The federal Fair Labor Standards Act (FLSA) was passed in the 1930s to ensure that workers received overtime pay when they worked more than 40 hours per week. The law requires an employer to pay every employee who works more than 40 hours in a week 150% of the worker’s regular hourly wage for every hour worked in excess of 40. Employers understandably don’t like this law because it increases their labor costs without any corresponding increase in output. In order to reduce their obligation to pay mandatory overtime, employers often try to take advantage of the exemptions in the statute by classifying workers in ways that place them in an exempt category.
Common Misclassification Techniques
Perhaps the most prevalent technique used to escape the mandatory overtime requirement is the classification of one or more employees as “independent contractors”. True independent contractors are not entitled to receive mandatory overtime compensation. The difference between independent contractors and true employees is subtle and not easy to comprehend. Generally, an employee is someone who works for another person’s business and is paid an hourly wage or a piece rate. Independent contractors provide their own materials, tools and equipment. An employer usually decides what work shall be performed and when and where it shall be performed. Independent contractors usually serve more than one client or customer at the same time.
Another Example of Word Play
Another common exemption relied upon by employers is classifying their employers as an “executive, administrative, professional, outside sales and Computer employees.” In doing so, these employers are usually forced to ignore two words that precede the quoted language: “bona fide.” In other words, Congress amended the FLSA to require employers to use actual reality, not their own version of it, when classifying employees as executive, administrative or professional. The employer must provide evidence showing that the employee actually participates in planning and policy making for the business entity. Without such evidence, a proposed classification will fail.
Any employee who feels that his or her employer is not paying mandatory overtime in situations where it is required by the FLSA, may wish to visit an experienced employment attorney for an evaluation of the situation and an estimate of the likelihood of winning a lawsuit for unpaid overtime.