Articles Posted in Overtime Wages (FLSA)

worker.jpgIndependent Contractors are not protected by the overtime wages provisions of the Fair Labor Standards Act (FLSA). However, disputes arise frequently over whether an individual is an independent contractor or an employee entitled to overtime pay.

There is no simple measurement for making the determination. The United States Department of Labor has published an advisory listing pertinent indicia. Florida’s workers’ compensation statute 440.02(15)(d) contains a more thorough list. (Since the employee vs. independent contractor dispute also arises in the workers’ compensation forum, this is an excellent statute to reference. Except for independent contractors working or performing services in the construction industry — see 440.02(15)(c)3 — independent contractors in Florida are not entitled to workers’ compensation benefits.) Case law should also be considered.
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us supreme court.jpgThe FLSA, codified at 29 U.S.C. §201 et seq., was enacted in 1938 in order to help the “lowest paid … of the nation’s working population” to secure a livable wage. Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707 n. 18 (1945). Current FLSA law allows an employee to maintain an action against the employer “in behalf of himself or themselves and other employees similarly situated.” 29 U.S.C. §216(b).

The purpose of the provision authorizing an employee to sue in behalf of “other employees similarly situated,” which has come to be known as the “Collective Action Provision,” is to minimize litigation by allowing numerous claims to be brought against the same employer in one lawsuit. This benefits both sides. It benefits employees by making it easier for them to hire lawyers to handle their claims. In most FLSA claims, the amount in dispute is relatively small. Collective Action cases raise the stakes, making FLSA cases more enticing to lawyers. This is a practical reality, one that courts recognize as legitimate. CA cases benefit employers by allowing numerous claims to be resolved in one action instead of in individual lawsuits.

A recent U.S. Supreme Court decision appears to put Collective Action claims at risk.

In Genesis Healthcare Corporation v. Symczyk, 133 S. Ct. 1523 (2013), Symczyk sued under the FLSA for herself and other co-workers. The District Court for the Eastern District of Pennsylvania dismissed Symczyk’s complaint for lack of subject matter jurisdiction after defendants Genesis Healthcare Corporation and Elder Care Resources Corporation extended an offer of judgment under Fed.R.Civ.P. 68 in full satisfaction of her alleged damages, fees, and costs. The trial court decision was appealed. The United States Court of Appeals, Third Circuit, framed the issue as follows: “At issue in this case is whether a collective action brought under § 216(b) of the FLSA becomes moot when, prior to moving for ‘”conditional certification”‘ and prior to any other plaintiff opting in to the suit, the putative representative receives a Rule 68 offer.” The court answered No, reversing the trial court’s ruling. Symczyk v. Genesis HealthCare Corp., 656 F. 3d 189 (3rd Cir. 2011).
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maze.jpg“Chinese Overtime” is allowed under the Fair Labor Standards Act (FLSA). See Overnight Motor Transp. Co. v. Missel, 316 U.S. 572 (1942) and 29 C.F.R. Section 778.114 (2010). It only comes into play for employees paid in accordance with the fluctuating workweek method.

Fluctuating workweek pay is a salary as opposed to being paid by the hour. It is a set weekly sum regardless of hours worked, no matter more or less than 40. Overtime pay is available.

The FLSA provides that employees paid on an hourly basis must be compensated at the rate of one and one-half their regular rate of pay for each hour over 40 worked in a week. For example, an employee paid $10/hr, which is the “regular rate of pay,” must be paid $15 for each overtime hour.

In contrast, employees paid by the fluctuating workweek method receive only 1/2 their regular rate of pay for overtime hours.
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dollars.jpgWe are finding that more and more employers are switching from paying wages based on set schedules to only paying for work performed. Although the practice has been in place for years, it seems to become more prevalent during tough economic times. Whether the practice is allowed under the FLSA (Fair Labor Standards Act) and Florida Statute 448.08 depends on the circumstances.

In a recent case, our client was employed to load and unload cargo planes at Miami International Airport. Because planes departed and arrived on rough schedules, he often had no work to perform for long stretches of each 8 hour shift. For the first two years, he was paid for each hour of his shift, work or no work, including overtime wages. This all changed one week without warning when his paycheck was nearly half the normal rate. He learned that the employer had changed its policy to limit wages to work performed, cutting out idle time pay. Instead of being paid for 48 hours a week, the minimum amount of time he was required by the employer to be at the airport, he was only paid for 24 to 30 hours, a substantial difference. We sued the employer for overtime wages under the Fair Labor Standards Act and unpaid wages under Florida Statute 448.08. The case ended up settling on terms favorable to our client.

Another case involves an auto mechanic who, although required by the employer to be onsite, only got paid when he worked on vehicles rather than while waiting for assignments.
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worker.jpgDuring these challenging economic times, our law firm is seeing a sharp reduction in the number of hours employees are being paid to work. Fewer employees are working overtime and many are seeing their hours reduced below the traditional 40 per week.

There are no state or federal laws mandating minimum work hours for Florida employees. The only obligation Florida employers have to those who work less than 40 hours a week is to pay the state minimum wage – $7.31/hr as of June 1, 2011.

Although employees do not have the right to be employed for a minimum number of hours, they do have the right to be compensated for all on duty time. This may seem like a straightforward proposition, but it is an issue that has given rise to a significant amount of litigation going back to the 1940s.

What we are seeing today is that employees are not being paid while waiting to work versus working. Whether this is proper is a question of fact involving “scrutiny and construction of the agreements between the particular parties, appraisal of their practical construction of the working agreement by conduct, consideration of the nature of the service, and its relation to the waiting time, and all of the surrounding circumstances. Facts may show that the employee was engaged to wait, or they may show that he waited to be engaged.” Skidmore v. Swift Co., 323 U.S. 134, 137 (1944). Importantly, there is no principle of law found either in statute or Court decisions precluding waiting time from also being working time deserving of compensation. Armour & Co. v. Wantock et al., 323 U.S. 126 (1944).
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The Fair Labor Standards Act (FLSA) authorizes piece rate pay. However, the Act also requires the payment of overtime wages for every piece rate hour over 40 worked weekly. 29 U.S.C. § 207(f) (2010).

The overtime rate is determined by establishing the “regular rate of pay,” § 207(e) (2010), which is done by dividing the employee’s total weekly earnings by the number of hours worked. The overtime rate is 50%, or 1/2, of the regular rate of pay.

For example: An employee is paid $400.00 for 50 hours of piece rate work in a week. $400 divided by 50 results in a regular rate of pay of $8.00 per hour, making the overtime rate $4.00. The employee’s pay should have been $440.00 (50 x $8.00 + 10 x $4.00).
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clock.jpgThe Fair Labor Standards Act (FLSA) is full of twists and turns. Here are just a few of them:

On the Clock: With the everyday use of cellular phones, computers, emails, and text messaging, employers can find themselves facing claims for FLSA overtime wage claims for heretofore unexpected reasons. Employees performing work activities such as responding to emails, text messages and telephone may be considered “on the clock” for purposes of the FLSA.

If enough employees are involved, the consequences can be devestating to the employer. ABC News recognized the threat when it stripped all of its writers of company-issued BlackBerrys. Employees of publicly traded real-estate company CB Richard Ellis are pursuing a collective claim for OT wages for required after-hours use of their BlackBerrys.

The FLSA is clear that non-exempt employees are entitled to compensation at 1.5 times the hourly rate for all time over 40 worked in a week. Two exceptions:

De Minimis Time: Not all time non-exempt employees work over 40 in a week is compensable at 1.5 times the normal rate. The exception is for de minimis time.

The Department of Labor describes this time as being a few seconds or minutes duration beyond the scheduled time. The various appellate courts do not hold a uniform view, keeping the door open to litigation. The US Court of Appeals, Federal Circuit, in Carlsen v. United States, 521 F.3d 1371 (Fed. Cir. 2008), suggested that 10 minutes was the cutoff. The Ninth Circuit Court of Appeals rejected the idea of time alone being the determining factor for whether an activity is de minimis. In Lindow v. United States, 738 F.2d 1057 (9th Cir. 1984), it established three considerations: “(1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.” Id. at 1063.
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The Fair Labor Standards Act (FLSA) requires employers to pay employees overtime pay, at a rate of time and a half, for all hours worked in excess of 40 hours per week. However, the Act contains many exemptions.

Many court battles have and will continue to be fought over these exemptions. One that is difficult for Claimants to beat is the so-called “Companionship services” exemption, derived from The Code of Federal Regulations, Title 29, Section 552.6. The section provides as follows:

As used in section 13(a)(15) of the Act, the term companionship services shall mean those services which provide fellowship, care, and protection for a person who, because of advanced age or physical or mental infirmity, cannot care for his or her own needs. Such services may include household work related to the care of the aged or infirm person such as meal preparation, bed making, washing of clothes, and other similar services. They may also include the performance of general household work: Provided, however, That such work is incidental, i.e., does not exceed 20 percent of the total weekly hours worked. The term “companionship services” does not include services relating to the care and protection of the aged or infirm which require and are performed by trained personnel, such as a registered or practical nurse. While such trained personnel do not qualify as companions, this fact does not remove them from the category of covered domestic service employees when employed in or about a private household.

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The Fair Labor Standards Act (FLSA) requires employers to pay employees overtime pay, at a rate of time and a half, for all hours worked in excess of 40 hours per week. See Section 207 of the Act. Pursuant to 29 U. S. C. §216(b), an action to recover overtime pay may be maintained in any Federal or State court of “competent” jurisdiction.

In which Florida State court, circuit or county, a claim may be brought, also known as the court’s statutory authority, typically depends on the amount in controversy as determined by the allegations set forth in the Complaint. These are the 2011 jurisdictional levels:

  • Circuit Civil: where the amount of damages sought is in excess of $15,000.
  • County Civil: where damages sought range from $.01 to $15,000 (In Miami-Dade County, where damages sought range from $.01 to $5,000, cases are assigned to the small claims division, with its own set of procedures including summary administration.)

Many individual (vs. class action) FLSA claims involve sums of less than $15,000.
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worker.jpgThe Fair Labor Standards Act (FLSA) requires employers to pay employees overtime pay, at a rate of time and a half, for all hours worked in excess of 40 hours per week. See Section 207 of the Act.

To calculate the amount of compensation an employee is owed under the FLSA, the overtime rate (OT rate) must be determined.

The first step in this equation is establishing the “regular rate of pay,” the hourly rate. If the employee has not received employer-furnished fringe benefits, such as health insurance and housing, the “regular rate of pay” is the hourly rate, and the OT rate is 1/2 of the hourly rate. For example, if the “regular rate of pay” is $10.00/hour, the overtime rate is $5.00.

Where fringe benefits have been provided, their value must be included in the calculation. In the case of health insurance, the fringe benefit value determination is relatively simple to make, with the employer’s share of the premium payment being the actual “value” of the fringe benefit. Where the employer is not making an easily identifiable payment, such as in the case of self-administered medical programs provided by some big emloyers, or where housing is provided by the employer, determining the value of the benefit is not as simple. Not infrequently, the parties will fight over the value of fringe benefits. (Caveat: the employer may try to argue that the fringe-benefit is a form of payment for overtime wages, rather than a benefit which increases the “regular rate of pay.” Paycheck stubs and tax records, among other evidence, must be considered to resolve this dispute.)

Where fringe benefits are part of the calculation, determining the OT Rate is a 3-step process:

Step 1 – Regular Weekly Pay: Hourly rate of pay times (x) hours worked per week plus (+) value of fringe benefit(s). (Example: $10/hr x 62 hours + $50 (weekly insurance premium.))

Step 2 – Regular Rate of Pay: Regular Pay divided (/) by hours per week.

Step 3 – OT Rate: Equals 1/2 of Regular Rate of Pay.

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