Sometimes, employees decide to take legal action against the company that hired them. Oftentimes, it is a belief that the business has failed to meet some kind of financial responsibility that leads to those claims. Failing to pay a worker’s full wages would result in wage claims, and overtime claims are some of the most common wage claims pursued in civil court. Businesses that are accused of not fully compensating their workers for their overtime hours worked could end up being ordered to pay overtime wages and struggling with the reputation damage that such claims can cause.
Businesses that are aware of this risk can self-evaluate for the purposes of organizational protection. What are the most common reasons that businesses end up facing unpaid overtime claims from employees?
1. Treating non-exempt employees as exempt
An organization may not even realize that workers have a right to overtime pay because it treats them as exempt based on an oversimplified approach to overtime rules. Not every employee who receives pay on a salary basis is exempt from overtime pay requirements.
Additionally, the Supreme Court recently clarified that those paid a daily wage rather than an annual salary or an hourly wage typically also qualify for overtime pay even if their annual compensation is relatively generous.
2. Enforcing no-overtime rules retroactively
Companies can potentially institute internal policies that prohibit overtime without approval from management or the corporate offices. However, for such rules to be legal, companies have to enforce them ahead of time by keeping someone from putting in more than 40 hours.
Refusing to pay someone’s wages when they put in extra hours because of a company policy could very likely lead to an overtime wage claim from that employee.
3. Requiring setup or cleaning off the clock
Some businesses will train their workers to do prep cooking or factory cleaning before or after a shift instead of during their normal work hours. Those who put in a 40-hour work week and then have to provide additional services off the clock may have grounds to claim unpaid overtime for all of the work performed without compensation.
Businesses may need to look at both their written policies and operational practices to eliminate the risks that expensive overtime claims may be filed in response to their approach. Learning more about why workers file wage claims against their employers can help companies to avoid embarrassing employment law disputes in court.