The Independent Counsel


Overtime - Do It Right


Everyone knows that most hourly workers must be paid time and a half for work over 40 hours per week, but most employers would be surprised to learn that they can accumulate liability of upwards of $100,000 by working a secretary or receptionist as little as one extra hour per day without overtime over just a few years.

While some employers flout the law and mis-classify workers to save money, many others expose themselves to substantial liability unknowingly. In either case, full appreciation of the rules and the risks involved in breaking them would cause those employers to change their practices.

Here we look chiefly at the federal Fair Labor Standards Act (Wage/Hour Law), although state laws also address overtime:

Why are employees called "exempt or non-exempt"? The overtime law covers all employees except those who fall under an exemption. To be "exempt", an employee must be one of the following:

  1. Executive. An executive is someone who spends 80% of time engaged in the management of the business or regularly supervises the work of at least two or more workers. Other indicia: exercise of discretionary powers and authority to hire and fire or recommend such.

  2. Administrative. Must spend 80% of time in work directly involved in management policy or general operations. Exercises discretion and independent judgment. Regularly assists executive. Does specialized work requiring special training. Secretaries do not qualify without expanded duties.

  3. Professional. College degree or equivalent required. Involved with a) tasks which assume knowledge in an advanced field of learning, teaching, or science b) consistent use of discretion or judgment, c) intellectual work, d) artistic endeavors such as invention or use of imagination.

  4. Outside Salesperson. Makes sales calls away from business premises 80% of the time.

Do's and Don'ts. Do apply the following rules to your business if it employs workers:



What are the risks?

Workers may be quick to contact the authorities or bring their own claims if they are fired or feel they've been treated badly. They can collect treble damages plus costs in Massachusetts, and the Department of Labor ("DOL") may seek civil penalties of $1000 per violation.

To add enforcement strength, Massachusetts moved prosecutions of its wage and hour laws to the Attorney General's Office last year. An individual complaint may lead to a company-wide investigation, and substantial violations are publicized.

Comment: Without serious attention to wage/hour law violations your company may subject itself, knowingly or not, to significant risk of prosecution .

© ASSOCIATION OF INDEPENDENT GENERAL COUNSEL 1994; (all rights reserved). This article is not intended as legal advice. Consult a qualified attorney for assistance concerning a specific issue or problem.