holiday retail overtime pay

Holiday Retail and Overtime Pay Violations

The holiday season is a “make it or break it” time for retailers. “Black Friday” is named as such because the Friday after Thanksgiving is the day when retailers hope to be “in the black” for the year. This is definitely the busiest time of the year in the malls and shopping centers, and it is also the time when retail employees put in lots of overtime.

Under the Federal Labor Standards Act (FLSA), most employers are required to pay overtime to employees who work more than 40 hours in a week. There are a few exceptions to this rule, but they almost never apply to retail stores. If a store has at least two employees and does at least $500,000 per year in business, or the store participates in “interstate commerce” (which is so broadly defined it includes almost everyone), then they are required to comply with FLSA overtime rules.

There are some employees who are exempt from having to be paid overtime. These exemptions are mostly for employees who are considered “white collar”, such as executives and administrative professionals. Exemptions may also apply to supervisors, managers, and salaried employees who earn at least $455 per week. Important Note: Starting January 1, 2020, the weekly overtime exemption threshold for salaried employees increases to $684 per week.

In the retail industry, there are many ways employers may violate overtime rules during the holidays. Here are some of the most common:

Not Counting all of the Hours the Employee Works

It is very easy during the hustle and bustle of the holiday season to not accurately count all of the hours that an employee puts in. For example, an employee may end up working “off the clock” before the shift starts or after the shift is over in order to clean their work area, restock shelves, and perform other tasks needed to get the store ready for shoppers. This might even become an unspoken expectation that is dressed up as “doing your part for the team” or some similar sentiment. Loyalty to your employer is admirable and highly encouraged, but no employee should ever feel like they are required to work for free, even if it is just for short periods of time.

Another common issue is employees not receiving their required breaks. For example, an employee is there for 8 hours but is only paid for 7.5 hours because they are supposed to receive half hour lunch (unpaid), but the store is so busy that the employee never gets his/her lunch break. These half hours may not seem like a lot, but they can add up quickly, especially when the employee is supposed to receive overtime pay for all this extra time worked.

Claiming that the Overtime the Employee Worked was Not Authorized

Along the lines of the previous point, some employers might refuse to pay an employee overtime because it was not properly authorized. Here is a common scenario in which this could happen. The employee is waiting for his/her replacement and they are running late or did not show up at all. As a result, the employee is forced to work two or three (or more) extra hours. The supervisor was busy and nowhere to be found, so no one was around to approve the overtime. Later on, the retailer reprimands the employee for working unauthorized overtime and refuses to pay it.

Whether overtime is authorized or not, this does not absolve an employer of their legal obligation to pay it. No matter what they might tell you, if you are a non-exempt employee and you work more than 40 hours per week, then your employer is bound by FLSA rules to pay the required overtime without exception.

Misclassifying an Employee in Order to Gain an Overtime Exemption

An employer might classify an employee as a “manager” or “supervisor”, even when their duties are not materially different from an hourly employee. In the retail business, there are a lot of positions called “team leads”, and these are employees who have essentially the same job as their coworkers, but they are in charge when an actual supervisor is not around. While each individual case is different, in general, an employee in this category should not be exempt from overtime rules.

Another common issue in the retail business is commissioned employees. Some employees are paid a sales commission instead of an hourly wage, and some receive a combination of hourly wage and commission. The Department of Labor (DOL) has specific rules on when a commissioned employee is exempt from overtime wages. For this to be the case, three conditions must be met:

  • The employee must work in a retail or service establishment;
  • The employee’s average hourly rate for the overtime hours worked must be at least 1.5 times minimum wage (in Alabama, this would mean the employee’s average needs to be at least $10.88 per hour); and
  • Commissions must account for more than half of the employee’s total earnings during the pay period in which the overtime was worked.

Miscalculating the Employee’s Hourly Rate

Some employers do not include all of the required compensation in the overtime wage. For example, they might not include commissions, shift differentials, performance-based bonuses, and other types of pay when they calculate the overtime premium of 150% of the employee’s pay. If an employee is not exempt under any of the aforementioned rules and an employer is required to pay them overtime, all of their pay must be included in this calculation.

Did Your Employer Fail to Pay you for Your Overtime Worked? Call Attorney Kira Fonteneau to Discuss your Case

If your Alabama employer did not pay the amount you were entitled to for the overtime work, there are legal recourses available, which may include monetary damages over and above the pay you are owed. To discuss your legal options, call attorney Kira Fonteneau today at 205-564-9005 or message us online to schedule a free consultation.

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