Meyers, Roman, Friedberg & Lewis has a Coronavirus Response Team. Contact Jon Hyman to help with how your business should
continue to respond to this national emergency.

Monday, May 12, 2008

Overtime not required for time not actually worked

One article that caught my eye last week while I was out was a piece by Tracy Coenen, on her Fraud Files Blog, about a scam that was uncovered in the Wisconsin prison system. It seems that under the prison's overtime policy, the guards figured out that they could call of sick for their own shift, but then pick up the next shift and collect time-and-a-half for overtime.

It appears that the Wisconsin prison system might be paying overtime when it is not otherwise required. Under the Fair Labor Standards Act, an employee is entitled to paid time-and-a-half for any hours in excess of 40 worked in a given work week. The key word is worked. Sick days are not days worked. Either are vacation days or paid holidays. In calculating the number of hours an employee has worked in a given week, you only look at the number of hours spent working. Now, there are a lot of variables to look at when determining whether an employee is working. But, for certain, sick days, holidays, vacations, and other paid days off are not time spent working.

Let's take as an example an employee who works Monday - Friday, 8 hours a day. That employee takes a paid day off on Monday, works 9 hours Tuesdays, and 8 hours each of Wednesday, Thursday, and Friday. At what rate should that employee be compensated for the extra hour worked on Tuesday - straight time or time-and-a-half? The answer is straight time. While the employee was paid for 41 hours that week, the employee only worked 33 hours. Thus, the employee did not work in excess of 40 hours in that work week.

Part of any wage and hour audit is a review of not just which employees are eligible for overtime, but the work rules under which overtime is calculated and paid. Depending on the size of your organization, thousands, tens of thousands, or even hundreds of thousands or millions of dollars could needlessly be paid to employees for overtime to which they may not be entitled.