Overtime court battles on the rise and expected to continue — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Overtime court battles on the rise and expected to continue

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in Human Resources

Rather than calming the turbulent legal waters, the revamping of the federal overtime laws in 2004 has churned up even more disputes and lawsuits.

In fiscal 2005, the U.S. Labor Department awarded $119.3 million in back wages to nearly 189,000 employees for overtime claims. That's a 26 percent increase in back wages compared with 2001 figures.

Some reasons: Labor's 2004 rewrite of the Fair Labor Standards Act (FLSA) overtime rules drew more public attention to the issue of employees' not earning their rightful overtime pay. Also, debate over the federal changes caused some states to pass their own, tougher standards. Plus, the past five years have seen plaintiffs' lawyers increasingly turning to class-action FLSA overtime lawsuits.

USB just agreed to pay $89 million to settle overtime-related lawsuits by financial advisers who claimed they were incorrectly labeled as exempt workers. Other big companies, including Wal-Mart, Lowe's and IBM, face big overtime suits.

Lawyers on both sides of the overtime debate say they expect the court battles to increase in the coming years.

Advice: Review your wage-and-hour compliance before a plaintiff's attorney forces you to. The Labor Department says most overtime violations fall into one of these categories:

  • Incorrect classification. Wrongly labeling employees as exempt from overtime pay is the top mistake for employers ... and the most costly one.
  • Working off the clock. Technological changes (e-mail, BlackBerrys, online training, etc.) have blurred the lines between compensable and noncompensable work.
  • Regular pay for OT time. Some employers pay the regular hourly rate, not the required time-and-a-half, for hours above 40 in a workweek.

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