Ask the Experts: Paying Overtime Amidst a Staffing Shortage
By: Mark Burzych | Fahey, Schultz, Burzych, Rhodes
Q: My employees now work more hours because of our staffing shortages. Am I required to pay them overtime for this additional work?
A: Staffing shortages are causing existing employees to work extra hours to make up for the lack of help. Chances are if your employee is working more than 40 hours a week, you are likely required to pay them overtime. However, there are a few things to consider when determining whether or not this requirement applies to you.
First, you must understand how to properly classify your employees. Under the Fair Labor Standards Act (FLSA), employees who are classified as bona fide executive, administrative, professional, computer, outside sales, or paid on a salary basis no less than $684 per week would be exempt from the overtime rules.
As a rule of thumb, unless exempt, an employee must receive overtime pay for any hours worked over 40 hours in a workweek. The rate for such pay must not be less than 1.5 the employee’s regular rate of pay for every hour over 40 hours per week. If an employee is not exempt and the employer chooses not to pay the employee the required overtime, the consequences to the employer may be catastrophic.
A: Staffing shortages are causing existing employees to work extra hours to make up for the lack of help. Chances are if your employee is working more than 40 hours a week, you are likely required to pay them overtime. However, there are a few things to consider when determining whether or not this requirement applies to you.
First, you must understand how to properly classify your employees. Under the Fair Labor Standards Act (FLSA), employees who are classified as bona fide executive, administrative, professional, computer, outside sales, or paid on a salary basis no less than $684 per week would be exempt from the overtime rules.
As a rule of thumb, unless exempt, an employee must receive overtime pay for any hours worked over 40 hours in a workweek. The rate for such pay must not be less than 1.5 the employee’s regular rate of pay for every hour over 40 hours per week. If an employee is not exempt and the employer chooses not to pay the employee the required overtime, the consequences to the employer may be catastrophic.
See this example of a Restaurant franchisee who suffered major consequences for failing to pay its employees for their overtime:
The Wage and Hour Division at the U.S. Department of Labor conducted an investigation on a Mountain Mike’s Pizza Restaurant franchisee, who had six different locations. The investigation found that the franchisee failed to properly pay overtime to the workers at these respective locations, thus violating the FLSA. According to the report, the franchisee required its employees to work intensive and long hours, but the franchisee completely ignored any obligations to pay the employees overtime. The franchisee also failed to combine the hours for employees who worked at multiple locations. The U.S. Department of Labor recovered in total $608,272 in back wages and liquidated damages from this franchisee for the 33 workers that were affected by these violations.
This Mountain Mike’s Pizza Restaurant franchisee is not the only recent example. In the fiscal year of 2021 alone, the Wage and Hour Division conducted over 4,000 investigations in just the food service industry. In doing so, they collected over $34 million in back wages for almost 30,000 employees throughout the United States. We are seeing an increased number of these Wage and Hour Division audits and investigations.
If you are contacted by the Wage and Hour Division for an investigation or audit, please contact your employment lawyer first so that the lawyer can help you respond to the inquiry. Further, if you have any questions about the proper classification of your employees under FLSA, please contact your employment lawyer. Failing to do so could result in devasting damage.
The Wage and Hour Division at the U.S. Department of Labor conducted an investigation on a Mountain Mike’s Pizza Restaurant franchisee, who had six different locations. The investigation found that the franchisee failed to properly pay overtime to the workers at these respective locations, thus violating the FLSA. According to the report, the franchisee required its employees to work intensive and long hours, but the franchisee completely ignored any obligations to pay the employees overtime. The franchisee also failed to combine the hours for employees who worked at multiple locations. The U.S. Department of Labor recovered in total $608,272 in back wages and liquidated damages from this franchisee for the 33 workers that were affected by these violations.
This Mountain Mike’s Pizza Restaurant franchisee is not the only recent example. In the fiscal year of 2021 alone, the Wage and Hour Division conducted over 4,000 investigations in just the food service industry. In doing so, they collected over $34 million in back wages for almost 30,000 employees throughout the United States. We are seeing an increased number of these Wage and Hour Division audits and investigations.
If you are contacted by the Wage and Hour Division for an investigation or audit, please contact your employment lawyer first so that the lawyer can help you respond to the inquiry. Further, if you have any questions about the proper classification of your employees under FLSA, please contact your employment lawyer. Failing to do so could result in devasting damage.
