Proposed U.S. Department of Labor rules that will broaden federal overtime protection for employees and an imminent ruling in an overtime pay class-action suit against the Chicago police force are making many organizations nervous about increased liability for unpaid overtime. But employment lawyers say a strictly observed overtime policy is the best offensive to head off concerns.
Currently the federal Fair Labor Standards Act requires that most employees be paid overtime at one and a half times the normal rate of pay for all hours worked over 40 hours weekly.
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However, there is a white-collar exception from both the minimum wage and overtime pay rules for people who meet the definition of “executive, administrative, professional, outside sales people or some computer employees” that applies to all employees paid over $455/week or $23,660/year.
Since 2004, when the rules were last updated, inflation has outstripped the white collar non-exempt maximum, and it is expected to rise to at least $50,000 per annum under the DOL’s revised rules, extending overtime protection to nearly five million workers in the first year.
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However, Linda Doyle, a partner in the Chicago office of law firm McDermott Will & Emery says “there are already millions of workers in the U.S. that make more than $455/week and are entitled to overtime because their job does not meet the ‘duties’ test of the exemption. For example, ‘administrative’ does not mean administrative assistant. It means having supervisory responsibilities for a business operation or an employer.”
Doyle points out that employers can be vulnerable if they have staff members they think are exempt, but they are not. “I advised a company a few years ago that viewed a group of employees as exempt because they were outside sales reps. However the DOL successfully argued that these people were non-exempt, because they were demonstrating the product and training clients. As a result, the company lost the overtime class action.”
Furthermore, law enforcement and fire protection employees fall under different provisions of the FLSA. Municipalities can choose whether they will pay police officers the premium rate after 40 hours worked in a week or 171 hours of work in a 28-day period.
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The 171 hours/28-day rule is the basis upon which over 50 police officers certified a class action against the city of Chicago for overtime pay based on extensive use of their BlackBerry smartphones after hours. That case was tried in August, but the judgment has not yet been released.
While smartphone overtime cases first started showing up about 10 years ago, Doyle says, “the few cases that made it to court were typically settled, like the lawsuit brought by salespeople at T-Mobile USA Inc. stores who were expected to work 10-15 hours/week off the clock answering emails and text messages from customers.”
Class action lawyer Paul Geiger acts for the Chicago police. He says “the police force handed out smartphones and said, ‘Keep them on 24/7. This is how we communicate.’ Subsequently they established a policy that said you can carry them off duty but if you answer them we are not going to pay you. When our motion to certify was upheld on appeal, they realized that wouldn’t work.”
Although the Chicago Police Force’s current overtime policy expressly forbids police officers to use their BlackBerry off duty for work-related reasons, Geiger says, “All 28 of my witnesses testified that no one pays any attention to the policy and they use them just as they did before.”
“The statute says that companies are required to pay overtime for work they ‘suffer or permit’ employees to do,” says Doyle. “Suffer means you make them do it. Permit means you know or sort of know about it, but don’t put a stop to the practice.”
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Both Doyle and Geiger agree that a properly drafted and enforced policy on the use of smartphones outside business hours is the key to managing the issue and staying out of court.
“I consult for a large company and they know darn well they can’t hand out smartphones to non-exempt workers and expect them to be on call or contact them at all hours of the day and night because the issue of potential overtime liability has been discussed ad nauseam,” Geiger says.
Doyle says her law firm has over 2,000 employees and they only give remote access to a certain cohort of employees. “If employees are exempt, it’s not a problem because we don’t have to pay them,” she says. “If employees are non-exempt, they get remote access via smartphone or laptop only if there is a business reason and they sign a remote access policy that says they will record all time worked using the remote device and submit the record for payment.”
She says supervisors are also trained to understand the company’s overtime obligations so they don’t summon people in on weekends unless they there is a good business reason and they will be paid appropriately.
Sheryl Smolkin is a freelance writer and lawyer based in Toronto.
