Recently, the U.S. Department of Labor's ("DOL") Wage and Hour Division announced that it reached a settlement agreement with the owners of six gas stations.
As part of the settlement, the two owners agreed to pay almost $500,000 in back wages and damages to 27 employees. The DOL's investigation concluded that the owners violated the Fair Labor Standards Act's overtime, minimum wage, and recordkeeping requirements. In this case, although the affected employees worked about 70 hours per week, the owners paid these non-exempt employees a flat monthly salary of between $2,200 and $2,400 per week without regard to minimum wage and overtime requirements.
Although it is permissible for employers to pay non-exempt employees a salary, it is very important for such employers to ensure that salaried non-exempt employees are still (1) tracking and reporting their hours worked on a weekly basis, and (2) receiving overtime pay if they work more than 40 hours per workweek. Unfortunately, many employers still believe that simply by paying non-exempt employees a salary, they can avoid the "inconveniences" associated with the required recordkeeping and overtime pay requirements.
To reduce exposure, employers should review each position on their organizational chart to ensure that the position is properly classified as "exempt" or "non-exempt" from the FLSA's overtime pay requirements and that all hours worked are being recorded for every non-exempt position regardless of whether the employee is paid based on an hourly rate of pay or salary basis. As you might imagine, when employees allege that they are owed overtime pay for working more than 40 hours per workweek, they often allege having worked 50, 60 or 70 hours per workweek.