Promised to pay overtime when it wasn’t required? You have to anyway

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in HR Management,Human Resources

Are you sure you understand the Fair Labor Standards Act (FLSA) overtime provisions and when they apply? If not, now’s a good time to review them.

An employer that agrees to pay more than required (because it mistakenly thought its workers were hourly employees entitled to overtime) can’t just change its mind. While employees can’t legally agree to take less pay than state and federal wage laws provide, nothing prevents employers from agreeing to pay more.

Illinois law recognizes a concept called promissory estoppel, which essentially says that employees who rely on an unambiguous promise, when that reliance was foreseeable, can enforce the promise. They can then use the Illinois Wage Payment and Collection Act (IWPCA) to collect on the promise.

Recent case: A group of First Line Solutions employees filed a class-action lawsuit alleging that, when they were hired, HR promised to pay them overtime. But it turned out that the FLSA didn’t apply to the employees because their employer was classified as “motor private carrier,” a category the law doesn’t cover.

The employees sued under the IWPCA, which allows employees to collect unpaid wages. They claimed that the promises their employer made were binding under Illinois promissory estoppel law. If that was the case, they argued they could use the IWPCA to collect the overtime pay.

The court agreed in principle and ordered a trial. The employees will now have to prove HR made the promises and their detrimental reliance on those promises. Plus, they’ll have to show the company realized the promise induced employees to take the jobs. (Molina, et al., v. First Line Solutions, No. 05-C-5818, ND IL, 2007)

Advice: If you aren’t sure which employees must be paid overtime and which employees are exempt, review the FLSA requirements. And don’t make promises about wages. At the very least, give yourself some wiggle room. When you prepare a job description, you can include its exempt or nonexempt status. But you should also state very clearly that the classification is subject to change. You may also require that employees sign a statement acknowledging that they understand wages and benefits may change at any time, and that the employer is making no promises. 

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