Should I Be Getting Overtime?

In November 2016, a federal judge blocked the nationwide regulation set to increase the number of employees entitled to overtime and raise the minimum salary requirement for "exempt" (not entitled to overtime) employees.  While this may be a disappointment to employees everywhere, it does not actually answer the question: should YOU be getting overtime?   Your employer may have messed up in two key areas. Let's look at those together: 

1. "Exempt v. Non-Exempt"  

To get out of paying overtime, your employer may have recently made you a "coordinator," a "supervisor," an "assistant manager," an "administrator," etc. Once you got that new title, I'd be willing to bet two things happened: 1. your job didn't change all that much; and 2. you got switched to salary AND you don't get overtime anymore - even though you work just as many hours as before!  What's wrong with this picture?  First, to be "exempt" from overtime under the Fair Labor Standards Act, you actually have to have significant decision-making authority over the actual business of the company.  Your job title alone doesn't count. The Department of Labor requires ALL THREE of these factors to be true: 

  • The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week  (Note: the new Department of Labor rule would have increased this on December 1, 2016, but it got blocked by a judge);
  • The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; AND
  • The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.  (see DOL Fact Sheet 17C for more.)

If you don't meet all three of those tests - or at least seriously doubt that you do - it's time to call a lawyer to see if you should be getting overtime.  For you Arizonans, you can reach me here.  I practice in this area a lot. 

2. "Employee v. Independent Contractor"

This is another major area where companies often get it wrong.  Often they do it just to keep from having to pay you overtime.  Just like with your job title, the label "independent contractor" is meaningless.  The Department of Labor has a lengthy series of factors that they consider in deciding whether you are an employee - but it primarily comes down to the "economic realities" of your position.  Are you truly in business for yourself?  If not, then you're probably an employee. (see DOL Fact Sheet 13 for more). 

Once again, for all you Arizonans, I encourage you to contact me here if you think you may be an employee instead of an independent contractor.  We'll look at your situation together.  

For both of these topics, you can find a wealth of information on the Department of Labor website, but the MOST HELPFUL tool on that site for employees on these specific issues is right here: Wage and Hour Advisor.  You answer a short series of interactive questions and the site will tell you whether you should likely be getting overtime under the Fair Labor Standards Act.  And, if you can get through, you can also call them at 1-866-4USWAGE (1-866-487-9243).    Or, if you're an Arizona worker, you can also contact me. 

Now on Amazon: New EEOC book for Employees!

I am excited to report that my new e-book "The Employee's Guide to the EEOC: How To Present Your Harassment, Discrimination, Hostile Work Environment, Wrongful Termination, Or Retaliation Claim To The EEOC With Confidence" is now live on Amazon's Kindle Store (free apps available to read on your smartphone) for $5.99 - about 2% of what an hour-long consult with an employment attorney will cost you.  It provides a detailed overview of the EEOC process and the types of claims the EEOC handles, so that any employee who has experienced harassment, discrimination, hostile work environment, wrongful termination, or retaliation in violation of federal law can file a charge with the EEOC.   If you buy it and like it, please leave me a review! 

WSJ: Feedback "Code Words" Suggest Gender Bias

The Wall Street Journal has recently published an article (linked here) discussing how gender bias can show up in written feedback and/or performance reviews.  Attorneys have long looked for communicated "code words" to suggest various forms of bias, but this level of detail goes beyond mere pseudonyms into the actual adjectives being used to describe work by female employees. One more place to watch what words your managers are using. 

Businesses with Independent Contractors LISTEN UP: the DOL is coming for you!

I'm not much given to hyperbole, but I recommend you sharing this with ANYONE you know who uses independent contractors in their business.  They may not realize it yet, but they're going to need serious help. 

H/T the inimitable John Perkins of AZ's HRHelp:


On July 15, 2015, the U.S. Department of Labor (DOL) issued guidance on determining whether a worker is an independent contractor in the form of an “Administrator’s Interpretation.” Describing independent contractor misclassification as resulting in an “uneven playing field for employers” and as a “means to cut costs and avoid compliance with labor laws” for other employers, it is no surprise that the DOL’s Administrator’s Interpretation No. 2015-1 adopts perhaps the most expansive definition of “employee” possible. Specifically, the DOL outlines that the economic realities test governs the determination of independent contractor status.

This is not a new position taken by the DOL, but it is the first time that the DOL has repackaged its analysis in the form of an Administrator’s Interpretation. This is also the first Administrator’s Interpretation issued by David Weil, who became the DOL’s Wage and Hour Division Administrator on May 5, 2014 and is an outspoken critic of independent contractor agreements, franchising agreements, outsourcing and other business arrangements that he contends create a “fissured workplace.” [JWC: emphasis mine]

The economic realities test is guided by six separate factors, including whether:

  • the work performed is an integral part of the employer’s business;
  • the worker’s managerial skill affects the worker’s opportunity for profit or loss;
  • the worker is retained on a permanent or indefinite basis;
  • the worker’s investment is relatively minor as compared to the employer’s investment;
  • the worker exercises business skills, judgment, and initiative in the work performed; and
  • the worker has control over meaningful aspects of the work performed. 

While all of these factors must be considered when making this determination and the Interpretation discusses each one in detail, the DOL finds some of these factors more compelling than others, including, for example, whether the contractor is performing work that is integral to the business. The DOL’s ultimate inquiry is whether the worker is “economically dependent on the employer or truly in business for him or herself.” This is the standard that the DOL often has referenced in its court filings in recent years.

Importantly, while the DOL promotes this economic realities test, it repeatedly emphasizes that this determination, overall, must be guided by the expansive “suffer or permit to work” standard governing coverage under the Fair Labor Standards Act (FLSA) generally. As the DOL explicitly recognizes in the interpretation, the “suffer or permit to work” standard ensures the broadest scope of statutory coverage possible.

Employers using independent contractors for construction, housekeeping, in-home care, and trucking services in particular should be especially cautioned, as the Labor Department has recognized those industries as common culprits of misclassification.

Importantly, the DOL’s use of the economic realities test is not limited to determining coverage under the FLSA. The DOL also applies this analysis in determining employment or independent contractor status under the Migrant and Seasonal Agricultural Worker Protection Act and the Family and Medical Leave Act.

This interpretation comes on the heels of several formal information-sharing agreements between the DOL and various states (including WisconsinFlorida, and Alabama), as well as the Internal Revenue Service, whereby the agencies agree to share information on misclassification. It also follows the DOL’s September 15, 2014 award of $10.2 million to 19 different states to implement and improve misclassification detection and enforcement in unemployment insurance programs.

While the extent of deference afforded to this interpretation by federal courts remains to be seen, there is no doubt that independent contractor relationships are under fire, and now is the time to closely review any independent contractor relationships you may have. This scrutiny must necessarily include review and revision of any applicable independent contractor agreements and, more importantly, actual practice with contractors, which would be the overriding consideration in audits or litigation. If the factors weigh against independent contractor status, employers should take appropriate steps such as enhancing the independent contractor model, arbitration agreements with class action waivers, or reclassification. The potential liability associated with a misclassification finding is too significant not to.

Source: the law firm of Ogletree Deakins

HRHelp - Great FREE employment law resource (that I use all the time)

I'm sharing with you one of the best HR quick reference guides that I've ever seen in the State of Arizona. John Perkins of HRHelp is not an attorney but he's assembled the "best of everything" in a guidebook that should be on every small-to-medium-size AZ business owner's or HR director's virtual desk. Best of all, it costs nothing. And if you subscribe to his e-newsletter, you'll get the updates to the guide as well as practical alerts to changes in law and policy affecting AZ employers. Oh, and you can hire John for a variety of HR-related consulting services.  

McJobs and UberJobs

Good article from The Economist on the changing nature of jobs in the US: 

"America needs to update its employment law to take into account the fact that FDR is no longer president. This will involve some careful balancing. Policymakers need to recognise that people want to work more flexible hours and that technology has made it possible to create spot markets in surplus labour and idle assets. But they must also recognise the state’s need to raise taxes to pay for public services and benefits. Given the dysfunctional nature of America’s politics, such updating will take a good deal of time and will probably involve many false starts. Until then judges should leave open as many options as possible. The last thing the country needs is for over-strict interpretations of outdated laws to kill exciting new businesses and sabotage jobs. Do that and you end up like France."