Unpaid Overtime

The Fair Labor Standards Act, a federal law, and the New York State Labor law, a state law, both require that employers in New York pay overtime to employees except to employees who are exempt. Employees exempt from overtime are generally employees who earn a minimum salary and perform job duties which are, in nature, executive, administrative, or professional. Additionally, some computer employees and outside salespersons are also exempt from overtime pay.

But, for those employees who are non-exempt and must therefore be paid overtime, federal and state law requires that the employer pay an overtime premium of 1.5 times the employee’s regular rate of pay for all hours worked over 40 in a workweek. For example, if an employee earns New York’s minimum wage of $15.00 per hour, once the employee works 40 hours in a workweek, then all additional hours must be paid at the overtime premium rate of $22.50 per hour.

Unfortunately, many employers do not properly pay this overtime premium to employees. Oftentimes, employers try to conceal their unlawful wage payment schemes. Frequently, employers will pay employees a lump sum payment in cash regardless of hours worked. Other times, employers will give employees extra pay for overtime, but an amount which is less than what the employee is entitled to under the law. Thus, uninformed employees may think they are getting proper overtime pay, when in fact, they are not.

In other schemes, employers tell their workers that they are 1099 employees, or independent contractors. Though independent contractors are indeed not entitled to overtime pay, whether a worker is an independent contractor or an employee is not dependent on whether the worker is paid on a W2 or 1099. Rather, the Supreme Court has set an economic realities test to determine whether the relationship between the business and the worker is that of independent contractor or employer-employee. In other words, the law, not the employer, determines whether a worker is an employee entitled to overtime, or an independent contractor, who would not be entitled to overtime.

Questions arise about what hours must be counted towards calculating working hours. Basically, any time where workers are engaged by the employer, and cannot effectively use the time as their own, must be counted as working hours. For example, if a worker must take time before starting work to put on protective equipment, that time may be counted as working time, even though the worker may not actually be performing work. Though employers typically do not have to pay employees for lunch breaks, if a worker eats at his or her desk and performs work while eating, that time counts as working time.

Overtime violations are rampant. Hourly employees who do not receive an overtime premium when they work more than 40 hours in a workweek are entitled to a variety of damages under both federal and New York State law. Actual damages are calculated by determining the total number of overtime hours that the employee worked and multiplying that number by the worker’s regular hourly rate. Because the statute of limitations in New York for unpaid wages is six years, the damages for unpaid overtime can be significant.

In addition to actual damages, federal and New York State law allow for liquidated damages. Liquidated damages in an unpaid overtime case are 100% of the actual damages. So, if the actual damages are $100,000, the liquidated damages are an additional $100,000.

Finally, plaintiffs in unpaid overtime lawsuits are entitled to obtain attorneys’ fees from the employer, and interest.