Recently the Department of Labor ruled that a company located in Oregon must pay over $98,000 in back wages to 51 employees for violating overtime pay rules in the Fair Labor Standards Act (FLSA). So, what went wrong? The company made several common overtime mistakes that should serve as a warning to employers.
The company did not include the time employees spent driving to worksites to determine total hours worked. According to the FLSA, while employees do not have to be paid for time spent traveling to and from work each day, employees must be paid for time spent by an employee in travel as part of their principal activity, such as travel from the main office to the worksite and between worksites during the workday.
Variable Pay Rates
Some employee earned at variable pay rates during the workweek , depending on the project. The employer, likely in an effort to simplify and possible to save money, based the employee’s overtime rate on the lowest pay rate during the pay period, rather than the weighted average of those rates, or upon the rates employees were paid while actually working the overtime hours as required by the FLSA.
Non-exempt employees with multiple pay rates are among the most difficult to determine overtime pay for. If an employee receives wages for work completed at two or more different rates during the workweek, an employer must calculate the employee’s regular rate by using either the weighted average method or by using the rate for the job that caused the employee to work overtime.
Under the weighted average method, an employer must first calculate the total wages the employee earned during a workweek using all applicable rates. Then, the employer must divide the employee’s wages by the total number of hours he or she worked at all jobs.
These types of mistakes are common among employers, many of whom are not trying to do anything illegal. They simply don’t understand the FLSA. Wage payment laws, particularly overtime laws are nuanced, and complicated pay situations happen often. If you have questions about overtime pay, reach out to our experts at email@example.com for assistance.