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Wage & Hour: There Is No “But, We Had A Deal” Defense

On Behalf of | Apr 19, 2013 | Wage: Minimum Wage, Wage: Overtime |

Our wage and hour attorneys have seen it many times before. We send a letter of representation and notice of wage and hour or overtime claims to an employer, who directly responds by saying, “We had a deal. [Name of the employee] knew what he/she was going to be paid.” The overtime provision of the Fair Labor Standards Act and Ohio Fair Labor Standards Act do not allow such agreement – even if they are in writing. Thus, an employer cannot get a non-exempt employee to agree as a condition of employment to be paid a flat rate no matter how many hours that employee works.

Here is a prime example of how this defense fails: In Harris v. Daniyal Enterprises LLC, an owner of several gas station companies was sued for because it paid 417 employees a flat rate –some of it in cash – for working an agreed upon number of hours, up to 80 hours per week. Shortly after the Court held that the owner would be personally liable, the case settled for $3 million and an additional $91,000 in penalties. The crazy thing is that this was – in my opinion – a good result for the employer, who had probably been doing this for years and was only subjected to a two year look back period. Indeed, it is likely that had he been paying properly for all of two year period, it would have likely cost him more than the $3 million settlement. On top of that, depending on how the settlement was structured, the employer may have significantly reduced his payroll tax liability by paying a settlement instead of the wages as they accrued. Even more so, the employer got the interest on $3 million for over two years. So if the employers that get caught can think they still did better, think about all the employers that are getting away with it.

If you even think that your employment rights have been violated or that you might need an employment lawyer, then call the right attorney to schedule a free and confidential consultation at 866-797-6040. Spitz, The Employee’s Law Firm is dedicated to protecting employees’ rights and solving employment disputes.


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