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Common Misconceptions About Overtime Laws

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Although it seems simple at first glance, employees (and employers) have many misunderstandings about who is entitled to overtime and when they are entitled to it.

These misconceptions are so strong that employees often work for years-working long hours each week-without ever realizing they are entitled to more pay from their employers.

Here are some of the misunderstandings that go unnoticed by employees:

Salaried employees are not owed overtime.

This is a big misconception, and we hear it all the time.

Whether an employee is paid a salary or not has very little to do with whether they are entitled to overtime pay.

We commonly see employees that are paid a salary, work much more than forty hours per week, and are owed an overtime premium for the hours worked over forty.

Much more important than salary in determining overtime eligibility is the employee's job duties. For example:

a. Do they supervise more than one employee?

b. Do they have hiring/firing authority?

c. Do they have the sole discretion to bind the company on significant items (ex. pricing, contract terms, company policies, resolving complaints)?

Independent contractors are not entitled to overtime.

This is another big one.

Employers often come up with a specific payment arrangement for "contractors" that does not include the payment of overtime.

This could be lawful if the employee is truly an independent contractor but often the employee is not truly an independent contractor.

Here are some relevant questions in determining whether a worker is an employee (perhaps entitled to overtime) or an independent contractor (not entitled to overtime):

a. How much does the employer control how the work is performed, when it is performed, and whether the worker is free to work for others?

b. Whether the work contracted for is integral to the employer's business (ex. a home health care company hiring "contractors" to provide home health)?

c. Whether the contractor arrangement is indefinite?

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Travel time or pre-shift work is not compensable time.

Travel time within the work day (from site to site) is typically considered compensable time.

So too is time spent before and after the shift doing work that is of any consequence to the employer (for example, pre- and post-shift meetings; putting on and taking off specialized equipment; repairing, preparing, or cleaning equipment).

Employees do not need to be paid for meal periods.

Employers can deduct the time that employees take  meal periods that are longer than twenty minutes.

But that meal period must be completely uninterrupted by work.

If employees continue to work while eating lunch-even if just a little bit-they must be paid for the entire meal period.

Incentive bonuses and shift premiums do not affect the overtime rate.

If additional payments by the employer are non-discretionary (the employer promises them to you in exchange for doing certain things or meeting benchmarks), the payment must be included when calculating the overtime rate.

Therefore, if your hourly rate is $12 per hour and your overtime rate is $18 per hour, the overtime rate is actually higher during any pay periods where you earned those extra payments.

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

If you'd like to discuss a pay practice that may violate the law, contact us at (512) 782-2293 for a free consultation.

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