I recently met with a potential client and we were discussing overtime. She said their company did not pay overtime because they would never approve it and that is their policy. I asked what would happen if someone accidentally worked 42 hours in one week. She said the overtime would not be approved by policy and they would get 42 hours of straight time pay.
I told her they should have an overtime policy and it should say that overtime must be approved in advance, however, in this example, they must pay the overtime. By not paying the overtime, they have broken the federal wage and hour law.
The right answer is to pay the overtime and have a discussion with the employee to remind them of the necessity to gain approval before the overtime is worked, and, any future infractions will be subject to the discipline procedure.
Employers who willfully or repeatedly violate the Fair Labor Standards Act may be penalized up to $10,000 per violation. Second offenses bring prison time.
It is a complicated law. On the face of it, it seems easy…minimum wage, overtime, etc. There are a lot of facets to overtime regulations where employers go wrong. There are many exceptions to the law and employers should take advantage where they can, however, the vast majority of employers need expert advice of what they can and cannot do.
Wage and hour lawsuits are one of the fastest growing types of employee lawsuits. The number of class actions brought under the federal wage and hour law, the Fair Labor Standards Act, exceeded the number of class actions under all other federal statutes combined.
Even large companies with Human Resource departments who understand the law get into trouble if HR does not stand up to a bad management decision. It is even worse for the small employer without human resource expertise. They run a risk everyday and could easily get into trouble. Penalties, back pay and statutory damages can easily put a small business out of business.
All it takes is one disgruntled employee or former employee to say they were cheated out of overtime and the feds will descend upon you like a Sandy Koufax fastball.
Contact me if you need an overtime policy or have any questions about the Fair Labor Standards Act.