An employer tells it’s employee that he will be paid on a salary basis with no overtime compensation for any hours worked over forty hours because the employee is “exempt.” Is this true? Not necessarily. Under the
Fair Labor Standards Act (FLSA), an employee is owed one and one half times the employee’s regular rate for all hours worked over forty hours in a workweek. Whether an employee is “exempt” or “nonexempt” from the payment of overtime wages depends on many factors
The main factor that determines whether an employee is entitled to overtime compensation is the employee’s actual job duties. Actual job duties means the tasks the employee performs on a daily basis, not what is in the employees contract or what the employer says the employee’s job duties are. Additionally, an employee can be paid on a salary basis but still be entitled to overtime compensation. The method of how an employee is paid in not determinative when classifying that employee. However, the law specifically excludes the payment of overtime for certain employees. The three largest categories of exempt employees are for professional, executive and administrative employees.
In the instances where federal law and state law are in conflict, the law of Pennsylvania is enforced. For example, under federal law, computer employees are not required to be paid for overtime (i.e., they are exempt employees). However, under Pennsylvania law, computer employees must be paid overtime compensation; therefore, computer employees must be paid overtime compensation if they work in Pennsylvania. Under federal law, a computer employee earning $15 per hour would earn $900 for working sixty hours in one week (60 hours x $15). Under Pennsylvania law, a computer employee Working the same hours for the same pay would earn $1,050 (40 hours x $15) + (20 hours x $22.50). As one can see, Pennsylvania law provides greater earnings for a Pennsylvania-based computer employee.
The misclassification of employees by their employers for overtime compensation is a growing area of practice for the U.S. Department of Labor (DOL). If an employee feels he is being misclassified by his employer and denied overtime compensation, the employee may bring a claim for back pay. The statute of limitations for these actions extend two years from the date of the work unless the employee can prove the employer intentionally misclassified him, which would extend the statute of limitations to three years. A potentially misclassified employee may bring this to the attention of the DOL, but this may not be the best course of action.
A Government Accountability Office (GAO) study in 2009 found the DOL’s complaint intake and investigative processes were inadequate. The GAO went undercover by posing as workers in ten scenarios. In one scenario, the DOL failed to investigate the claim altogether. By the time the study ended, the DOL had yet to begin investigating three of the GAO’s fictitious claims, delaying them for two to five months. Similarly, the GAO found cases where it took over a year for the DOL to respond to a complaint, where cases were closed based on unverified information provided by the employer, and where cases were dropped when the employer did not return phone calls. Delays in investigating and bringing claims against an employer may cause the employee to forfeit unpaid overtime compensation rightfully earned but improperly withheld.
The way an employer classifies an employee is not always correct. An employee should educate himself as to his classification to determine whether or not he should be paid for overtime work. Any employee questioning their overtime compensation or lack thereof should meet with an attorney without delay to discuss the employee’s potential claim.