1938. There are two major provisions covered by the FLSA: the establishment of a minimum wage and the implementation of maximum hours in a workweek, known as overtime.

The reasons Congress passed this legislation was to 1) to spread out employment by placing financial pressure on employers to hire additional workers instead of having the current work force work longer hours and 2) to fairly compensate employees who did have to work overtime. At that time, the evil was not so much the length of time men and women worked, but rather the fact that there were nearly twelve million unemployed in this country and FLSA was designed to lessen unemployment without financially hurting industry and its employees.

The objective behind the FLSA is just as important today as it was during the Great Depression. Even in today's economy, the FLSA’s purpose of spreading employment and creating more jobs remains an important reality.

Federal Overtime Laws

Under Section 7(a) an employer is required to pay employees for all hours in excess of 40 at not less than one and one-half times the regular rate at which they are employed. By increasing the employer's labor costs at the end of the 40-hour week and by giving employees a 50% premium for all hours worked in excess of 40, Section 7(a) achieves its purposes of inducing the employer to reduce the work hours and instead employing more workers while also compensating employees for the burden of a long workweek in the event that overtime is required.

Overtime pay is required not only for hourly workers but also for salaried workers.

All hourly workers, except teachers, doctors, and lawyers, are entitled to overtime. All salary workers, who do not clearly and unmistakably, fall into one of the narrow exemptions, are also entitled to overtime. The burden is on the employer to establish the exemption, not the employee.

A common misconception is that an employee who is paid a salary is exempt from overtime pay. This fallacy is the reason that the Department of Labor states that 70 percent of employers violate the overtime laws, which explains the increase in overtime lawsuits seen throughout the nation. Paying an employee a salary is only one factor to consider when deter mining whether an employer is permitted to not pay employees time and a half for hours over 40 in a workweek.

There are exemptions to the time and a half overtime pay rule. For example, section 213 states that employees paid a salary and also employed in a bona fide executive, administrative, professional or outside sales job are exempt from overtime pay. There are additional exemptions that may also apply. Although there are numerous exemptions to the overtime laws, the three main exemptions are administrative, executive, and professional.

Administrative Exemption

To qualify for the administrative exemption, here is what an employer is required to prove:

  1. an employee must be paid on a salary basis of not less than $455 per week;
  2. the employee's primary job duty is the performance of office or non-manual work which is directly related to the management or general business operations of the employer or the employer's customers;
  3. the employee's primary job duty includes the exercise of discretion and independent judgment with respect to matters of significance.

The exercise of discretion and judgment implies that the employee has authority to make an independent choice, free from immediate direction or supervision with regard to "matters of significance". This refers to the level of importance or consequence of the work performed.

Executive Exemption

The exemption requires that:

  • an employee must be compensated on a salary basis not less than $455 per week;
  • the employee's primary job is to manage the entire business or a customarily recognized department of the enterprise;
  • the employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent;
  • the employee must have the authority to hire or fire other employees, or the employee's suggestions as to the hiring, firing, advancement, promotion, etc., of other employees must be given weight.

Generally, "management" includes activities such as interviewing, selecting, and training of employees; setting of pay and hours of work; directing employees’ work; along with many other managerial factors.

Professional Exemption

The learned professional exemption is restricted to professions where specialized academic training is a standard prerequisite for entrance into the profession, e.g., job in engineering, accounting, law, medicine. This exemption does not apply to occupations in which most employees acquire their skill by experience rather than by advanced specialized intellectual instruction.

Damages in Overtime Cases

Employers often allege that employees who are paid a salary are already compensated for all their "time" during the week, and thus, because they have been paid their "time," they are only entitled to the additional "half-time." However, the United States Supreme Court has ruled that a contract for a salary for all hours worked, without a provision for overtime compensation, is an illegal contract. The Supreme Court has defined the regular rate is defined as all non-overtime hours in a workweek.

To calculate the overtime due to a salaried employee, divide the employee's yearly salary by 2080 to determine a standard hourly rate. From this, the overtime wage rate can be determined. An employee is entitled to two years of overtime wages, and in some cases, three years of wages if the employer's actions were willful. In addition to the payment of the back due overtime, the employee is entitled to an equal amount of overtime wages as liquidated damages as well as attorneys' fees and costs.

There are common mistakes that employers make in failing to properly pay overtime wages are:

  • paying an employee "straight time" rates for overtime work;
  • automatically deducting lunch, particularly when many employees work at their desk during lunch;
  • providing compensatory time in lieu of overtime;
  • failing to include other payments to the employee in calculating the rate of overtime allowed;
  • assuming that all salaried employees are not entitled to overtime;
  • making employees work off the clock;
  • refusing to pay overtime that was not pre-approved;
  • docking a salaried employee's pay for time off due to absence or discipline;
  • not paying overtime if an employee is accessing e-mail, Intranet, or using cell phones for business after hours;
  • automatically rolling a time clock so that it rounds up and does not accurately reflect the time worked.

If you have questions about FLSA, overtime or exemptions from these laws, please call The McAleer Law Firm – the Atlanta Overtime Lawyers - for immediate assistance.

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