On Wednesday, August 22, the Automotive Service Association (ASA) hosted a webinar on “Making the Overtime Law Work for You” as part of its Webinar Wednesdays initiative.
The presentation featured Brian Farrington, ASA’s wage and hour attorney and expert, who addressed federal overtime laws and the costly impact they have on non-compliant shops.
ASA Vice President Tony Molla opened the webinar by welcoming attendees and introducing Farrington. Farrington began by discussing the Fair Labor Standards Act of 1938 (FLSA), which is the basic wage and hour law in the United States and establishes standards in four areas: minimum wage, overtime, child labor and recordkeeping. As of July 24, 2009, the federal minimum wage is $7.25 per hour.
Farrington emphasized that when state law varies from federal law, an employer must follow whichever standard most benefits the employee. For example, if the state’s minimum wage is higher than the federal minimum wage, but there is no state overtime law, an employee in that state will receive the state’s minimum wage while being paid overtime under federal provisions.
Farrington stressed, “Employers must be familiar with the state laws in every jurisdiction where they operate.”
Although overtime is often viewed as a reward for an employee who works a long week, Farrington explained, “It is actually a penalty on the employer for working an employee over 40 hours. Overtime is paid out at one and a half times the employee’s regular rate of pay for hours worked over 40 hours in a workweek. The primary purpose of overtime is to spread employment because the government wants you to work more people for fewer hours. It is meant to be punitive, cost you money and be difficult to comply with.”
Clarifying that a fundamental principle of overtime is that “each workweek stands alone,” Farrington defined a workweek as a “fixed and recurring period” of seven consecutive 24-hour days that may not be altered unless it is being changed permanently. However, daily overtime is not required under FLSA, which means an employer can schedule employees within the workweek as they see fit, moving hours around to minimize overtime. Averaging workweeks is forbidden, even if the employer pays bi-weekly. For example, an employee who works 48 hours one week and 32 hours the next is still entitled to eight hours of overtime for that first week.