Do You Have an Overtime Case?

Since the Great Depression in the 1930s, most employers in the United States have been legally required to pay overtime to eligible employees who work more than 40 hours in a week. The original purpose of this rule was to spread the work around and get as many people as possible off the unemployment rolls.

These days, overtime is seen less often as an economic stimulus program and more often as an employee right: If employees have to work more than a standard work week, they should be paid a premium. However, many employers try to avoid paying the overtime premium—time-and-a-half for every overtime hour worked—through creative timekeeping, employee misclassification, and miscalculating employee pay.

This article explains the basic overtime rules, covers some common overtime violations, and provides information on what you should do if you believe your employer is breaking the law.

How Does Overtime Pay Work?

Under the federal Fair Labor Standards Act (FLSA), covered employers must pay eligible employees an overtime premium of 150% of their regular hourly wage for every hour they work over 40 in a week. The vast majority of employers are covered by the FLSA. However, not every employee of a covered employer is entitled to overtime.

Which Employees Are Exempt From Overtime Pay?

Exempt employees—those who fall within an exception to the FLSA overtime rules—are not entitled to overtime if they work extra hours. (Employees who are entitled to overtime are referred to as "nonexempt.")

The FLSA exempts a variety of workers, from newspaper deliverers to seamen, workers on small farms, and outside salespeople. However, most of the disputes arise over the so-called "white-collar" exemptions for executive, professional, and administrative employees.

Salaried Employees and Overtime

Exempt employees (which includes most salaried employees) don't receive overtime if they work more than 40 hours a week. Employees are exempt from the FLSA if they earn a salary of at least $684 a week and they perform job duties that require an advanced degree, are managerial in nature, or involve relatively high-level business decisions, generally speaking.

Learn more about how each of these exemptions is defined—and how to tell whether you are paid a true "salary" or not—in Nolo's article Overtime Pay: Your Rights as an Employee.

State Overtime Laws

Most states have their own overtime laws, too. Employees are entitled to the rights provided by the more protective law, federal or state. State overtime laws differ from the FLSA in a couple of important ways.

First, states may exempt and include different categories of employees, such that you might be entitled to overtime under federal law but not state (or vice versa). Second, a few states have daily overtime limits. For example, a California employee is entitled to overtime after working eight hours in a day, no matter how many hours the employee works in a week. (You can find out more about your state's overtime law by contacting your state labor department.)

Can a Salaried Employee Refuse to Work Overtime?

An employee who is exempt from the FLSA (which includes many salaried employees) generally has no legal right to refuse overtime hours. However, the employee may be able to negotiate their workload with their employer. To be sure, employers who regularly ask their full-time salaried employees to work a large amount of overtime hours may find it difficult to retain staff.

Common Overtime Violations

Most overtime violations fall into one of these three categories:

• misclassifying employees as exempt
• not counting hours worked, and
• miscalculating hourly wages.

Misclassification Problems

Here are some common violations involving employee classification:

• classifying employees as exempt "managers" (or assistant managers) when their job duties are the same as the employees who supposedly report to them
• classifying employees as exempt under one of the white collar exemptions when their jobs don't require discretion and independent judgment
• paying employees based on how many hours they work each week rather than paying them a true "salary" that doesn't fluctuate based on hours worked or production
• docking employee pay based on productivity, hours, performance, or other reasons that are not allowed (for more information, see Legal Limits on Pay Docking and Unpaid Suspensions), and
• paying employees a salary of less than $684 per week.

Not Counting Hours Worked

Even if an employer properly classifies an employee as nonexempt, the employer might violate the law by undercounting employee hours by, for example:

• requiring employees to work "off the clock" (before clocking in or after clocking out)
• requiring employees to work through unpaid rest or meal breaks
• requiring, expecting, or allowing employees to do extra work at home that's not compensated
• not counting time employees spend putting on or taking off protective gear and clothing at the worksite
• not counting time employees spend traveling for work (for example, if employees are required to report to a particular location, then are transported or drive from there to a worksite), and
• not counting time spent on required training and other mandatory activities.

Miscalculating the Hourly Rate

The overtime premium is 150% of the employee's regular hourly rate. Some employers don't include all required compensation in coming up with that wage, however. Common mistakes here include:

• not counting all wages, commissions, and shift differentials in calculating the employee's hourly rate, and
• not counting all performance-based bonuses and prizes (such as a $50 award to the employee of the week) in the employee's hourly rate.

Next Steps

If you believe you are not being paid overtime to which you are entitled, it's usually best to start by talking to your employer. Explain why you believe you are entitled to overtime. If you have documentation (for example, of hours you had to work at home to complete assigned projects on time), give the employer a copy.

If you don't succeed in convincing your employer that you are owed overtime, you have a couple of options. Most states provide an administrative procedure for making a wage claim. Contact your state labor department to learn the process for complaining about unpaid wages, including time limits for making a claim and forms you'll need to complete. Typically, you don't have to use the state's administrative procedure; you also have the option of bypassing the state agency and going straight to court.

Before you file a wage claim or consider taking legal action, however, it's a good idea to talk to an experienced lawyer and make sure you have a viable claim. A lawyer can help you figure out your chances of success, what evidence you'll need, and so on.

If your case looks strong, the lawyer might be interested in representing you in agency proceedings or a lawsuit (or simply trying to settle your claims informally). If a number of employees have been subjected to the same overtime policies, there may even be a potential class action lawsuit, in which all of you band together to vindicate your rights.