Has the question of overtime payment come up in your organization? Sometimes the concern over budget tries to override the reality that employers MUST pay overtime when a worker clocks over 40 hours in a 7 day work-week. Tune in to this episode and find out how you can view this issue and handle it responsibly in your business.
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Transcript
SBS 008: BIG BOSS WON T PAY OVERTIME
Small Business Spoonfuls is a twice a week Q&A with Lisa Smith providing the answers to questions you have about running your small business.
Hello, welcome again to Small Business Spoonfuls. I hope everyone out there is a having a great day, a great week, a great month, a great year. This is Lisa Smith coming at you from Atlanta, GA as usual. I am super excited to be speaking to you guys today. I just cannot believe how crazy things have been lately. We have just been so busy over here at beauditsecure.com.
We are coming out with all kinds of great news. The law is bursting at the seams, which is good for business, but oh my goodness, maybe not so good for your business some times. That is what we want to talk about today. I had a person that wrote in and usually the questions that I get are honestly from business owners and managers. People who are in that position to be the big boss as I sometime say.
The one I m addressing today is a question that came in to me and basically the question was, what can I do because Big Boss won t pay overtime. 1. Thanks for writing that in. 2. I love the fact that you used the term Big Boss because Big Boss is one of my characters on beauditsecure.com that I often refer to in videos I do and blog posts and courses I build and so forth.
Big Boss is very near and dear to my heart, and that shows you have been listening so thank you for that. The more troubling part of this question is Big Boss won t pay overtime. I did not get a lot of detail from this person that actually gave this question, but let me just go ahead and give you some heads up if you are dealing with something similar or maybe you re Big Boss and maybe you re the owner of the company or the person who is managing the whole show and you are thinking that all of this overtime is not really necessary.
One thing that really happens commonly when we get a lot of staffers who are maybe doing a great job and were having high productivity but they are putting in a lot of hours, we have a tendency to kind of default to well, let s just go ahead and put everybody on salary and that way we don t have to worry about overtime. A lot of employers even justify that we are going to pay them more than minimum wage, so we will make sure we are clear there.
Maybe they even go ahead and pay the equivalent of time and a half minimum wage. Federally speaking that would be $10.75 an hour roughly, something like that. Maybe you are going to justify it like that. That way you can say for every hour they ve worked, they ve made time and a half and you feel like you re covered. That is not necessarily going to cover you.
There may have been a time years ago when that thinking worked and even when the Department of Labor even allowed more types of flexible payments and arrangements and so forth. In today s world with overtime being such a hot topic, the Department of Labor has basically just nullified. Not on paper but in their actions and in the court cases that are getting settled.
The judges, The Department of Labor and the whole system put together has basically come out and told employers, you really need to be careful before you decide not going to pay someone overtime. Let s say you are going to set someone s salary at $11.00 an hour. Federally that s time and a half or more so we are doing okay there. We think if they work 40 hours a week, they are getting that. If they work 50 hours a week, they are getting time and a half above minimum wage, which is what ultimately most folks are protected for, at least theoretically.
We do that, we think we are okay. Maybe even an attorney advises us that we are okay with that. Maybe a CPA, maybe your consultant you work with. Maybe it s like, I joke about my other character, Suzanne, who was someone I relied on years ago from another business and she s been doing it for years and that s the way she does it and she s never been audited. Maybe that s the advice we are getting from so called trusted sources.
Rethink that, because what is going to happen is the Department of Labor is eventually going to come in, maybe they are going to audit you, maybe you are going to get a complaint. Honestly, the complaint is really the way it is going to come. When they come in, they are probably not going to listen to, oh, but we set their base wage at time and a half so we are good. They are probably not going to listen to that.
What they are going to say is you have established a practice of the acceptable base wage being, let s say $11.00 per hour, so that means anything over 40 should be paid at time and a half based on $11.00 an hour not the federal minimum wage. That is where it is going to catch you up there. You may feel like, we didn t understand or we didn t know. That is not going to be any sort of excuse at all.
The DOL is going to say ignorance of the law is no excuse and therefore, you owe everybody a whole lot of money. What you will have to do is you will have to figure out what the overtime hours were for each employee, going back most likely three years. Even employees no longer working for you, you will have to calculate their money that would be due to them from the time that they did work for you. You will have to go out and try to find those people.
If you cannot find those people, then the DOL will cause you to hold that money in trust for a period of whatever it is, maybe 3 years, maybe 5 years, depends on the state you are in. Very common practice is 3 years federally, that may be the situation you fall into. After that, the DOL takes charge of it and turns that money over to the treasury. I had always thought that money got turned over to unclaimed money in your state.
It turns out they have a whole little department over at the treasury for unclaimed wages and they keep a database of people who have never collected their money. You can actually go onto the Department of Labor website and search unclaimed paychecks. I believe the acronym for unclaimed wages is WOW, wages or worker, something. Anyway, just search WOW, it will come up. There are a lot of different provisions for making sure people even if they are not currently working for you get paid.
That is going to be like a whole thing. Depending on how large your business is, it could cost you a lot of money when you have to go backward and pay everyone. Let me just say this as well, if during the investigation over this allegedly nonpayment of overtime, it is determined that you did have the ability to have an awareness. Maybe there were managers and supervisors in your organization that had the awareness.
Maybe someone testifies and says I tried to tell Big Boss and they wouldn t listen or maybe multiple employees who have been the cause of this action to begin with, they have gone and complained. Maybe they are now all getting together and testifying well, we talked about this over the period of the last six months or two years and Big Boss ignored us. Big Boss said no, this is the way it is set up.
Maybe they say, we even brought evidence and Big Boss still ignored us. This is going to get really, really messy because the messy part of this is ultimately minimum wage and overtime guarantees under the law weren t really there. Minimum wage was but the overtime was not there. You had an awareness.
Someone brought to your attention that you should be creating an awareness even if you don t know what the law is and at that point keeping yourself ignorant of the law is no excuse in this type of an action. We definitely want to make sure that we address these types of concerns when employees bring them to us, because that is going to be the determination of do we just pay back wages and interest and taxes or do we get hit with something called liquidated damages, which would possibly mean for us that we pay triple the amount that we would have normally had to actually pay out.
Liquidated damages can get extremely costly. When you get to that point, there is no safe harbor for you. There is none of this, let me see if I can follow a checklist of rules to see if I qualify to have penalties reduced. The bottom line is you need to get an attorney, but even then if you have not done your homework today and you haven t worked to audit secure your business as I like to say, or lawsuit secure, it s the same thing.
If you get a lawsuit, someone is going to audit you during this time. Audit securing applies to lawsuits, so if you have not done this, oh my goodness, oh my goodness, you are going to be in such a world of hurt if the determination is that your errors were willful, and egregious and neglectful and you get painted with this brush that says you knew, or you had the opportunity to know, or you had the opportunity to know or you should have known and you just chose to willfully disregard your responsibilities to take care of the people under the law.
That all sounds pretty harsh doesn t it? You re thinking, Lisa, I m just about ready to turn your podcast off. You know what, I don t blame you because this stuff is hard to hear. It s hard to hear. I am on this podcast twice a week not to tickle your ears and not to feed you spoonfuls of sugar. No, I am here to give you the truth. Sometimes the truth is hard to hear. Sometimes it hurts.
Sometimes it hurts the pocketbook a little bit but if we get it done now, we handle it right now, our pocketbooks are going to be much safer down the road. I want to give you some case in point on what has been going on lately with the law where all of this is concerned. Just a couple of these. We have Ecolab who is an organization out of California and they employ all of these exterminators.
For years, exterminators have been paid on the basis of a salary because the employer says you are out in the field, it s hard to track your time, it s hard to know when you take a break and so forth, so we are just going to pay you a salary and then we don t have to worry about overtime and every little minute of the day. That has worked off and on for years but it doesn t work anymore. Ecolab found that out the hard way.
They are having to pay $7.5 million dollars to settle this class action suit against them for non-payment of overtime. We also have another one that was just announced. It is Pilot Travel Center. If you travel much, you know that Pilot Travel Centers are across the country and they have about 82,000 employees that have brought the class action suit because apparently Pilot Travel Center employees have been working off the clock.
And 1.They have not been paid for it and 2. Apparently there is some proof that shows that Pilot has been actually working to conceal this time, so they have been hiding it. Maybe they have been rolling back time cards. I don t know what all the details are of this case, but whatever it is, it is going to be interesting when it all comes out. We are talking about 82,000 plus employees nationwide. The court has said you have standing, which means we are certifying this class and you can come before the court now and you can take them to trial or you can make a settlement or whatever, but you have reason to bring this suit.
When that happens, what that basically means is the employer is guilty now until they prove their innocence. That is a very scary place to be in for an employer. The next thing that is going to happen is the counsel for Pilot is going to come in and say, this would be a good time for us to agree on a number and settle it and get done with it, because knowingly rolling back these timecards and knowingly denying people of overtime and knowingly working to conceal it, however that came about, that is egregious, that is willful, that is bad, bad, bad.
We are talking about liquidated damages, we are talking about three times the normal penalty and who knows what else may get tacked onto that. Sometimes they even tack on an extra 25% to pay the attorneys so that money does not come out of the employees settlement. Sometimes the money comes out of the settlement. Whatever deal is negotiated in a situation like this, this is really bad. 82,000 employees that is not going to be cheap.
Maybe you are a small business and you think, I don t have 82,000 employees. Worst thing that could happen if I get caught is $2,000 or something like that. Okay, $2,000 and everybody involved goes out and tells everybody in town and that tarnishes the name of your business. I was teaching payroll law awhile back in the State of Texas. I will tell you that much. I don t want to out the business too much in their home town. I was teaching and there was a company there that was a small business that had I think 25 employees, I think she said and had been in business for years and years.
They had a situation come up where there was a complaint with the Department of Labor about a person who was not being paid properly, overtime payment and so forth. I believe they had to go back and pay her like $2500 and that was for one person for a very short period of time actually. She only worked for them 6 months. $2500 just going back the six months and they figured it out.
It didn t break the business but the fact that they had to do it was bad enough. They are a business in their community that a lot of people know about and they are in one of these industries that you really feel like you should trust. They are in child care. That is one of those industries that you don t want to work with just anyone in child care because you figure if they are going to do something shady in one place, maybe they are going to hurt my kids.
Any kind of bad publicity is potentially fatally damaging to a business like that. She was really worried and she was having to take care of business and trying to do damage control because it was just one of those things that happened. According to her, it was not an egregious act and DOL didn t find it to be egregious either. I felt like for a small business that was a really good lesson and she made some good points about protecting the reputation of the company.
Think about that with your company, even with a couple thousand bucks, depending upon the size of the town and the number of people that know and the industry that you are in and how well you are trusted in the community. One piece of perception that says you cheated someone, could potentially damage your business for years to come.
HR Superstar
Let s move on to a lighter note because it is time for our regular feature, HR Superstar. Today in HR Superstar, we are going to be discussing a superstar moment in HR that I saw this week in a TV series right now that is a limited series that I m watching and it is called Wayward Pines. Have you seen Wayward Pines? Well, if you haven t yet, please go out and find it on one of your local networks and you can go online, well, you can watch the first few episodes maybe on Hulu I don t know.
I watched it on another type of subscription type service to get started and then I picked up as it is coming on regular TV now. I Tivo it. It is one of those limited series. It has ten episodes to it and I think we are up to episode 6 right now. It is very suspenseful and very good. I won t give you the whole thing but there was a moment for HR Superstar this week in one of the episodes of Wayward Pines where a woman gets notified she is supposed to report to work at a real estate company in the town of Wayward Pines.
I won t tell you how all of that comes about. It sounds weird that she gets notice to report but nevertheless, you will figure it out when you watch it. She goes and she reports and the first thing that happens when she walks in the door, is the boss of the agency gets her attention by whistling at her and calling her honey and baby and saying you are a lot easier on the eyes than the last person that worked here. We are going to get along really well.
At one point, she delivers this home to a member of Wayward Pines. He says you re going to get a gold star if you go through with this deal effectively. She does. She comes back in and he says well, looks like somebody earned a gold star. She said I thought you were kidding about that. He has this big gold star and he takes it and presses it on her chest area to kind of put the gold star there and he kind of lingers for a minute and he looks at her. In HR we know that is huge no, no, no, no, no.
We have here examples of sexual harassment, obviously. We have examples of assault because he has now touched her person. We also have examples at the very least, hostile work environment where he might come back and say I said you were easy on the eyes, I thought that was a compliment. That s just the way I talk. I m from the old days. That was a compliment in the old days. But to her, her ears heard it as that was demeaning to me and I should be treated as an equal in the workplace and my looks should not come into play here.
I am a professional. Those are all very valid arguments today. Maybe they were valid 30-40-50 years ago, but they weren t observed. Anyway, HR Superstar is given a glass breaking thumbs down moment to Wayward Pines for the way they conducted HR in the Wayward Pines Real Estate Agency. There you go, Wayward Pines, thank you.
Thank you for a bad example in helping us see what not to do and thumbs down for the way you treated that little lady, oh, I did it, too. For the way you treated that real estate professional who came in to do a job. There you go. HR Superstar.
Alright, well, that s going to wrap up Small Business Spoonfuls for today. I am so happy you guys tuned in. Thanks so much and I will see you in a few days. I am Lisa Smith and I am out.
The post SBS 008: Big Boss Won’t Pay Overtime. appeared first on Be Audit Secure.
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