Overtime is required to be paid for all hours worked over 40 during a workweek. A workweek consists of seven consecutive 24-hour periods. Overtime pay is required at one and one-half the regular hourly rate for hours worked over 40.
1. What Constitutes “Hours Worked”
Although “hours worked” is usually obvious, this issue is at the forefront of FLSA litigation today. Under the FLSA, employment is broadly defined to include all hours that an employee is “suffered or permitted to work” for the employer. 29 U.S.C. §203(g). This broad definition may require an employee to be compensated for time the employer does not otherwise intend to consider “working time.”
The landmark case at the time regarding “hours worked,” was Anderson v. Mt. Clemens Pottery Co. (1946) 328 U.S. 680, in which the Supreme Court found that time spent walking from the entrance of a plant to their work stations and back was compensable. As a result of that case, $6 billion in FLSA lawsuits were filed, which prompted Congress to enact the Portal-to-Portal Act the next year in 1947.
The Portal-to-Portal Act eliminated from “hours worked” this travel time and other “preliminary” and “postliminary” activities. Generally, the Act does not affect pre- or post-liminary activities that are compensable by contract, custom or practice, or other work done at the employer’s behest and for the employer’s benefit.
There are several examples of current litigation involving “hours worked.” The most common litigation involve “donning and doffing,” “on-call time,” “early relief,” “k-9 pay,” and “training time.”
2. Computation of Overtime Rate
While most people view the FLSA as applicable only to “overtime” payment, there are several other provisions within the FLSA that may subject employers to liability, including proper computation of the overtime rate. Overtime pay equals one and one-half times the employee’s “regular rate” of pay. Where disputes arise in this area is in calculating the correct “regular rate” of pay to determine what the overtime payment should be. The FLSA does not equate the “regular rate” as merely the employee’s salary.
Pursuant to the FLSA, the regular rate includes “all remuneration for employment paid to, or on behalf of, the employee.” Thus, there have been actions challenging virtually every benefit possible. Below are examples of what has been held to be required inclusions in determining the regular rate of pay:
• Shift differential pay;
• Longevity pay;
• Special assignment pay;
• Hazard pay;
• Educational incentive pay;
• Certificate pay;
• On call pay;
• Bonus for quality of work;
• Lunch or meal expenses paid by employer;
• Salary increases, including retroactive increases; and
• Recent law suggests cash-in-lieu of benefits payments.
Items which, although are a part of remuneration paid to employees, have been held not to be required as part of the regular rate of pay include the following:
• Discretionary bonus;
• Holiday pay (if paid in the holiday pay period);
• Retirement contributions;
• Call-back pay;
• Health premiums;
• Uniform allowances;
• Tuition reimbursement;
• Automobile reimbursement.
The recent landmark case of Flores v. City of San Gabriel was initiated and filed by Dieter Dammeier. The Flores case has opened up many avenues for employees to obtain significantly higher overtime rates by including other forms of compensation in the “regular rate.” While Flores dealt with deciding that medical benefits, in many cases, must be added to the “regular rate” and thus overtime rate, it bolstered other areas as well. Other benefits paid as cash are now more susceptible to being included and thus significantly boosting the overtime rate as well.
3. Timeliness of Payment of Overtime
Public employers have lost millions of dollars by simply failing to timely pay overtime. In one significant case, the City of Los Angeles paid out fifty million dollars to its police officers for failing to timely pay their overtime after the riots which occurred in the aftermath of Rodney King. The FLSA requires an employer to pay overtime “as soon as practicable.” Courts have generally construed these requirements to require that overtime be paid on the regular payday following the pay period in which the overtime was worked. The only exception to this is where the amount of overtime compensation cannot be determined until sometime after the regular pay period. However, in such case, the overtime must be paid as soon as the employer can compute the pay and arrange for payment.
Remedies for Violation of the FLSA
Employees who have had their rights pursuant to the FLSA violated may bring a civil action against their employer, including managers and/or supervisors. Employees can recover back pay and/or overtime, liquidated damages, prejudgment interest, punitive damages, emotional-distress damages, and reasonable attorney’s fees and costs.
FLSA violations cannot be redressed by a typical class action lawsuit. However, employees can still bring a collective action, which means that each individual employee must affirmatively “opt-in” to the lawsuit. This entails either signing up on the initial complaint that is filed, or filing a separate consent form that is filed with the court after the initial complaint is filed.
An employee has two years to file suit after a violation occurs, or three years if the employer has “willfully” broken the law. In order to be a “willful” violation, the employer either knew or showed reckless disregard as to whether its conduct was prohibited by the FLSA.
Under the FLSA, retaliation is also prohibited. It is unlawful to discriminate against an employee because he or she has asserted rights under the FLSA.