Federal Wage-Hour Law Expanded to Include Overtime ‘Gap’ Claims

Recently in Connor v. Cleveland County North Carolina, the federal Fourth Circuit Court of Appeals, of which Maryland is part, held that the Fair Labor Standards Act (FLSA) allows claims for unpaid straight-time wages in weeks when an employee works overtime hours.

Typically, the FLSA only requires that an employee be paid the required minimum wage, currently $12.50 in Maryland for employers with 15 or more employees (Montgomery County has a separate minimum wage based on employer size), and overtime for all hours worked at a rate of one-and-one-half times the employee’s regular rate of pay.

An overtime gap claim exists when an employer pays an employee more than the minimum wage but less than his/her guaranteed hourly rate during a week when the employee worked overtime hours and is owed overtime pay. For example, if an employee has a fixed hourly rate of $15 per hour but is only paid $13 per hour and during that week the employee worked over 40 hours in the workweek and is entitled to overtime wages, there is a possible $2-per-hour overtime gap claim.

Prior to the Connor decision, an employee had no claim for the difference for what was supposed to be paid as the guaranteed hourly rate and what was actually paid during weeks when they worked overtime hours. The Connor case makes clear that when an employee and employer have an expressed agreement for a set hourly rate, the employee is entitled to be paid all of his/her guaranteed regular straight-time rate before overtime wages are calculated. The Court relied on the plain language of the FLSA and relevant federal overtime regulation to make its decision.

In Connor, the agreement between the employer and the employee was a collective bargaining agreement. It is an open question as to what is needed for an employee to prove that there was an agreement that bound an employer and could not be changed.

Importantly, even if an employee does not have a viable overtime gap claim, the employee may still have a claim under the Maryland Wage Payment and Collection Law, the Virginia Wage Payment Act, and the District of Columbia law. This is because these laws require that employers timely and correctly pay their employees.

Although the decision in Connor allows for “overtime gap time claims,” “pure gap time claims” are still not allowed under the FLSA. “Pure gap time claims” are for unpaid wages when an employer pays an employee more than the minimum wage but less than his/her guaranteed hourly rate during a week when the employee did not work overtime hours of more than 40 hours in a workweek.

If you think your employer has not paid you all that you are owed (overtime, commissions, bonuses, etc.), contact the lawyers at Lebau & Neuworth at (410) 296-3030 or lebauneuworth.com/contact-us.

Employers Can’t Avoid Overtime Wages by Playing Dumb

Recently in Richardson et al. v. Alliance Residential Company, the U.S. District Court for Maryland was asked to review and clarify its ruling in a Fair Labor Standards Act (FLSA) case. Specifically, the employer, Alliance, sought clarification regarding whether it could argue it lacked knowledge that the employees worked overtime hours.

The Fair Labor Standards Act is the federal law that sets the rules employers must follow regarding minimum and overtime wages. Under the FLSA, employers must pay overtime wages at one and one-half times an employee’s regular rate of pay for all hours worked over 40 hours per week. A central issue in determining whether or not an employer owes unpaid overtime wages is whether or not the employee actually worked overtime hours and whether or not the employer knew about that work.

In Richardson, the employer, Alliance, argued that a manager violated company policy by telling an employee not to record his overtime hours, and because of that policy violation, Alliance could not be held liable for any unrecorded overtime hours of which it was not aware. The Court rejected that argument and held that because the employee’s supervisor was responsible for monitoring his hours worked, the supervisor knew the employee was working overtime hours and that knowledge could, therefore, be imputed on Alliance. In other words, what the supervisor knew, Alliance knew.

This is an important case for employees because corporations often try to avoid liability for unpaid overtime wages by hiding behind corporate policies and management. This case reminds employers that they cannot “play dumb” or hide behind the actions of management to avoid liability under the FLSA.

If you think you are owed unpaid overtime wages, the lawyers at Lebau and Neuworth may be able to help. For more information, contact us (410) 296-3030 or lebauneuworth.com/contact-us.