Watching the Clock.

• Author: Spendlove, Gretta
• Position: Paying overtime - Brief Article

Controlling employee overtime

Farmers Insurance Exchange, an insurance claims company in California, was recently hit with a $90 million judgment based on its failure to pay overtime to claims adjusters. Rent-a-Center Inc., a Texas-based rent-to-own retail chain, recently agreed to pay $3 million to settle overtime claims made by assistant managers in 119 stores throughout California. And a former manager at a Denny's restaurant in Washington state recently filed suit, asking the company to pay him and other supervisors at least $22.5 million in overtime pay he claims the company owed them.

These are only a few examples of recent lawsuits brought by disgruntled employees claiming that they were required to work overtime without sufficient compensation.

Federal and state overtime laws are complicated, but the risks of not understanding or complying with them can be high. Under the federal Fair Labor Standards Act (FLSA), employees must be paid overtime if they work more than 40 hours per week. Companies that fail to comply with this rule subject themselves to hefty fines and may also be sued by present and former employees.

Unlike many other states, Utah has no separate overtime statute, so Utah companies need only be concerned with the FSLA requirements. However, the lack of state laws has not stopped employees in various occupations from filing compensation lawsuits in Utah courts under federal law. Cases on file in Utah range from workers in the ski industry to crews involved in movie production. Classifying workers as "exempt" in a field such as movie-making, for instance, in which workers may spend 12 to 15 hours a day working, may be very tempting to an employer but under federal law may also be illegal.

Despite the general FLSA rule that all hours over 40 per week must be paid at overtime rates, there are many "exemptions' under the FLSA which remove various categories of workers from the overtime pay requirements of the act.

Three of the most common exemptions to the overtime rule are for executives, administrative employees and professionals. A review of these exemptions may help save your business a costly lawsuit if you employ such workers.

Executives. Employees can be excluded from claiming overtime pay if they are paid at least $250 per week in salary, regularly direct the work of two or more employees, and spend 50 percent or more of their time managing either a whole business or a "recognized" department or subdivision.

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