Are Your Employees Eligible for Overtime?

In an overtime case, the burden is always on the employer to demonstrate that it paid workers appropriately for every hour worked. It is therefore crucial that employers maintain detailed timekeeping records on all non-exempt (and borderline-exempt) employees. In addition to traditional time clocks, swipecard, handprint systems and computerized time-tracking software are now available to make timekeeping easy. Even a simple timesheet form that an employee fills out and turns in every week can be effective. It is best if time records are signed each week by employees to verify their accuracy.

Any rational timekeeping system is OK, but remember that if records are missing for any week, the employer can be liable for back pay (and possibly penalties) based on whatever time employees claim to have worked that week, so collection and maintenance of records is key. Accurate payroll records should also be kept, and should include any peculiarities such as cash payments. Deductions from pay that are not mandated by the government should be authorized by the employee in writing, and described accurately on the paycheck stub.

Avoiding Overtime Claims

There are steps you can take now to protect your business in case you are subjected to an overtime claim:

• Make sure employee job descriptions are up to date, and properly describe  employees’ primary responsibilities. If an employee is performing exempt duties, an accurate job description will help document the employee’s exempt status. L Confirm that time and payroll records are in order for any employees you anticipate terminating. Many claims come from former employees unhappy about being let go.
  
  



• Remember that all hours worked must be paid—you can’t cut down on overtime by discouraging employees from reporting it.
  
  



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  Develop an overtime authorization process to discourage employees from putting in unnecessary time. If they work anyway, pay them—you can discipline them for violating your rules, but this needs to be done carefully (to prevent retaliation claims).
  
  



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  Avoid conspiring with employees to circumvent wage and hour laws. Employees can’t waive their rights under the FLSA. If you make some deal that involves money under the table or any other questionable practice, your business can clearly be held liable.
  






• Don’t offer “comp time” in lieu of overtime pay. This practice is currently illegal for private employers.
  
  



• Update your employee handbook and/or published policies with the latest changes to wage and hour laws. Most modern employers now understand the importance of having a formal discrimination and harassment policy as a legal defense, but they don’t always realize that there are also a number of defensive policies relating to compensation and timekeeping practices needed to protect them in overtime and other wage-based litigations.
  
  



• Provide any training necessary to bring your supervisors up to speed on the requirements of the FLSA and state wage and hour laws.




Employers should be concerned about the possibility that their companies may be at risk for overtime claims. The sooner you bring your company’s practices into compliance, the less you can potentially be assessed in the event that an overtime action is filed against your company.