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Fact of the Month and Test Your Knowledge - September 2012

September 2012

By: Jennifer Adams Murphy, Esq. and Ryan L. Young, Esq.

Fact of the Month

Employers must keep track of time worked by employees--even if it is "Blackberry" time. If full-time non-exempt employees are expected to respond to texts and emails from work even when not at work, this time may constitute overtime which must be tracked and compensated. A lawsuit was recently filed in the U.S. District Court in Atlanta by Amerisave Mortgage employees. The employees, who were granted conditional class status, complained that they were not paid overtime for time spent using electronic devices after regular work hours. As we all have become available 24/7 through various electronic devices, this issue should be recognized and policies should be instituted to address this potential liability.

1. If a non-exempt employee Clara, the cashier, works 10 hours on Monday and 6 hours on Tuesday through Friday and earns an hourly rate of $15 per hour, how much (gross wages) is Clara owed for her work that week?

a. $500

b. $525

c. $510

2. Clara's friend, Benji the butcher, works exactly the same hours as Clara did in Question 1 (i.e., 10 hours Monday, 6 hours Tuesday - Friday) for the same hourly rate ($15 per hour), but let's assume that Thursday of the week in question was Thanksgiving Day, and that Benji was required to work that day. How much (gross wages) is Benji owed for his work that week?

a. $510

b. $555

c. $570

3. Now assume that the following week, Benji worked the same hours on Monday through Wednesday as described in Question 1 (i.e., 10 hours on Monday and 6 hours on Tuesday and Wednesday) except that on Thursday and Friday he worked 12 hour days. Further assume that Benji earned incentive pay of $50 on Friday for butchering extra sides of beef pursuant to a non-discretionary performance plan. How much pay is Benji entitled to receive for the week in question?

a. $698.30

b. $746.54

c. $788.30

d. $794.84

4. If Clara worked 10 hour days Monday through Wednesday and 10 hours on Friday and was also paid for 8 hours of work on Thursday (although she did not work that day) because it was Thanksgiving Day (a paid holiday pursuant to the Company's policy), is she entitled to overtime?

a. Yes

b. No

5. Barry the baker (a non-exempt employee) is paid on a commission basis based upon loaves of bread sold. On the week in question, Barry was paid $900 and worked 50 hours. Is Barry owed overtime and if so, how much?

a. No overtime owed

b. $990

c. $1080

Question 1 Answer: "c" Clara is not entitled to overtime wages because she worked under 40 hours during the week in question. Clara is not entitled for overtime wages for the day she worked 10 hours. See 29 CFR §778.102.

Question 2 Answer: "a" Like Clara, Benji is still only entitled to $510. Neither Turkey Day nor any other legal holiday requires time and one-half (unless required by company policy). See 29 CFR §778.102.

Question 3 Answer: "c" Benji worked a total of 46 hours. Although Benji's straight time wage is $15 per hour, because he earned the $50 incentive pay, his regular rate for purposes of overtime calculations increased to $16.09 per hour. Regular rate is calculated based upon total compensation (46 hrs x $15 + $50) divided by total hours worked (46). See 29 CFR §778.109. Accordingly, Benji was entitled to his regular pay of $15 per hour for the 46 hours worked plus 6 hours of extra half-time at a rate of $8.05 ($16.09/2) plus the $50, for a total weekly earning of $788.30.

Question 4 Answer: No. Clara only worked 40 hours. The fact that she was paid for 48 hours does not give rise to overtime obligations because the 8 hours over the 40 was for time not worked. See 29 CFR §778.218.

Question 5 Answer: "b" If Barry is not exempt, even though he is commissioned, he is entitled to overtime pay for work over 40 hours. See 29 CFR §778.117. Barry is owed $900 plus 1/2 his "regular rate" for the 10 hours of overtime worked. Barry's regular rate is $18 per hour calculated by total pay ($900) divided by (50). Barry is therefore owed 10 (overtime hours worked) x .5 x 18, for a total additional amount of $90.