Wage and hour claims for non paid overtime. Have you had these and how is it best handled? In New York large advantage for employees who make these allegations.
Answers
First, I'd hire an expert
Second, I'd go over every record relating to employees; their job duties, their classification, your policies. Investigate whether the error for non-payment was the employee or the employer.
Third, for non-exempt employees, re-check your procedures as to time recording and then make sure they are LOCKED-OUT of your business unless they are authorized to work.
Let me be clear, a non-exempt employee who comes into work early and/or stays late, even if they "claim" not to be working OR you have policies that state no authorized overtime will be paid, can, and will make a successful claim for not paying them over-time.
I have instituted FLSA overtime for salaried non-exempt employees in the past. It does a few things:
1) To be eligible for OT, you have to clock in and clock out. A definite turn-off for people who consider salary to be superior to hourly.
2) OT is calculated based on each week's work hours and only gets paid at half time for the over 40, or 45, or 50 hours per week. Per the DOL, you can set an hourly schedule of any number of hours that are reasonable for your line of business and make things over that OT.
3) Actual OT paid is half of what you would pay if you were strictly looking at this from an hourly point of view. A salaried employee will get extra pay, but not as much as they might expect and that can curb the desire to extend their work days.
4) This can make the transition from non-exempt to exempt much easier. Their raise for moving up in the company does not have to be as high to compensate for 'lost OT."
From the business perspective, you have to present this as it is: "This is a program to make sure we (the business/your employer) are compensating you for the time you are here. The only way to do this accurately is to have everyone use a time clock and you will automatically earn OT when appropriate." At the same time you need to document what times are not considered work hours - i.e. no showing up at 6am when the office doesn't open until 9am, if you are non-exepmt you can't work from home after hours or on the weekends, etc.
At the beginning you have to monitor the employees so they know you are paying attention. This resolves any issues over claims and helps an employer recognize when there is a timing issue with someone. You can review their work to see if they are being asked to do too much, or if they are not good at managing their work.
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Having had a conversation with the US DOL Regional Manager at a seminar, even though you use a timeclock, have a policy about OT or use any other reasonable method to limit OT;
If a non-exempt employee is "working" and accrues overtime regardless of the above paragraph, they are DUE overtime.
Hence my statement about locking them out of the premises. Now depending on how "liberal" the DOL/Court goes, a non-exempt employee who reads and answers e-mail when not in the office (or cell calls) "could" be considered "on-the-clock".
According to the DOL, whether or not you have policies, the company has enjoyed the spoils (unjust enrichment). Again, the only alternatives after you have paid overtime is punishment of the employee (docking time, furlough or firing for violating company policies).
So back to my first statement (since I am neither an HR expert or an Attorney): Hire an expert HR person and a Labor Attorney!!
There are different scenarios under which unpaid overtime can occur. If claim is filed, respond expeditiously. Review your company policy on overtime. Most require pre-approval before incurring the costs. Like Wayne mentioned, regardless if approved or not, it they worked they must be paid. Confirm the OT regulations at state-level which may be more generous to employee than federal requirement, in which event, the more generous one typically supersedes. In handling the situation, understand why the claim was filed (e.g. did the employee stay to complete the work that was time sensitive; supervisor require they stay and didn't facilitate reporting/approving the time; unintentional oversight etc). Resolution should include preventative measures (e.g.
You're right, New York is a hot state for FLSA claims. One point that's important to make is that even if an employer has Employment Practice Liability Insurance, it's not likely that it will include coverage for Wage & Hour, and if it does, it may be very limited, which indicates the need for diligence in maintaining proper records.
Very difficult issue. You have received great feedback. An organization that I work with has a clock-in and clock-out requirement. We have a process where employees need to request permission to work overtime. However, you pay overtime on punches, not approval.
I pour over the numbers weekly. Always 10 minutes here, 20 minutes there always gravitating to the overtime side. In a year it becomes real money.
My approach has always been that employees in theory do not wish to work overtime, just let them know it should be used sparingly. Actively manage the issue. If people know you are watching they tend to be more professional.
Be careful of putting into place a hardcore policy like a lock-out, as you