One of the hottest issues being discussed in the news today is the question of minimum wage. With this issue comes the question of overtime pay.
What both employers and employees may not realize is that overtime pay is both a federally and state mandated issue that requires compliance, and the failure to comply with federal and state overtime pay requirements can result in a very costly lesson to federal regulations.
What is an overtime work violation?
The typical case involves an employee who is working 40 hours a week and asked by his employer to work overtime because of a rush project or large order. The employer dutifully pays the employee their overtime pay at the straight hourly wage believing that they have fairly and adequately compensated the employee for working overtime.
What both employees and employers may not realize is that under the Fair Labor Standards Act (“FLSA”) and the Illinois Minimum Wage Law, qualifying employers are required to pay hourly employees one and a half times their hourly wage for all hours worked in excess of 40 hours per week.
Even though there are certain requirements to be a qualified employer (i.e. a minimum amount of sales per year), most employers in the state are going to be required to comply with the FLSA and are required to pay 1.5 times the hourly wage of any worker who works over 40 hours per week.
Increase in FLSA Lawsuits
Congress has enacted provisions within the FLSA that encourages employees to bring claims against employers who fail to comply with the requirements of FLSA.
In the last 10 years, there has been a 200% increase in the number of FLSA claims with significant money dollar judgments against some of the largest employers in the country (i.e. Allstate, Merrill Lynch, Gap).
The reason why these lawsuits have increased is because of the provisions for payment of not only the unpaid time and a half back pay, but also for penalties of up to 3 times the amount of the back pay plus attorney’s fees for bringing the cause of action. It is the intent of the law to encourage individual lawsuits under FLSA to encourage compliance with the overtime payment requirements of employers.
There are certain exceptions to the requirement of overtime pay. These exceptions essentially revolve around the difference between hourly employees and salary employees. For example, employees who are considered executive employees, professional employees, computer employees or outside sales employees, who are all paid salaries rather than hourly wages, would in general be exempt from the requirement of 1.5 times hourly wage payments.
Best Course of Action
Because of the distinct nature of compensation for various employees in various industries, it is always best to consult an attorney to determine whether or not you have a claim for overtime. If you are an employer use an attorney to review the various defenses to any claims brought under FLSA and state wage claim laws.