Employer Attempts to Avoid Overtime Pay by Claiming Workers Have an Ownership Interest

Summary: One employer who tried to avoid overtime pay by claiming workers were exempt for having an ownership interest in the company faced a tough crackdown from federal investigators. If you are a nonexempt worker but your employer says you are not entitled to overtime pay, you may have a case for wage theft. Reach out to our office today.

While the Fair Labor Standards Act (FLSA) mandates that employers pay all nonexempt employees overtime, companies may use various tactics to withhold overtime pay. Not only is withholding overtime pay against the law, but employees whose rights are violated can be eligible to file a claim for compensation. 

One recent example of an employer who attempted to avoid overtime pay by claiming workers had an ownership interest in the company highlights the issues workers face in getting fair wages. If you believe your employer has not properly compensated you for overtime work, you should hire an experienced unpaid overtime attorney

A New York Employer Illegally Withholds Overtime from 53 Roofing Workers

A recent federal investigation led to the recovery of more than $166,000 in back wages for 53 roofing workers employed by a New York contractor. The investigation found that the roofing contractor engaged in numerous overtime and recordkeeping violations, including failing to record all hours worked for some employees. 

Investigators determined that the roofing contractor paid straight time for travel time. The company also paid employees straight time for hours worked over 40 in a workweek, instead of time and a half as mandated by the FLSA. 

Not only did the contractor fail to accurately record all work hours, it also neglected to include commissions and bonuses when determining the overtime hourly rate. The company even fell short of ensuring it kept a poster up that enumerated workers’ FLSA protections, another violation of federal law. 

The owner of the roofing contractor claimed that they did not consider workers to be employees because the workers bought into the company when hired and became members of the underlying corporation. The owner also claimed that this ownership interest caused workers to be exempt from being entitled to overtime. 

Common Types of Overtime Violations

It was determined that the affected workers were employees and entitled to full protection under the FLSA. This meant that workers not being paid overtime were subjected to wage theft, a finding that underscored the subsequent $166,000 judgment against the roofing subcontractor. 

Misclassifying workers as exempt is just one way that employers try to shirk overtime obligations. Other tactics include

  • Not paying employees overtime for hours worked beyond 40 in a week
  • Failing to count all hours worked
  • Failing to pay for travel time that is part of the job
  • Incorrectly calculating overtime pay rates based on an employee’s regular wage, 
  • Leaving out bonuses and commissions when calculating overtime
  • Requiring employees to work off the clock. 

Employees who have not been paid proper overtime may be entitled to:

  • Back pay for unpaid wages
  • Liquidated (double) damages
  • Interest
  • Attorneys’ fees

Ownership interest of 20 percent or more of a business can exclude workers from overtime pay under the FLSA. 

However, this exemption did not apply to any of the workers included in the judgment against the New York roofing company. None of the affected workers were exempt because they were neither owners or executive management; instead, they were all nonexempt workers entitled to overtime pay. 

Contact a Wage and Hour Attorney About Your Legal Options

The story of an employer who tried to shirk overtime pay obligations by making workers part owners of the business is one of many tactics companies may deploy to unlawfully deny workers their wages. A proactive attorney can assess your rights, help you navigate complex employment laws, and help you recover your rightful wages.

A lawyer can analyze evidence such as your work hours, pay stubs, and employment records to determine the correct amount of overtime pay owed. A successfully negotiated settlement or court award could help you collect unpaid wages and interest on the unpaid amount. 

Our firm handles cases on a contingency fee basis, so we are not paid any unless you receive a settlement or recovery. If you have questions about filing an unpaid overtime claim, fill out our online form or contact us through the chat box to receive your free, confidential review.

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