Updated June 23, 2020:

Not Getting Paid for Hours Worked Laws: Everything You Need to Know

Not getting paid for hours worked laws provide that employers must abide by the Fair Labor Standards Act (FLSA) to ensure that all employees are paid for those hours worked. However, many states have their own state laws regarding overtime pay; but the FLSA sets the minimum standard. States can, in fact, provide additional financial compensation to employees above the FLSA if they choose to do so.

There are many businesses out there that hire only exempt employees so that they don’t have to pay those employees for additional hours worked on the typical 40 hour workweek. However, if an employee is, in fact, hired as a non-exempt employee, then he or she must be paid for all hours worked; in particular, any hours worked over 40 hours will require financial compensation of 1.5 times the employee’s hourly pay. For those who are paid a salary but are still non-exempt, the salary will be calculated to ensure that the hourly pay X1.5 is paid to the employee.

There are ongoing debates and battles surrounding overtime pay, which is why new bills on the matter are commonly drafted, but not implemented. One new bill provides that employees can be provided vacation days instead of being paid overtime. However, this bill will likely spark debate as many employees prefer the additional financial compensation as opposed to the vacation time.

Unpaid Wages, Bonuses, and Commissions

The Wage-Hour Division of the U.S. Department of Labor sets the federal minimum wage rate. The only requirement here is that if the employers wishes to have the employee bear the cost of a cash register shortage, the deduction cannot be taken from the employee’s pay if it is below the minimum wage nor can the employer reduce the overtime compensation.

While most employees believe they are entitled to bonus pay for a job well done over the year, bonuses are not a requirement under the FLSA. However, the employee can, in fact, make a complaint if the employee’s employment contract otherwise states that he or she will receive a bonus on an annual basis. Such a complaint will generally be brought in the small claims court if the amount is under a certain threshold. Further, employees need not hire an attorney for this type of case as most courts will provide that the employee is entitled to a bonus so long as the contracts indicates as such.

The FLSA also doesn’t require commissions to be paid to those employees working in a position that may otherwise receive commissions. However, if this information was stated in the employee’s contract, then the employee can go down the same avenue as previously mentioned for those entitled to a bonus. However, before having the courts involved, employees should draft a letter to their employer evidencing that the employment contract indicates that they are entitled to either a bonus or commission. If the employer still fails to rectify the problem, then employees can communicate to their employer that they will be bringing a lawsuit in small claims court. If the employer still fails to fix the problem, then the employee should move forward with the suit.

Company Bankruptcy

What if your employer goes bankrupt? You may have a claim for unpaid salary, wages, or commissions. Priority exists for those unpaid wage that are owed to the employee up to $4,000 earned within 90 days before the company files for bankruptcy. Such wages include salary, commissions, bonus, vacation and sick pay, and severance pay.

The New Rule under the FLSA

The Obama administration’s new rule under the FLSA provides that people should be eligible to receive even higher overtime pay. This rule helps though lower-income families who don’t otherwise make money to support the cost of living in the area they live in. This rule, however, does not fare well with small businesses, educational institutions, and nonprofit organizations who generally cannot afford to provide their employees with overtime pay. Moreover, nonprofit organizations generally are exempt from such laws due to the nature of the organization.

While this new rule will be favorable to those who can financially benefit from it, it will not be favorable to those employers who will have to incur additional costs because of it. This may even cause businesses to let go employees or even shut its doors if it can’t handle the additional costs.

However, keep in mind that this rule has not yet been entirely implemented. With President Trump in office, he is currently handling the matter and will decide if this rule should, in fact, be implemented in its original version or if revisions is necessary.

Exempt vs. Nonexempt Employees

Exempt employees receive an annual salary without the ability to receive overtime pay where the non-exempt employee is non-exempt under the FLSA, and thus must be paid for any hours worked over 40/week. It is important to remember that exempt employees, even if they work on a federal holiday (i.e., New Year's Day, Christmas, Presidents Day, etc.), are not eligible for additional compensation. However, if the exempt employee is forced to work on a federal holiday, then the employer facing the risk of having the exempt employee’s status automatically changed to non-exempt.

Non-exempt employees are paid at an hourly rate. As previously noted, if a non-exempt employee works more than 40 hours/week, he or she must be paid overtime for that additional time worked. Under the FLSA, the amount to be paid is 1.5 times the employee’s hourly rate. Therefore, if the employee generally makes $8/hour and works 45 hours in one week, the employee will be paid for the additional five hours at a rate of $12/hour. Keep in mind that, if a non-exempt employee works on a federal holiday, the employer need not pay the employee additional compensation for that holiday worked (unless the employee works over 40 hours during that same week). With that being said, however, most companies do, in fact, pay overtime for holidays worked.

There are several other important key items for employers and employees to keep in mind regarding overtime pay, including the follows:

  • Employers are required to pay employees for training conducted on the job. Therefore, even if the employee is “shadowing” another employee or engaging in computer e-learning courses, that time must be paid to the employee.
  • In certain industries, employers must pay the employee for time spent driving to/from work. This would be the case for police officers, EMTs, and other similar types of positions.
  • If you are “on-call” and are called into work on a weekend, you must be paid for your time spent working over the weekend.
  • Some positions can earn overtime pay for any hours worked in excess of eight hours/day, even if that means you still only work 40 hours/week. This includes school officials.
  • Some industries have different overtime rules depending on the position. This includes hospitals, police officers, and firefighters.

If you need help learning more about the laws associated with not getting paid for work, and your rights and responsibilities as an employer or employee, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.