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Dispelling the 10 Biggest Wage and Hour Myths – Part I   

On what seems like a daily basis, I receive a phone call from a client or prospective client who is confused about some aspect of wage and hour law.  Myths and urban legends abound in this area of the law.  Passed on from person to person and company to company, the more they are repeated, the more believable they become.  Today, I will take aim against five of the most frequently encountered myths about properly compensating employees.  Please note that the commentary below is based solely upon federal and Pennsylvania law.

  1. Employees are entitled to mandatory work breaks. NO!  With the exception of truck drivers and minors, employees have no legal entitlement to any breaks during the work day.  This includes lunch and meal breaks.  While most employers provide a lunch or meal break, employees have no legal entitlement to such breaks. In the event that an employer is unionized, the break issue will be governed by the applicable collective bargaining agreement.
  1. All salaried employees are exempt. WRONG!  Paying an employee on a salaried basis is only one requirement of the FLSA’s white collar exemptions.  If the employee’s job fails to satisfy all of the duties requirements of the exemption, the employee will not be exempt and will be entitled to overtime for all hours worked in excess of 40 in a work week.  Paying a clerical employee a salary does not make the employee exempt from the FLSA’s overtime requirements.
  1. Employees are entitled to be paid for accrued but unused vacation, sick time, or PTO upon the termination of employment. NOPE!  Neither federal law nor Pennsylvania law requires employers to pay out accrued but unused vacation, sick time, or PTO upon termination of employment.  In Pennsylvania, this issue is dictated by policy and/or practice.  Whether or not an employee is entitled to payment will be determined based upon the applicable employer policies.  It is perfectly acceptable for an employer in Pennsylvania to adopt a PTO, vacation, or sick leave policy that states “upon the termination of employment, employees will not be paid for any accrued, but unused leave (vacation, sick, PTO).  Similarly, Pennsylvania employers can condition the payment of such accrued but unused leave upon the employee satisfying certain conditions (e.g., appropriate notice of termination, no-fault termination, etc.).
  1. An employee who works unauthorized overtime is not entitled to overtime pay. NADA.   Consider this scenario:  Fred asks his boss if he can work on Saturday to get caught up in his work.  Fred’s boss says no because he does not want to incur the overtime cost.  Fred disregards his boss’s decision and works 8 hours of overtime on Saturday.  When his boss finds out, he is furious because of Fred’s insubordination; the boss refuses to pay Fred for the overtime work because it was “not authorized.”  Fred’s boss has violated the FLSA.  The employee must be paid for all hours worked, even unauthorized hours.  The employer’s recourse here is discipline or termination, not withholding pay.  My guess is that Fred will be polishing up his resume.
  1. Employees who prefer time off instead of overtime can be given compensatory time off in lieu of overtime pay.  GUESS AGAIN!  There is no such thing as compensatory time off in the private sector.  While public sector employers are able to substitute compensatory time off for overtime pay, private sector employers cannot.  Consequently an employee who works 8 hours of overtime this week cannot be given time off with pay for 8 or 12 hours next week.  The employee must be paid for the overtime hours.  Work schedules can be manipulated in the same work week in order to avoid overtime pay (i.e., Monday through Thursday, the employee works 36 hours; the employer can instruct the employee to work only four hours on Friday to avoid overtime).  Overtime earned in week one cannot be erased in week two by providing compensatory time off.   Please note that the FLSA does permit employers to adopt Time Off Plans; however, these plans are very difficult to administer and, in many situations, will not eliminate overtime liability.

Tune in tomorrow for the remaining five wage and hour myths.  In the meantime, I’m going to look for Big Foot!

For more information regarding wage and hour or any other labor and employment law matter, please do not hesitate to contact a member of our Labor and Employment Department.