Just before Christmas, the United States Court of Appeals for the Sixth Circuit gifted employees a great wage and hour opinion in the case of Walsh v. KDE Equine, LLC, No. 21-5054, 2022 WL 17843720 (6th Cir. Dec. 22, 2022). In Walsh, the Sixth Circuit, which presides over the district courts in Kentucky, Michigan, Ohio and Tennessee, addressed a failure to pay proper overtime compensation to two classes of workers. KDE Equine, which operates in Texas, New York, and Kentucky, is one of the largest United States based thoroughbred racehorse training and care operations. Overall, the employer trained approximately 180 horses while employing somewhere from 120 to 150 employees at any given time. This case involved two classes of employees, “hotwalkers” and “grooms.” The employees who worked as grooms prepared horses prior to the training training by saddling the horses, administering liniments and poultices, brushing the horses, clipping their hooves, and cleaning the stalls while employees who worked as hotwalkers walked and bathed horses to cool them down following training. The hotwalkers employees worked about 44.25 hours each week and the grooms averaged in the range of 48.5 to 52.5 hours worked each week. Each position carried extra work and responsibilities on race days, which came with extra working hours.
In the case, it was undisputed that both sets of workers were paid on a salary basis but were not exempt employees.
Am I entitled to overtime pay if I’m paid a salary?
Salary is only one of several factors that are considered to determine if an employee is entitled to be paid time and a half for all hours worked over 40 in a given work week. Under the Fair Labor Standards Act (“FLSA”), an employer cannot deny an employee the right to overtime pay simply because that employee is paid a salary. On the flip side, if an employee is paid on an hourly basis, i.e., not paid a salary, that employee will almost always be entitled to overtime pay at time and a half under the FLSA.
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How is overtime pay calculated?
The FLSA mandates that employers pay their employees at one and one-half times their regular rate for every hour worked above 40 hours per designated work week. 29 U.S.C. § 207(a)(1). “Regular rate” is basically calculated by dividing the total weekly pay to the employee by the weekly hours worked by that employee. 29 U.S.C. § 207(e); 29 C.F.R. § 778.109. Of course, there are many complicating factors to consider depending on each employee’s individual circumstances, which necessitates consulting wage theft attorneys to get direct advice.
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Who is responsible for keeping track of hours worked, the employer or the employee?
The employer is responsible for tracking time and keeping time records. The FLSA specifically requires employers to “make, keep, and preserve” payroll records for a period of time. 29 U.S.C. § 211(c). As established by the United States Supreme Court in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687–88, 66 S. Ct. 1187, 1192–93, 90 L. Ed. 1515 (1946), the employee has the initial burden to present evidence that work was performed beyond 40 hours per week and provide and reasonable estimate of such time. The burden then falls back to the employer to present accurate and concurrently recorded time records to demonstrate the actual amount of time worked by that employee. If the employer cannot do so, the employee should prevail and be paid based on the amount of time estimated.
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Can my company give me a set schedule that includes and pay me for overtime?
Yes, but it really has to be a fixed and not a fluctuating schedule. A Department of Labor (“DOL”) regulation provides key insight on this point: “Where an employee works a regular fixed number of hours in excess of the statutory maximum each workweek, it is, of course, proper to pay him, in addition to his compensation for nonovertime hours, a fixed sum in any such week for his overtime work, determined by multiplying his overtime rate by the number of overtime hours regularly worked.” 29 C.F.R. § 778.309. However, when the hours are not fixed, neither can the pay.
KDE Equine primarily argued that it properly paid its employees because the employees worked a fixed schedule for fixed pay. The United States Court of Appeals for the Sixth Circuit disagreed:
the district court found that neither the grooms nor the hotwalkers worked a fixed number of hours. Instead, “the hours that the employees worked from week to week fluctuated depending on if they arrived early, stayed late, left early, worked additional hours on race days and worked outside the normal schedule hours performing ‘extras.’” That finding was supported by employee testimony that the district court found credible. KDE has not shown those findings were clearly erroneous. Thus, § 778.309 doesn’t apply.
Walsh at *3.
Can the company I work for avoid paying me overtime pay by paying me a set amount for each task that I do after working 40 hours during the workweek?
Only in very limited and rare circumstances can an employer avoid overtime by making lump sum payments by task assigned that are outside the employee’s normal duties. Critically, however, the employer must be able to show that: (1) there was a clear understanding between the employer and the employee regarding this payment method; (2) these lump sum payments were equal to or greater than the time and half payments that the employee would have otherwise been entitled to; and (3) the work performed was not part of the employee’s regular duties or regular schedule, but rather was a special job for a specific estimated number of overtime hours.
In Walsh, the employer paid employees an extra $25.00 for unloading hay, $25.00 for transporting horses to and from the racetrack, and $100.00 for doing laundry tasks. The Court held that this arrangement did not fall within the limited exception.
How far back can I sue for unpaid overtime?
The FLSA standardly provides a two-year statute of limitations for an ordinary failure to properly pay overtime or minimum wage, but extends the statute of limitations to three years when the employer’s violation is willful. The violation will be held to be willful when the employer knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute. In McLaughlin v. Richland Shoe Co., 486 U.S. 128, 128, 108 S. Ct. 1677, 1679, 100 L. Ed. 2d 115 (1988), the United States Supreme Court held that, “the word ‘willful’ refers to conduct that is ‘voluntary,’ ‘deliberate,’ or “intentional,’ and not merely negligent.”
One way to demonstrate that an employer acted willfully or with reckless disregard is by showing that the employer “had actual notice of the requirements of the FLSA by virtue of earlier violations, his agreement to pay unpaid overtime wages, and his assurance of future compliance with the FLSA.” Herman v. Palo Grp. Foster Home, Inc., 183 F.3d 468, 473–74 (6th Cir. 1999). This obviously makes sense because an employer should only be able to claim ignorance the first time around. In Welsh, the United States Court of Appeals for the Sixth Circuit importantly held on this point:
Whether a defendant willfully violated the FLSA is a factual question. See Elliott Travel & Tours, 942 F.2d at 967 (reviewing the record to determine whether a genuine issue of material fact existed as to the willfulness of employer’s conduct). An employer having notice of the FLSA requirements by virtue of prior violations and assurances of future compliance is a material fact that we have found to be highly indicative of willfulness. See, e.g., Elliott Travel & Tours, 942 F.2d at 967; Palo Grp. Foster Home, 183 F.3d at 474. Accordingly, the factual disputes as to whether an employer’s prior violations and assurances of future compliance gave the employer actual notice of its obligations under the FLSA raise enough of a genuine issue of material fact to preclude summary judgment.
Walsh at *5. Given KDE Equine’s prior violation, the Sixth Circuit Court of Appeals held that summary judgment in favor of the employer on the issue of willfulness was not proper. Further supporting the potential finding of willfulness, the Sixth Circuit pointed to the employer’s failing to keep proper time records despite admitting to knowing that it was obligated to have such records to properly pay its nonexempt employees overtime pay. And, lastly, the Court held:
Belanto testified that timesheets would not arrive until after checks were issued and that he did not even use the timesheets that employees filled out when issuing paychecks. KDE claimed it introduced timesheets to comply with the FLSA wage and recordkeeping requirements, yet Mr. Belanto admitted to only occasionally using the timesheets for processing payroll. A reasonable jury could infer from this record that KDE intended to simulate compliance with the FLSA by maintaining timesheets that were not actually used to issue payroll.
Walsh at *5. To me, such testimony is as close to an admission as possible that the employer did not care what hours were worked and willfully intended to pay whatever it wanted.
How do I recover unpaid overtime that I’m owed?
Best Ohio Wage And Hour Attorney Answer: Because the FLSA is very complex, you need to consult with a lawyer that focuses in wage theft issues. Indeed, the overwhelming majority of lawyers have little to no experience dealing with FLSA issues, much less the complexities of the exemptions. Your best FLSA lawyer option is to contact Spitz, The Employee’s Law Firm today for a free and confidential initial consultation. (Read: What is the Spitz No Fee Guarantee?; How Do You Recover Stolen Wages?). Our experienced wage and hour lawyers at Spitz will evaluate your particular overtime pay dispute.
The overtime pay information on this FLSA, wage and hour blog and at this employment law website are for informational purposes only and not for the purpose of providing legal advice regarding your pay dispute. Do not rely on this employment law blog as legal advice. Again, your best option is to contact an experienced overtime attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of The Spitz Law Firm, Brian Spitz, or any individual attorney.