A couple of recent U.S. cases in the news have highlighted the importance of properly complying with overtime pay regulations ― and the consequences that can occur when not doing so.

The first instance involved a company in Cleveland, Ohio that contracts out private security guard services. The president of the company wanted to be a good guy and help out his lower paid employees, many of whom had families and had been clamoring to work overtime to increase their take home pay.

The president told them that, while he could not afford to pay them the overtime rate ― which by law is 1.5 times the regular rate of pay if a non-exempt employee works more than 40 hours in a work week ― he would let them work overtime hours at their regular pay rate. The workers readily agreed, as they found that preferable to no extra hours at all.

The Department of Labor (DOL) somehow caught wind of the situation, and conducted an investigation. The result? The company had to pay almost $15,000 in back overtime pay to the 30 security guards who had volunteered to work overtime at less than the required rate. What’s more, the company also had to pay a $5,000 fine for ‘willful and repeat violations of the Fair Labor Standards Act (FLSA)’ for failing to implement required record-keeping provisions of the FLSA, including maintaining time and payroll records.

Costly violations

The second case concerns a maid service company in San Carlos, California. The California Labor Commissioner launched a three-year investigation into the company after a worker submitted an anonymous complaint alleging intentional illegal overtime violations. The investigation determined that 18 employees routinely worked ten hour days, but were only paid for working eight hours.

As a result of the investigation, the California Division of Labor Standards Enforcement fined the two owners of the company nearly $400,000, which included unpaid overtime, minimum wage violations, and unpaid rest period and meal break premiums. The owners also had to pay $61,200 in civil penalties for additional violations including failure to provide employees with itemized wage statements as required by law.

The Bottom Line

Business owners must pay all non-exempt employees who work more than 40 hours per week the legal overtime pay rate ― no excuses are accepted under the law! It doesn’t matter whether the employer’s reasons for circumventing overtime payments are noble or malevolent, or even based on ignorance or the employees’ own acquiescence.

A word to the wise is to avoid finding yourself in the ugly predicament of facing a DOL investigation or expensive collective action lawsuit in the first place, as neither will make attractive headlines for you, your business, or your business’ reputation. A simple solution is to use a modern time and attendance tracking solution. Such a solution can easily keep costs in check with configurable overtime calculation rules that not only increase accuracy, but also help improve compliance with overtime and other labor laws.