EDITORIAL
Asking an employee to work beyond their normal hours has never seemed much of a risky proposition, especially if they are salaried and not entitled to overtime. But in the USA the situation is changing and an increasing number of lawsuits are involving hourly paid/nonexempt workers.
The Fair Labor Standards Act (FLSA) has been around since 1938 and this contains a requirement to pay overtime at time and a half for certain jobs carried out by ‘nonexempt’ workers. The threshold for nonexempt status is just $23,660 per annum – so not too many employees are currently covered by FLSA rules. However, the US Department of Labor (DOL) has issued draft regulations raising the threshold to the 40th national pay percentile (currently $50,440 per annum) and numerous court cases have also effectively extended overtime pay entitlements to all exempt jobs. The “highly compensated” threshold under the FLSA is also on the move – with the DOL proposal lifting it to the 90th pay percentile ($125,148 per annum)
The problem for companies is that many do not keep a strict record of their workforce’s working hours – let alone apply any controls. In the modern world of the Internet and mobile telecommunications there is far more scope to carry out work duties out of hours – especially by remote workers. It is just all too easy for a manager to call a nonexempt colleague out of hours and talk about business issues.
To overcome the risks of potential litigation it is therefore important to ensure that out of hours work obligations are clearly spelt out and agreed to (especially for remote workers). All working time must be tracked and documented. If there is no formal overtime pay then that must either be rectified or a (partly self-certified) system of time off in lieu introduced. There must also be a formal understanding that if the employer fails to pay overtime due, the employee will notify them in good time – and not just sit on a potential arrears claim and let the value mount.