In each of the leading areas, a precedent has been set by a previous case, which allows current cases under similar conditions to be pursued successfully. Below is a detailed analysis of the precedent that has been set for the leading areas in which employers often violate overtime laws.
Off-the-Clock - Alvarez v. IBP
The Supreme Court's recent decision in Alvarez v. IBP has likely opened the door to off-the-clock claims regarding pre-shift and post-shift claims. In Alvarez, the Court ruled that once an employee picks up a piece of equipment or clothing at the worksite or is compelled to perform some other work activity such as reviewing supervisors' memos, the clock for compensable work time begins. With regard to equipment or clothing, the work clock ends only when the equipment or clothing is returned.
Alvarez is significant because previously employers argued, often successfully, if the amount of time spent performing these tasks was "de minimis," the employee's work time did not begin until the employee arrived at their work station. This could result in employees being deprived of pay for 10-20 minutes or more each day.
There are currently two types of off-the-clock cases that are being pursued successfully - meal breaks and pre-shift / post-shift.
There are essentially two types of meal period cases: (1) Individuals who work through the meal period by eating at the worksite and (2) individuals who receive only an abbreviated meal period. The Second Circuit's decision in Reich v. Southern New England Telecommunications Corp.121 F.3d 58 (2nd Cir. 1997) illustrates the first point. Construction workers were told to eat their lunches at the construction worksite to provide security for expensive equipment at the site. The court held that the employer was the primary beneficiary of the employees' meal period because the employees performed an important service for the employer during the meal periods. The employees recovered several million dollars in backpay and liquidated damages.
The second type of meal period scenario involves employees who grab a sandwich and eat it in a break room or other assigned area for a few minutes and then return to work. The employee is then docked the full allotted time - e.g., 30 minutes - for a meal period. An employee must be relieved of duty for more than 20 minutes during the workday in order for the employer to dock the employee's pay.
Pre-shift / Post-shift
We have encountered a variety of different scenarios in our pre-shift / post-shift cases in which employees have worked without compensation:
Office Workers turning on computers and reviewing company memos before their official shift commences
Police officers signing in log books 20-30 minutes before their official starting times in order to be briefed, to review memos on the bulletin board or in their mail, to put on equipment, etc.
Police officers being required to clean their guns off-duty
Paramedics reviewing memos at the start of each shift and having to inventory and stock vehicles before the official starting time of their shifts
Prison guards picking up batteries for their radios and then traveling to their posts
Misclassification Exemption Cases
These are cases in which employers simply fail to pay employees any overtime or overtime at a reduced rate because the employer claims that the employees are exempt from the FLSA. The main exemptions employers attempt to use to avoid overtime pay are the administrative, professional, and executive exemptions.
The professional exemption is straightforward and the types of jobs that one would instinctively think of as professional (RNs, lawyers, vets, certified teachers, etc.) is pretty consistent with the law. However, the exemption only applies to persons who are qualified or certified to perform the professional and are actually performing the work of the profession as their primary job duty.
The executive exemption is used to exempt managers. To be exempt, an employee must make recommendations which are given "substantial weight" with respect to changes in an employee's employment status and the executive must have management as his or her primary job duty.
The administrative exemption is the most mis-used by the employer. An exempt administrator must be involved in the internal workings of the employer as opposed to doing the day to day production work, and the employee must make decisions with respect to matters of significance to the company. For example, a secretary would meet the test for being involved in the company's internal operations, but would nonetheless be non-exempt because he or she would not make any decisions of significance for the company.
These are some of the typical types of misclassification:
First line supervisors who are working foremen
Assistant restaurant managers
The FLSA requires that all non-discretionary pay be included in the rate at which overtime is paid unless there is a specific statutory exception for it. The most common types of pay that are wrongly excluded from the calculation of the regular rate of pay are longevity pay, shift differentials, hazardous duty pay, annual bonuses, and employee performance or contest awards. Pensions, holiday pay, paid leave, stock options and similar payments may be excluded from the regular rate.
Longevity or seniority pay that is paid once at the end of the year and then not included in the employees' overtime pay is the most common type of violation, though shift differentials are often omitted as well. Merely because the payment is made only once a year is not a defense to failure to include it in the overtime rate. The employer must pro-rate the pay over the course of the year.
In some states, failure to pay wages on a timely basis results in significant penalties.
The FLSA requires that overtime be paid in the next pay period after it is worked for which the employee receives a paycheck. The damages for the failure to pay timely are either liquidated damages equal to the amount of the late payment or interest. In Biggs v. Wilson, 1 F.3d 151537 (9thCir. 1993), the court ruled that California state employees were entitled to liquidated damages for late paychecks. State laws often require timely payment of wages, as well.
The theory behind getting liquidated damages is that the employer is improperly receiving not only the fruits of the employee's labor, but also the benefits of the employee's money. Moreover, unless the employee gets his paycheck right away, the employee can not remember how much OT he or she has worked and check whether the employer has paid for all of the overtime worked.
Section 211 (c) of the FLSA requires employers to maintain accurate records. If it can be shown that the employer has failed to meet this burden, the employees' estimates as to hours worked are presumptively valid.
Compensatory Time - Public Sector
Under Section 7(o) of the FLSA, public employers may, with the agreement of the employee or their representative, pay comp time instead of cash for overtime work. However, there are specific rules that must be followed in awarding comp time, granting requests to use comp time and cashing it out.
To pay comp time, the employer must have an agreement with the employee or their representative to do so before the employee performs overtime work. There are limits on the number of comp hours that can be accrued: 240 hours for regular employees and 480 hours for public safety employees.
If an employee requests use of comp time, the request must be granted unless it unduly disrupts the operations of the department. The Sixth Circuit recently held in Beck v. City of Cleveland, 390 F.3d 912 (6th Cir. 2004), that it does not disrupt the operations of a department to call in another employee to work overtime. There is also a district court decision -- Debraska v. City of Milwaukee -- that reached the same holding. Thus, as long as there is an employee willing to work to replace the employee using comp time, the comp time request must be granted within a reasonable date of the request.
Finally, when an employee terminates his or her employment, the employees' comp time must be cashed out at the average rate of pay the employee received in the three years before retirement or his final rate of pay, whichever is higher. 29 CFR Â§ 553.27.
Comp time cases usually involve two issues:
Requests are improperly denied
Many public employers routinely deny requests to use comp time on the basis that they will have to call an employee back to work overtime to replace the employee who wants to use comp time. They do so under the mistaken belief that calling another employee to work overtime constitutes an "undue disruption" of the agency's work. As the Beck decision makes clear, however, this is legally invalid.
Comp time is not cashed out properly or is converted to some other form of leave
Public employers often fail to cash out the employees' comp time when employees retire, or they cash it out at the wrong rate. All shift differentials, longevity pay, etc. must be factored into the rate at which comp time is cashed out. In some jurisdictions, comp time is converted to some other form of leave if it is not used within a certain period of time. For example, in one case we handled it was converted to sick leave after one year. Then, any unused sick leave was cashed out at 50% of its value when an employee left employment. This violates the FLSA.