U.S. Government Cracking Down on Overtime Violations

Negotiating the balance of power between an employer and an employee can be a tricky prospect. In this economy, many workers are very worried about job security. As a result, they are often afraid to do anything that might put their employment at risk. However, employers have a vested interest in minimizing costs and maximizing profits. Some try to improve their bottom lines by violating federal labor laws.

The federal government takes these violations seriously. Employees have a right to speak up against such abuses, and anti-retaliation laws protect aggrieved employees from being punished for reporting unlawful behavior.

One of the most common labor law violations is the intentional misclassification of workers as "exempt" employees. Exempt employees are not entitled to overtime pay, and therefore can be asked to work extra hours for no additional pay.

Recently, the U.S. Department of Labor has made a renewed effort to crack down on employee misclassification. As a result, courts have seen a surge in wage-and-hour lawsuits.

Who Is an Exempt Employee?

To determine whether an employee is exempt from overtime laws, the federal government will apply a three-part test that looks at the employee's salary, how they are paid and what their job duties are.

First, the government looks at the employee's annual pay. Workers who make less than $23,600 per year - or $455 per week - are automatically considered non-exempt employees. By contrast, nearly all workers who earn more than $100,000 per year are exempt, though this is not a hard-and-fast rule.

Next, the government will determine whether the employee is paid on a "salary basis." Essentially, this means that the employee is guaranteed to make a set amount of money in any given week that some work is performed. For example, the employer cannot reduce an exempt worker's pay for missing part of a day or not meeting goals. In addition, the employer cannot dock an exempt worker's pay simply because there is no work to be done.

There are some permissible reductions, however. Exempt employees can be docked pay for missing a full day of work because of illness, personal leave or disciplinary suspension. Further, some occupations - like doctors, lawyers and teachers - qualify as exempt even if employees are paid on an hourly basis.

If the first two tests are met, the government will then look to see whether the employee performs exempt job duties. Only executive, professional or administrative duties will be considered exempt. Executive duties typically involve the management and supervision of two or more employees. The professional duties exemption is meant to cover what the DOL refers to as "learned professions" including doctors and nurses, lawyers, architects, clergy, scientists, accountants, engineers and other jobs that require advanced knowledge. Finally, the administrative duties exemption generally applies to work that involves independent judgment and discretion and is directly related to the management of business operations.

If all three of these tests are met, the employee can be properly classified as exempt. If not, the employee will be considered to be non-exempt and must be paid at least 1.5 times his or her normal hourly rate for any overtime worked. Overtime is defined as working more than 40 hours during any given workweek.

What to Do if You Are Misclassified

Employees who are misclassified may bring a civil lawsuit to recover lost wages and other damages.

Workers who think they may be misclassified would be wise to seek the advice of an experienced employment law lawyer. An attorney will be able to evaluate the situation and determine whether a potential labor law violation exists. Most wage-and-hour lawyers offer clients a free initial consultation.