As an owner of a hardwood flooring contracting business, you may pay your employees by the hour. Because you sometimes juggle both full-time and part-time employees, it can be difficult to keep up on all the different issues associated with hourly wages and overtime. The following are some of the more common wage questions I receive under the Fair Labor Standards Act (FLSA), which is the federal law governing employees' rights to minimum wages and overtime.
Q: Can I "round" an employee's starting and stopping times when they punch in and out on a time clock?
A: Yes. The Department of Labor (DOL) has taken the position that it will allow employers to round an employee's starting and stopping time "to the nearest five minutes, or to the nearest one tenth or quarter of an hour." In order to take advantage of rounding, however, the employer must ensure that the practice of "computing working time ... will not result in, over a period of time, any failure to compensate employees properly for all of the time they actually worked." This means that the rounding of time cannot merely benefit the employer; the time must be rounded to both the benefit and disadvantage of the employee. For example, assume an employer rounds to the nearest quarter hour and an employee who is scheduled to start at 8 a.m. punches in at 7:51 a.m. The employer must round the time back to 7:45 a.m., and pay the employee for this time, even though he didn't work it. Conversely, however, if the employee punches out at 4:07 p.m. for a shift that was to have ended at 4 p.m., the employer is allowed to round the employee's time back to 4 p.m., and not pay the employee for the additional 7 minutes. This rounding would benefit the employer but disadvantage the employee. Rounding in this manner is essentially a "wash" and is permissible.
Q: I have an employee who sometimes works up to 10 hours in a day, even though he is scheduled for eight hours per day. He is paid on an hourly basis. He does not, however, work more than 40 hours in a workweek, as he is part-time. He claims that I owe him overtime at "time and one-half" for all hours worked in excess of his regular schedule of eight hours per day. Do I have to pay him overtime for those additional hours per day that he works beyond his eight-hour shift?
A: Technically, you have no obligation under the FLSA to pay an employee "daily" overtime for hours worked in excess of the employee's regularly scheduled hours. The FLSA only requires employers to pay nonexempt employees overtime at time and one-half their regular rate of pay for all hours worked in excess of 40 hours per week.
However, be aware that some states require employers to pay overtime if an employee works more than a certain number of hours in a day. Consequently, you need to be cognizant of your state's laws. Additionally, if you have agreed (either by contract or written policy) to pay overtime for hours worked over a certain amount in a day, you must comply with the requirements of the contract or policy, and pay overtime. Such language is sometimes found in collective bargaining agreements negotiated by employers with unions.
Q: Recently, I had to schedule a part-time employee to work on a holiday. Even with those hours, he only worked 32 hours that week. The employee claims that I owe him pay at "time and a half" for the hours he worked on the holiday. Do I?
A: It depends. The FLSA does not require an employer to pay premium pay or "overtime" to an employee who works on a holiday. However, you may choose to do so. Therefore, if you have a written policy (such as in a collective bargaining agreement, an employee handbook or posting) that requires such a payment, or you have a consistent past practice of doing so, you should pay it. If, however, you do not have a policy or practice of paying overtime or premium pay to an employee who works on a holiday, and the employee did not actually work over 40 hours in the week, you are under no obligation to pay a premium rate or overtime under the FLSA.
Q: An employee recently quit his job at our company and, as he was leaving, he mentioned to a coworker that he was going to sue for unpaid overtime. We are concerned that we may have misclassified him as "salaried exempt" and owe him overtime pay. How much time does he have to file a lawsuit against us for overtime pay?
A: An employee must file an action within two years of the accrual of a claim. An unpaid wage claim technically accrues each day the employee is not paid the required wages. That means the employee can recover back wages or overtime for the two-year period prior to the date the individual filed the wage complaint in court. However, if the violation of the FLSA is found to be "willful," the statute of limitations (and period of liability) is lengthened to three years. A willful violation is defined as one in which the employer either knew its conduct violated the FLSA or showed "reckless disregard" for whether its actions complied with the FLSA. Thus, "willfulness" requires more than mere negligence.
Complying with wage law can be complicated, and it's very factspecific. For any question you have, it is recommended you consult with a lawyer who specializes in such issues.
