Are You Incorrectly Paying Your Employees? If So It Could Cost You Your Business

Are You Incorrectly Paying Your Employees? If So It Could Cost You Your Business

Darke Employers beware: in overtime wages cases you’re not just fighting one or two employees in litigation, it has now turned into every employee. Increasingly, attorneys are using the Fair Labor Standards Act (FLSA) to collect huge awards from employers by including every similarly situated employee who has not received properly paid wages. Whether entitled employees are denied overtime pay or employers are not correctly calculating overtime wages, an employer must audit payroll records to ensure compliance or potentially face its entire workforce in a courtroom. This is especially true if the employer is relying on an FLSA overtime exemption.

One the Act’s exemptions that is often misapplied relates to the motor carrier under Section 13(b)(1). Frequently, employers believe that certain employees are exempt from overtime wages under the motor carrier exemption because they help dispatch or unload a vehicle. However, that’s not the case. The FLSA provides that the Department of Transportation (DOT) has authority over those employees to establish qualifications, hours of service, safety and equipment standards. The courts narrowly interpret this exemption but have exempted drivers, drivers’ helpers, mechanics or loaders employed by a motor carrier with duties that affect motor vehicle safety operations when transporting passengers or property on public highways during interstate commerce.

Now this doesn’t mean that if an employer deals with the DOT it is exempt from paying employee overtime wages. There are several other factors that must be analyzed before beginning to apply the exemption. If it is determined that the employer is covered under the Act, the overtime exemption applies only to those employees who are called upon or could be called upon in the ordinary course of job performance that regularly or from time to time includes safety-affecting activities. However, an employer cannot have an employee perform safety-affecting activities for a few days and then be forever exempt. The Act provides a four-month period in which an employee can be called upon to engage in such activities.

Because an analysis of the motor carrier exemption is very complex, it must be done by a professional with knowledge in this area. If an employer incorrectly believes it is exempt, the consequences could bankrupt the company since the FLSA allows all similarly situated employees to participate in a lawsuit in addition to the employee(s) who filed the suit. Further, if the exemption is misapplied, employers must pay back wages and double that figure for liquidated damages. To top it off, employers are also required to pay attorney fees for both sides. It is paramount that employers apply all potential exemptions correctly or find themselves in court against all of their employees!

Questions? For questions or comments about this topic, please contact Attorney Sean Darke in our Chicago office at (312) 629-9300, or sedarke@wesselssherman.com.