OVERTIME COMPENSATION
DOL enforcement results in the payment of many millions of dollars in overtime back wages annually. Collective-action litigation by employees often results in multi-million dollar judgments or settlements. In most of these cases, the employer believed that he or she was operating in compliance. These types of rude awakenings (and accompanying expenses and wasted time) can be avoided through due diligence. Employers should exercise great caution when contending that they do not have overtime compensation obligations or when utilizing unusual pay plans.
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Failure to understand and properly apply the FLSA overtime concepts when overtime compensation is computed may result in employers facing a "double whammy" (paying the overtime wages twice). In some cases, if it is not done correctly the first time, credit for the intended payment of overtime compensation will not be allowed by DOL and/or the courts.
In other instances, the deficiency does not destroy overtime compensation that was paid, but merely results in additional overtime pay that is owed. This is a less costly infraction, as the employer receives credit for overtime wages that were paid, but the additional overtime compensation owed is nevertheless an unexpected expense. Even when the back wage liability is not great, the employer is held (by DOL or the courts) to be a "violator" of FLSA.
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"Comp time" is often applied by employers to nonexempt employees. When this results in the averaging of overtime hours among two or more workweeks (i.e., failure to pay overtime based on each workweek separately), it is not a permitted method of dealing with overtime obligations. Each workweek "stands alone" for overtime calculation purposes, unless an applicable exemption allows an alternative method. However, rescheduling of hours worked by employees is an employer prerogative and is not equivalent to "comp time" if hours are rescheduled within the workweek.
FLSA authorizes public agencies to utilize a compensatory time pay plan. There are restrictions and rules that the agency or institution must follow.
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Certain pay plans lend themselves to inadvertent errors. The arrangement may appear to be beneficial to employees, yet overtime compensation is not being computed as required by the FLSA overtime regulation. An experienced Wage and Hour consultant will know how to spot deficiencies and explain to you how to correct them.
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The overtime compensation provisions are quite convoluted and most employers need an advisor who fully comprehends the regulatory concepts and principles that must be applied to actual pay plans. Whether you are an employer, attorney, accountant, or human resources consultant, obtaining the guidance of a Wage and Hour expert will benefit you. Seeking appropriate assistance enables you or your client to avoid hassles and expenses.
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