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Don’t try to ‘explain away’ overtime errors

Excuses can create 'willful' violation, causing extra damages

by on
in Human Resources

Counsel your managers to treat overtime complaints with respect, and avoid any cavalier statements or excuses about why someone hasn't been paid overtime. Reason: You face big risks by making such candid admissions, even if you think you're providing "good faith" explanations, such as your organization's tenuous financial situation.

It's more likely that such admissions will simply build a record for a court to find that you "willfully" violated the Fair Labor Standards Act (FLSA). And a willful violation can result in an additional year's worth of damages imposed on your organization.

The FLSA usually lets workers recover unpaid overtime going back two years prior to filing the complaint. But courts will extend the damages period to three years if the employer willfully violates the law.

One option: Train managers to direct all questions about overtime to a specific person, preferably in HR, who knows overtime law inside and out.

Recent case: The Labor Department brought an FLSA overtime claim on behalf of eight employees of a home health care company. A district court sided with the workers and awarded them back wages and damages.

But the court also punished the company for willfully violating the FLSA. Reasons: When an employee complained about being denied overtime pay, a manager told her, "You should think of all the blessings you are getting," and that the company would "go broke if it had to pay the nurses ... for their overtime." When another employee demanded overtime, she was told that if the company had to pay overtime, "it would file for bankruptcy." The 9th Circuit Court upheld the decision on appeal. (Chao v. A-One Medical Services Inc., No. 02-35158, 9th Cir., 2003)

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