Don't Be Blindsided with an Overtime Audit Due to Misclassifying Independent Contractors

The IRS has stepped up enforcement of rules regarding independent contractors. Early this year, the IRS started deploying auditors to conduct intensive audits of an estimated 6,000 employers in different industries and including both large and small companies. The federal government believes that misclassification is on the rise given that independent contractors receive fewer incentives to trim costs during these difficult economic times. The IRS is engaging in vigorous enforcement for various reasons, including to collect more money for the federal tax coffers and as a result of the Obama administration’s friendly approach to labor.

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AT&T Blindsided by Overtime Litigation

AT&T is the latest major corporation to get hit with overtime class action litigation.  In this case, the communications giant got hit from two sides.

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You Can't Avoid Paying Overtime Wages By Splitting Up An Employee's Tasks

Unless an employee fits into an exemption under the FLSA, employees who are entitled to overtime need to be paid overtime pay for all hours over 40 worked in a single work week. One Maryland school bus company thought otherwise.

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Waiting Time is Often Work Time . . . and Must be Paid

A Tennessee car wash found out the hard way that “waiting time”—time employees spend between tasks—is paid working time. Employees of the Shur-Brite car wash in Nashville sued claiming that the car wash would clock the workers in and out multiple times a day—clocking them in when a car pulled in to be washed, clocking them out when there were no cars around.

An advocate for low-wage earners went undercover at Shur-Brite and was clocked out more than 10 times during a single eight-hour shift. The result—he was paid for only four of the eight hours. The case settled for $130,000.00.
 

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Don't Forget: States Have Penalties for Overtime Violations Too

Under the federal Fair Labor Standards Act (FLSA), if an employer violates the overtime provisions, employees may either bring their own lawsuit or file a complaint with the Department of Labor. In either case, the potential penalties against the employer are substantial and rectifying the original problem by paying back overtime wages owed to employees may not be the employer’s only concern.  Calculations of amounts due include the following:

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Is your business too small to have to pay overtime?

The Fair Labor Standards Act, like other federal economic regulation, applies to businesses engaged in interstate commerce. It covers enterprises—businesses—which gross at least $500,000 a year.

The $500,000 threshold would seem to exclude at least the smallest businesses from FLSA requirements. Take your neighborhood specialty toy store or bookseller—they may very well gross less than $500,000 a year, which would seem to exempt those enterprises from federal wage and hour regulation, right?  

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Paralegals and the Highly-Compensated Employee Exemption

A recently decided Southern District case with somewhat unique facts illustrates two important and often overlooked overtime-related concepts:  1)  paralegals are generally non-exempt employees; and 2) employees who make $100,000.00 and who perform one or more exempt duties are ordinarily not eligible for overtime pay.  This second concept is known as the “highly compensated employee” exemption

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Court Affirms Commissioned Salespeople Entitled to Overtime

One common mistake that employers make is to consider all commissioned salespeople to be exempt employees.  Most companies employ inside salespeople, including those who make telesales or e-mail sales from remote locations.  These inside sales people are generally not exempt.  Only outside salespeople and retail salespeople are exempt.  All other commissioned employees must be paid overtime if they work over 40 hours in a workweek, unless another exemption applies to them.

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How much influence must someone have in the firing process to qualify as exempt from overtime under the executive exemption to the Fair Labor Standards Act rules?

Under the FLSA, employees are paid overtime unless they qualify for one of the exemptions in the Act. One of the most common exemptions is the Executive Exemption.  While called an “executive” exemption, it’s not limited only to inhabitants of the C-suites and their VP-level direct reports. Instead, it may be available to a wide range of managerial or supervisory employees and should likely be called the “managerial exemption.”

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Don't Round Time Worked and Deny Employees Overtime Pay

Non-exempt workers need to be paid for ALL time worked. Failing to do so can lead to substantial liability, especially for unpaid overtime pay. Amazon.com may be in the process of learning that lesson painfully.

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