Long hours are the norm in many lines of work, including hospitality, oil field, construction, IT, food service, etc. with employees regularly clocking 60, 80, or even 100 hours per week. More shocking than the number of hours worked is the high rate of wage theft experienced by American workers in these and a wide variety of industries. By some estimates, up to 70% of U.S. employers are not in compliance with state and/or federal wage and hour laws. When employers fail to comply with the law it almost always an error in their favor – meaning employees are deprived of pay they are legally entitled to. This is wage theft.
While there are very few legal restrictions on an employer’s ability to require that employees put in large amounts of overtime, there are very strict legal rules with regard to how “non-exempt” employees must be paid for working overtime. Employees are broken down into two categories under the wage laws – exempt and non-exempt.
- Exempt employees are those that fall under specific exemptions or exceptions to the overtime pay rules, meaning they are not legally required to be paid time and a half for working overtime.
- Non-exempt employees are all other workers whose job duties and pay schemes do not qualify for any exemption, meaning they are legally entitled to, and must be paid, time and a half for all hours worked over 40 per week. In general, employees who are not a part of management and do not participate significantly in the operations of a business should be classified as non-exempt (even if paid a salary). Employees who are paid hourly or using a day-rate are almost always non-exempt.
Wage theft arises all across the pay scale, ranging from workers paid minimum wage to those paid over $60 per hour, and often times becomes institutionalized as an industry standard once an improper pay practice has been used long enough. When “everyone is doing it” few think to question or investigate whether it is legal.
One glaring example is the use of day-rate pay among oilfield workers. For decades, oil and gas jobs have been paid on a day rate (eg $400 per day for all hours worked). The problem being that no overtime premium was paid in addition to the day rate once a worker has put in more than 40 hours in a week. What workers did not realize or understand (until recently) is that they must be paid an overtime premium, even if they are paid a fixed day rate. Calculating overtime pay for day rate employees is a bit different and more complex, but the method for doing so is well established. If an employer chooses to use a day rate pay program, they are responsible for knowing and properly using the correct method for calculating overtime due its employees. The difference between being paid a day rate with and without overtime pay can be substantial – with some workers being shorted upwards of $50,000 in unpaid back wages over a 2 year period.
Other industries have used (and abused) day rate pay schemes as well. What workers need to know is that there are extremely few situations in which hourly or day rate employees are not required to be paid overtime, and that they should seek independent professional help (not the boss or HR) for guidance as to their specific situation. Private lawyers who handle overtime claims commonly offer free consultations and do not require any up-front fees to pursue a claim.
Don’t assume pay practices are legal just because many employers use them. Question the status quo. Know your rights. Protect your paycheck.