Overtime Changes & Unreported Hours

Hopefully, all employers are aware that as of January 1, 2020, federal changes to the Fair Labor Standards Act increased the salary threshold to $684 per week to classify employees as exempt from overtime and minimum wage requirements. Likewise, the state of Washington has adopted changes to its Minimum Wage Act which will go into effect beginning in July 2020.

These federal and state changes impact many employees and result in previously exempt employees now being eligible for overtime pay.

Employers should discuss with affected employees the importance of recording their hours accurately and review with them any policies related to overtime. Employees who are used to being classified as exempt may fail to report overtime hours for a variety of reasons, including unfamiliarity with time recording processes, attempts to save the company money or a desire to “just get the job done.”  Even well-intentioned employees can cause serious problems for their employers.

Employees may not waive their right to overtime pay and unwritten policies discouraging employees from turning in overtime hours or accurately reporting hours worked may result in significant liability for employers.

Employers may not turn a blind eye to employees who work hours in excess of 40. Employers who know or should know that employees are working but not reporting overtime may be liable for wage and hour violations. Further, employees who wok and report unauthorized overtime must be paid for those hours, even if unauthorized. Violations may result in actual damages, attorney’s fees, and costs.

What can an employer do about non-exempt employees who do not accurately report their hours or who work unauthorized overtime? First, the employer should review their production expectations to determine whether the expectations need to be adjusted to fit within a 40-hour workweek. Next, employers should enact a policy that requires employees to accurately report their hours and obtain authorization prior to overtime hours being worked. Also, employers may treat the failure to accurately report hours or the failure to obtain approval for overtime as a performance issue and discipline employees, including termination. If an employer knows that overtime hours were worked, whether the time was approved or not, the employee must be paid for the time.

Failing to correctly pay an employee can end up costing an employer much more than the original overtime hours.