There are thousands of employees who have not been paid fairly. This is unfair because it allows employers to cheat the system, which can then have a negative effect on working families.
It’s still hard to nail down a federal wage violation, even with understanding your rights under the FLSA. However, there are common wage violations that you may be able to detect.
Below are the six most common wage violations:
1. Working “off the clock”
This is when employers fail to account for hours worked by an employee when they are not scheduled for their regular shift. According to the FLSA, the definition of employment means “to suffer or permit to work.”
This means that working, on its own, is one of the requirements of being an employee. There are tasks or duties that an employer allows the employee to perform. When the employee performs them, they need to be accounted for.
Examples of working off the clock include coming in for work early or staying late to finish an assignment, or working through part of, or an entire meal break. These should all be counted towards hours worked. Many of unpaid overtime lawsuits have been filed by those who work in call centers who were uncompensated for pre- or post-shift time at work.
Waiting to be engaged? Or engaged to wait?
There is some waiting time that is not considered work under the FLSA guidelines. But if an employee has been “engaged” to wait, it’s a different story. An example of this would be a receptionist that is checking the internet while they are waiting on phone calls to come in, or a firefighter playing a game of cards while waiting for an alarm to go off. These are examples of where an employee is “engaged to wait.”
These are all instances where an employee is “waiting to be engaged” and these circumstances do not count towards overtime. An example of this would be a truck driver who delivers a shipment at noon but doesn’t have their next assignment until hours later. They are considered off duty for the next six hours between shifts.
Work Travel and Commute
Many employees have to commute to their jobs. This is a reasonable expectation and does not count as hours worked. However, if they are asked to pick up or drop off supplies, or pick up another employee to drive to work, it may be considered “on the clock” at which point that time should be accounted for.
There may be situations where an employee has to drive to a particular job site. The time spent commuting between sites or multiple sites would count as hours worked.
Another instance is when a company vehicle or truck is used to commute. For example, if a large truck or big-rig prevents the employee from taking certain roads, or incurs additional costs at a toll booth, this would be considered work time.
Other examples include travel for work. If an employer requires you to travel as part of your job and you are taking a flight during normal working hours, those hours should be counted as work. If the regular hours an employee works are between 9am and 5pm, and the employee has to take a plane at 2 p.m., the remainder of normal working hours (three) would be counted as hours worked.
If you get called back to work after leaving for the day, that time spent commuting back to the work location would be counted towards hours worked.
There are many professions that require employees to be on-call, such as nurses or doctors.
Some professions, such as retail workers, are put “on-call” but this does not usually match the definition of on-call by the FLSA. In this line of work, if you are able to go home but might be expecting a call later to come in for a shift, it’s probably not the same as what FLSA considers on-call.
Many of the FLSA-defined on-call workers are not allowed to leave the premises. Many employees that work in hospitals might be provided an “on-call” room where they can sleep, watch TV, read books and other activities until they are asked to perform their duties.
Taking Breaks at Work
Breaks that are no longer than 20 minutes usually don’t count towards hours worked. An employer should outline the exact amount of time an employee has for a break, otherwise the ambiguity could be considered work.
You have to be completely free of your job duties in order for it to be considered an actual break. If not, then the time taken and duties performed would be counted as hours worked.
Nurses, for example, in the healthcare industry are notoriously uncompensated for their work during normal break time.
This happens when you have to go back into work to fix a mistake. It could be your fault or someone else’s, but either way, if you’re working during that time it counts toward your hours.
After a Shift is Over
During this time, anything that is primarily to your own benefit is not considered work. For example, taking a shower in company lockers or making a leisurely phone call at your desk. However, it should be stated in a written or unwritten contract that those types of activities count towards work hours.
2. Employee Misclassification
There are certain kinds of employees who are exempt from the FLSA minimum wage and overtime pay requirements, while others are only exempt from overtime provisions.
A common violation of employers is found when misclassifying their employees into one of the exempt categories; this includes managers, executives, professionals, or administrators. Click here for more information about the various kinds of exempt employees.
Many people who have the name administrator, manager, or professional in their title is not necessarily the same as what your job description is. For example, a store manager in a retail space may not be the same as a manager according to the FLSA definition. Many retail workers are entitled to earn overtime pay.
When you’re exempt from the FLSA overtime provisions, it will look at what you do, rather than what your job title is. It all comes down to what the job duties require you to do.
Many positions have a tendency to get misclassified more than others. This includes:
- Accountants and bookkeepers typically perform “intellectual” work. This could make it seem like they would be eligible to fall under the “professional” category of the FLSA. However, in order to be qualified for this, you must usually hold an advanced degree or professional certification.
- Computer technicians typically fall under the “learned professional” category of the FLSA since they usually have earned an advanced degree in their field.
- Warehouse foreman and clerical workers who sell goods for resale are often misclassified as “administrators” or “executives”
- Nurses and licensed practical nurses (LPN) are typically misclassified as exempt “professionals.” However, most LPNs are entitled to overtime. Registered nurses (RN’s) may or may not be, and this is dependent upon their level of “advanced knowledge” in the medical field; if they do or do not receive a salary of no less than $455 per week; as well as the primary task of their employment.
Employee classification is always changing with the Department of Labor. That’s why it’s important to stay on top of its guidelines. Additionally, those who work in restaurants are particularly subject to wage and hour violations.
3. Independent Contractors
US regulators face a great challenge when it comes to employees being misclassified as “independent contractors.” With the increasing use of technology, businesses are able to remove what used to be business operations, and instead, contract their work to others.
Many “employees” are entitled to minimum wage and overtime regulations, but true independent contractors aren’t. The distinction comes from the FLSA “economic realities” rather than a title.
Overall, “employees” are somewhat financially dependent upon the business they are employed with. Many workers are considered employees, while non-exempt employees are entitled to all FLSA protections.
However, independent contractors are financially “independent” from the business(es) they work with. This means, they are in “business for themselves” and not the other way around.
Economic Realities Test
In 1947, the decision of the US Supreme Court in United States v. Silk, 331 U.S. 704 (1947) outlined six considerations that will help determine whether or not a worker is “economically dependent” on an employer. This “economic realities test” is outlined as follows:
- Does an employer depend on your work?
Basically, if you perform an essential task for the employer, you are probably integral to the business– meaning, the employer depends on you for their work.
- Is your work relationship permanent?
Even though the terms of employment may be undefined, permanence in a relationship between a worker may indicate true employment.
- Are you in it for yourself?
If you treat the “employer” more like a client, and compete for its business with others, you aren’t dependent on them, you probably operate more like an independent business.
- Are you invested in the business?
Though independent contractors and businesses both participate in purchasing equipment, hiring staff, or other business investments, the Supreme Court sees it a certain way: such investments must be equivalent enough to suggest they both share the risk of the business’ losses.
- Who controls the work relationship?
If the business determines wage and salary, decides who does the work, hires others for the job, you are probably an employee. Employers are the ones that set the stage for work environment and the conditions of employment for employees. Independent contractors have more freedom and flexibility on when and how they work.
More workers are finding themselves in the gray area of employment and independent contracting. FedEx settled a class action lawsuit for $228 million, in regard to allegations the company misclassified over 2,000 of its delivery drivers.
4. Inaccurate Hour Tracking
Employee hours are typically tracked with a time clock. Early clock-ins or late clock-outs aren’t usually counted towards total work hours, as long as an employee isn’t performing work before and after their start or close time.
However, if you have worked prior to your scheduled shift, or after your shift ends, that time counts towards your hours.
Many employers “round down” in 5, 6, or 15 minute increments. What this means is if a worker clocks in at 9:01 a.m., the system may count their clock-in time as 9:07 instead. The FLSA accepts this kind of practice as long as it “balances out overtime.” But if an employee clocks out at 5:08 and 5:14, the time should be rounded up to 6:15 and counted towards hours worked.
It becomes a bit more convoluted when it comes to clocking in. If an employee is scheduled to start at 8:00 a.m. and they don’t clock in until 8:07, should the employer clock them in at 8:15? Yes, so long as the employer balances it out for the ending shift.
One rule of thumb, if an employer consistently rounds down, you are probably being under compensated for your work hours.
Some employers demand their employees set up, clean, or close down before and/or after a shift. This practice is a violation of the FLSA and insulting to employees.
Fluctuating Workweek and “Chinese Overtime”
This is known as “half-time” or “half-pay”. This indicates a prior arrangement with employees who agree to be paid half their regular wage for hours worked over 40 in a workweek. Rather than one-and-a-half times mandated by the FLSA.
If the hours of an employee vary week to week, and the employee receives a salary no matter what, overtime hours can be paid at one and a half times their regular wage. In order for a fluctuating workweek to be possible, three criteria need to be met:
- Both the employer and employee must clearly understand a set salary covers all hours during a workweek, no matter how many hours they actually worked
- Employees hours must change week to week
- The “regular rate” at which overtime is calculated cannot fall below the set federal minimum wage
For example: an employee receives a fixed salary of $375 a week. Say one week they work 45 hours– their regular rate is how much they worked for the workweek divided by the hours worked (in this case, 45). This would equal $8.33 and still above the federal minimum wage of $7.25. Their employer would lawfully be able to pay for five hours of overtime at a rate of $4, half the regular rate of pay.
However, the next week the employee ends up working 60 hours, as they are suddenly swamped with extra work. The regular rate of pay ($375wk divided by 60) would come out to $6.25 and well below the minimum wage. In this case, the employer cannot claim they are working a “fluctuating workweek” employee. They would have to pay them overtime according to FLSA regulations which is one-and-a-half their regular rate of pay.
The employer may also be liable for violating the minimum wage requirements as outlined in the FLSA.
Employers are not able to get around 40-hour workweeks for their employees when it comes to calculating overtime. Many employees are paid biweekly, which makes it seem like each work period is a total of 80 hours (or two weeks of work).
For example, if an employee works 42 hours one week and 38 hours the next, an employer may want to add the two weeks together to make 80 hours. However, this is not counting the two hours the employee worked overtime in the first week.
The employer, at this point, would be breaking the law. The employer should have been paying the employee overtime at one-and-a-half times their regular rate of pay for the first week.
5. Unlawfully Charging Employees for Expenses
Employees can be asked to purchase certain items that pertain to work, such as uniforms, aprons, etc. However, employers are not allowed to reduce any employees rate of pay below the minimum wage, or reduce the amount of overtime mandated by the FLSA.
For employees making minimum wage, an employer cannot force workers to purchase business-related items on their own. Additionally, the employer cannot reduce the workers rate below minimum wage for a certain period of time to cover the expense.
If an employee is making more than minimum wage, however, it is entirely lawful for an employer to deduct business-related expenses from their pay. An employer could deduct a maximum of $30 on the week for an employee making $8.00 an hour ($.75 over the federal minimum wage).
6. Bonuses and Gifts
There are discretionary and non-discretionary gifts under the FLSA.
Non-discretionary bonuses are doled out to employees who meet certain requirements. These are generally defined by their employer, such as meeting a particular goal or having perfect attendance.
Any payment that is over and above an employee’s base wage and offered for meeting a goal counts towards the employees “regular rate,” and their true hourly wage. This is important for bookkeeping because “regular rate” is used to calculate overtime wages.
An employer is violating FLSA if an employee is awarded with a “non-discretionary” bonus that does not count towards calculations of overtime compensation.
“Discretionary” bonuses are considered gifts because they happen randomly and do not count towards the employee’s regular rate of pay. Many employees receive a Christmas bonus, but those are considered “non-discretionary” because it was ambiguous on whether the employer would be giving them out or not.