Overtime Issues and Salaried Employees – Do You Have a Problem?                           

By Paul J. Franzetti

 

The number of overtime lawsuits has sharply increased in Texas in the last decade.  That employees are seeking greater compensation should come as no surprise, given the overall stagnation in take-home pay since the 1980s.  But why should you as an employer care?  After all, you are paying market rates for wages and you may believe that relations with your employees are so good that no one would think of suing.

Many employers may be taken off-guard regarding:  

·        The complexity of the Fair Labor Standards Act (FLSA) and regulations regarding overtime.

·        The detail of recordkeeping required by the FLSA.

·        How easy it is to violate the FLSA.

·        The availability of collective actions for all affected employees.

·        The recoverability of attorney’s fees by successful plaintiffs.

The severity is compounded by how quickly damages can multiply even for minor violations and all it takes is one disgruntled employee to start the ball rolling.  The basic rule under the FLSA, payment of 1½ times the normal hourly rate for all hours worked over 40 during a week, seems simple enough, but it isn’t. 

Consider whether the overtime rule applies in the following situations:

1.      An employee works more than 40 hours a week even though you have told them not to do so.

2.      An employee answers phone calls or responds to email or other social media outside normal working hours.

3.      An employee works 50 hours one week and you tell them to work 30 hours the following week.

4.      An employee reports to a jobsite but is not paid for work until you give them a particular project to work on.

The illustrative answers by numbered line are:

1.      Compensable.  You may be able to take disciplinary action but overtime is owed.

2.      Most likely compensable.  The real issue is the system for tracking employee time in this regard.

3.      The extra 10 hours in the 50-hour week is compensable overtime.  Comp time is legal in the public sector, not the private sector.

4.      The wait time is possibly compensable if it and the time worked on the project are greater than 40 hours in a week.

These answers are not meant as legal advice but only as illustrations in an overview of complex issues and the reader should not rely on them in any way to make decisions about their situation.  Different circumstances pertaining to these and seemingly similar situations may result in different answers.

Many small businesses try to avoid overtime issues by paying all employees a salary with occasional bonuses paid for extra time on special projects.  The FLSA overtime requirements, however, have nothing to do with whether the employee is paid on a salaried or hourly basis.  Instead, the overtime provisions apply to ALL employees unless an exemption applies; thus the references to “exempt” and “non-exempt” employees.  The exemptions from the overtime requirements generally apply only to executive employees and managerial employees.  The burden of proving that an exemption applies, moreover, is on the employer. 

If a non-exempt employee is paid a salary and works more than 40 hours in a week, the overtime rate is generally calculated by dividing the regular weekly salary by the hours normally worked per week (40 or fewer) and applying the 1½ times rate to the portion worked over 40 hours.  In addition, the “salary” rate could include bonuses paid for additional work that are not properly segregated for the overtime portion which could actually work against an employer who thinks he or she has already generously compensated for the overtime.

Focusing on how this article began, the sharp increase in overtime suits, keep in mind that the FLSA allows successful plaintiffs to recover attorneys’ fees which means that private attorneys have an incentive to bring these cases.  Plainly, the best way to navigate wage, hour, and employee classification issues as well as foster a good working relationship with your employees and minimize risk to the business is to consult an experienced professional.  ________________________________________________________________

Paul J. Franzetti is the Founder of Paul J. Franzetti, Attorney at Law.  He can be contacted by phone at 713-242-1265, by email at pfranzetti@trustedlawadvisor.com, or visit his website at www.TrustedLawAdvisor.com.

The 4 Keys to Success - Marketing, Planning, Prospecting, and Implementation       

By Rita Santamaria

Marketing, planning, prospecting, and implementation are the four keys to success.  The most important key of all is implementation because the other three are useless without taking action.  It helps to have a checklist that contains both interactive and lead generation activities.

1. Marketing

It is important to regularly showcase your company and also let your customers know you are thinking about them.  Having a client appreciation event at least once per year is a great way to do that.  You need to be “touching” them as often as possible through weekly blogs, monthly newsletters, brochures, emails, holiday cards, and anniversary and birthday cards.  Social media and e-blasts work when marketing to those you already know.

When you personally go into your business farm area and attend functions where people already know you (called centers of influence), this is an example of marketing.  Volunteering to help a group is another example of marketing.  If you do a good job, people will call you because they already know you, trust you, and see you as the “go to” person in your industry.  In addition, they are more likely to refer others to you.

2. Planning

Do you know your geographic area?  You must establish and work a geographic area so you get to know the results or metrics of your success in that specific area.  What is your territory?  How would you rank yourself on a scale of 1 – 5 with 5 being excellent?

There are also demographic farm areas.  These areas are identified by age, activities, and community involvement.  This is where understanding generations and the difference in selling, advertising, and networking make a huge difference in your success.  The way one generation values your expertise can be different from another generation.  You need to know the difference in techniques and stereotypical expectations based on generational expectations.

3. Prospecting

When you personally work to expand your personal sphere of influence into a group of people who do not know you, this is known as prospecting.  Prospecting involves calling on people and being prepared to hear why this customer will not use you; rejection is a normal occurrence.  They are going to tell you why they use someone else.  This is great information as it will help you overcome objections from the next person while giving you valuable insight as to what is important to this customer.  The law of averages demonstrates the more persons we call on either in person, on the phone, or with social media, the greater the percentage increases for new business.  Instead of texting, personally call potential clients whom you’ve met but have not yet established a business relationship.  It is far more effective.

4. Implementation

Your personal advertising budget and the implementation of that budget may move your direction to personal marketing and prospecting.  This produces a higher metric for success than impersonal or spending money.  Contests and giveaways where you have personally been visible are good examples and the return on your investment will pay off in referrals.  Even though many companies and individuals are marketing through the development of a personal monthly newsletter, it is an impersonal way to market.  In addition, direct mail pieces for a targeted market is still impersonal and perhaps not worth the investment.

Always write 10 personal notes per week to people who know you.  This is personal and works well and the return on investment of stamps and time is impressive.  Volunteering for marketing and recruiting events is personal and a wonderful return on your time with potential referrals.  When you attend local and national conventions, this only works for obtaining business if the educational seminars you attended gave you good insight into better business performance.  Be sure to always prospect while you are attending these events as well as attending sessions.

These tried and new initiatives will help you achieve the success you desire; it is all about implementation.  Without implementation your success is limited to luck. Work your plan.

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Rita Santamaria is the owner and CEO of Champions School of Real Estate which was founded in 1983 and is a five time Pinnacle Award Winning School.  The Champions School of Professional Development was founded in 2012 and has grown in a short time to be a leading development venue for individuals and companies.  For more information, visit their websites at www.ChampionsSchool.com or www.TheChampionsProfessional.com