Our grandparents punched the clock in a much simpler world. Yet the law of their day governs how we get paid in the Year 2000.
Companies say they try hard to comply with the confusing wage and overtime provisions of the Fair Labor Standards Act of 1938, but employment lawyers say they aren’t always doing a good job of it.
The overtime terms of the 62-year-old act are its most commonly violated aspect, said Mary Mikva, an employment lawyer with Chicago-based Abrahamson, Vorachek & Mikva. While very often non-compliance is caused by ignorance of the law, Mikva said sometimes employers are just taking advantage of workers.
The act requires employers to pay workers not exempt from the overtime provision time and a half for every hour over 40 hours worked in a week. Professional, executive and administrative employees were named exempt under a 1954 amendment called the “white-collar exemption.” The problem is determining who fits in those classes, Mikva said. In recent years rulings have exempted such occupations as computer analysts, programmers and some software engineers.
“Employers misclassify people all the time,” said Mikva. “When the law was passed (the workplace situation) was much clearer: The hourly people were on the assembly line and the manager was telling the people on the line what to do.
“The line is much harder to draw now,” she said. “Employers are understandably confused.”
How to classify employees is one of the most common questions the Society for Human Resource Management gets, said Deron Zeppelin, director of the association’s governmental affairs office. “When we have a seminar on the topic, more people show up,” Zeppelin said.
Historically, a professional has been defined as someone with an advanced degree–doctors, lawyers, some engineers. But in March, the U.S. Supreme Court let stand an appeals-court ruling that eight public school athletic trainers in San Antonio were “learned” professionals and therefore exempt from receiving overtime pay.
“With the new technology, people are more used for their brains than their brawn,” said Zeppelin. “They may only have a high school degree but you have Web page technicians, who type in code all day. Where do they fall? We’ve had engineers at American Broadcasting Company, who were making $70,000 to $80,000 a year, found not to be exempt.”
Lines are blurring in the executive classification as well, said Jac A. Cotiguala, an employment lawyer with his own Chicago firm. The Fair Labor Standards Act says that to be considered exempt an executive must supervise at least two other workers, must have the power to hire and fire and cannot devote more than 20 percent (40 percent if a retail or service business) to non-managerial tasks.
“But you have these `assistant managers’ at fast-food places who are really straw bosses,” said Cotiguala. “They’re there flipping burgers and making fries like everyone else. . . . But the companies are saying these kids are exempt from overtime, and they’re making chump change.”
The murkiest class to define is the administrative category, said lawyer Mikva. “If you read it one way it applies to everyone,” she said, “and if you read it another way it applies to no one.”
To be considered an exempt administrative employee one must “customarily and regularly exercise discretion and independent judgment,” said Dennis McInerney, district director of the Wage and Hour Division of the U.S. Department of Labor.
Often any white-collar or office worker will be classified as an administrative employee. “We have a number of complaints where we have secretaries classified as (administrative) exempt,” McInerney said. “It’s not rare.”
Workers who are paid by the hour must get overtime regardless of their job title and description. And some people companies call salaried workers really aren’t, said Cotiguala. “In order to be salaried you have to be paid your salary whether you work one hour or 100 hours a week.”
A salaried worker’s pay can’t be docked for a violation of work rules unless it’s for a major safety violation, he said. Also, salaried employees must be paid when on military duty or jury duty.
“If you take Monday off and your employer deducts 20 percent of your pay from your check, you’re not salaried,” he said. “If you’ve run out of vacation and personal time, and you want to take a half day off to see your daughter’s graduation, they have to let a salaried employee take the time without docking him.”
Cotiguala says a popular “alternative” to paying overtime, called compensatory or comp time, is not permitted under the law.
“If an employee is truly exempt, say a salaried executive, and is given comp time for working extra hours, that’s fine,” he said. “Then you’re going above the minimum standard.
“But if you’re not an exempt employee, comp time is not legal and it never has been,” Cotiguala said. “It’s not even a fair illegal tactic. If you were paid overtime, you’d get three hours paid for two hours worked. When they give you comp time you get two hours off for two hours worked.”
Congress has made an exception only for public employees to be compensated for overtime in compensatory time, he said. Those employees are allowed to “bank” hours at a time-and-a-half rate.
Zeppelin of the human resource group said that forbidding comp time “is shackling a lot of inventiveness” on the part of employers.
Another common misconception is that a non-exempt staffer must be formally authorized to work overtime to be paid time and a half. If you work more than 40 hours a week–even without being asked– and your employer is aware of it, he has to pay you overtime, said Cotiguala.
So what does an employee do if he thinks he’s misclassified or that he should be paid overtime? The least contentious route could be going to the human resource department and requesting an audit of your position because you believe you are misclassified, Mikva said. “You won’t get any time-and-a-half pay for time already worked,” she said, “but you would for future overtime.”
If you want to take it further, you can complain to the U.S. Department of Labor or the Illinois Department of Labor or you can file suit.
If one person’s job is misclassified in a large firm, then hundreds of people are probably misclassified, said Mikva. “You then have the basis for a class-action suit, and a lawyer would probably represent you on a contingency basis,” she said. “But I always recommend two or three people go to file because there’s safety in numbers.”
While retaliation is prohibited under the Fair Labor Standards Act, it is often hard to prove. “Sometimes the retaliation is subtle. Bad things just seem to happen to you. Or sometimes you are treated differently by co-workers and it’s uncomfortable,” said Mikva.
Congress has talked about overhauling the law since 1985 but, said Zeppelin of the Society for Human Resource Management, there doesn’t seem to be consensus on how to change the act.
Zeppelin and Mikva agree on one thing: An employer not sure how to classify an employee should go ahead and write the overtime check. “I think you should just pay people overtime,” Mikva said. “If they’re working 60 hours a week they deserve to be paid.”
Cotiguala says if employers choose not to pay overtime, they may regret it eventually. “Juries tend to believe we’re more enlightened today and we don’t discriminate anymore,” he said. “But when it comes to not paying overtime, that’s un-American. Juries think you have to be Uncle Joe Stalin’s father not to pay an employee what he’s earned.”
