What Employees of DOD Contractors Need to Know About Overtime

If you have been following the defense industry, you have noticed a lot of recent overtime lawsuits against Department of Defense contractors.

Recently, the Center for Public Integrity conducted a study of wage and hour violations by federal contractors from January 2015 to July 2016.

It found that contractors with the Department of Defense committed more pay violations than contractors with any other federal agency.

The Center uncovered forty-nine contractors that the Department of Labor determined collectively owed $4.7 million in back pay to nearly 6,200 workers.

Common Violations

Straight-time for overtime

Paying straight time for overtime may be fine for employees who are working overseas.

But, when those workers perform work in the United States, even if it the same work they performed overseas, the workers are entitled to overtime.

Paying a salary only

This is something common to many industries and the defense contractor industry is no different. Just because a worker is paid a salary does not mean that they are not also entitled to overtime. To be exempt from overtime, the worker must also have job responsibilities that meet stringent FLSA requirements. When a salaried employee is entitled to overtime, they are entitled to additional compensation on top of their salary for all hours worked over forty in a week.

Working off the Clock

For a variety of reasons, employees of defense contractors often work off the clock for no pay.

Sometimes it is because of an aggressive supervisor trying to achieve a lower labor cost.

Other times, the defense contractor is allotted only a certain number of hours per day or per worker in its contract with the federal government and does what it takes to stay within that allotment—even if it takes shorting workers the overtime they’ve earned.

Regardless, if an employee is working, federal law requires he or she be paid for that time and supervisors and companies violate the law by requesting that you work for free.

Production Bonuses, Shift Differentials Not Included in the Overtime Rate Calculation

When employees receive production bonuses, shift differentials, or other forms of additional pay on top of their hourly rate, those amounts must usually be included in determining (and increasing) the overtime rate.

When an employer ignores those additional amounts and excludes them from the overtime calculation, they underpay overtime to the employee and commit an FLSA violation.

Why are Overtime Violations So Prevalent in the Defense Industry?

Here are five reasons why Department of Defense contractors commonly violate the law:

1. Prior Military Service

Many managers, supervisors, and employees of defense contractors are former active duty military where they were exempt from federal overtime laws.

When they depart for the private sector, they often assume that because they are still working with the military, the federal overtime laws do not apply to them.

That is wrong. Federal overtime laws apply to civilian military contractors.

2. Overseas Positions

Employees of defense contractors have often spent time overseas working for private companies that provide services for the U.S. Military.

In those overseas positions, U.S. overtime laws typically do not apply.

But when those same employees return to the U.S., the overtime laws do apply.

For example, defense contractors could pay straight time for all hours worked in Iraq but may have to pay overtime for the same work if it were performed in the U.S.

It is a small legal difference that could result in a large pay discrepancy.

3. The Contract Itself

Companies often believe that the contract with the federal government trumps federal wage and hour laws.

This is not true.

Employee protections under those laws cannot be waived.

Therefore, even if the U.S. Department of Defense is paying a straight hourly rate for all hours billed on the contract, the employer must still comply with federal law and pay its non-exempt employees (meaning, those employees who are entitled to overtime) time and a half for all hours worked over forty in a week.

4. Military Mentality

Military workers are used to working long and irregular hours, often in uncomfortable locations.

They are also respectful and have an extraordinary work ethic.

So they are not afraid of hard work, and when their supervisors ask them to work long hours, they often readily agree.

Nonetheless, non-exempt workers are still entitled to overtime pay for those long hours.

5. Highly Compensated

Employees of defense contractors can be highly paid depending on their experience, industry, and living arrangements.

But simply being highly paid does not exempt you from federal overtime requirements.

Your method of pay and job responsibilities must meet stringent requirements before you can even begin to be considered "exempt."

Simply put, "highly compensated" is not a magic bullet that deprives workers of overtime entitlement.

Employees who prevail on their claims could recover all of their back pay going back up to three years, double back pay, and attorneys' fees.

Learn More About Your Rights In A Free Consultation

Your specific compensation will depend on factors such as your position within the company and whether that title is justified by the work you actually do. The best way to understand your rights and legal options is to discuss your case with an experienced employment law attorney.

If you'd like to discuss a pay practice that may violate the FLSA, call us at (512)-782-0567 for a free consultation.