Compensation and Benefits
Compensation and benefits of employees are regulated by a myriad of state and federal laws. Whether it is a question of an unpaid commission, qualifying for a pension, negotiating a bonus, vesting a stock option, preserving retiree health benefits, or fully valuing an ownership interest under a buy/sell agreement, employees often need the advice and assistance of knowledgeable counsel.
Our attorneys are experienced in all phases of this area of the law, advising and representing prospective, current, departing, and former employees maximize their positions in these regards.
Federal and State Overtime Laws
The Federal Fair Labor Standards Act ("FLSA") and the corresponding Connecticut Minimum Wage Act ("CMWA") provide for the payment of overtime pay. The FLSA and the CMWA regulate the hours that employees can work and the circumstances under which they must be paid overtime compensation. Generally, overtime must be paid at a rate not less than one and one-half times the employees regular hourly rate after the employee works 40 hours in any given week.
There are several ways in which employers may attempt to avoid the payment of overtime wages:
- classifying an employee as "exempt" from the payment of overtime;
- giving an employee a job title which is not reflective of the actual duties of the employee;
- having employees work "off the clock" before or after the start of their scheduled shift;
- paying employees "straight time" for overtime hours worked;
- forcing employees to "clock out" for breaks and meal periods, even if the employee did not use such time; or
- averaging the hours worked over a two week period.
Classifying an Employee as Exempt
Employers often attempt to misclassify employees as exempt from the payment of overtime wages. Generally, any exemption asserted by an employer is narrowly construed against the employer. The exemptions most frequently asserted by employers are the administrative, executive, and professional exemptions.
The Administrative Exemption
With regard to the administrative exemption, an employer asserting the administrative exemption must demonstrate that employee is paid more than $455 per week, the employee's primary duties must consist of office or non-manual work that is directly related to management policies or general business operations, and the employee must customarily and regularly exercise discretion and independent judgment in matters of significance. Properly exempt administrative employees will have the ability to exercise discretion and independent judgment on a routine basis. Employees that have no authority to hire or fire, independent purchasing authority, or perform work that is routinely approved by a higher level manager may not be properly classified
The Executive Exemption
Some employers assert the executive exemption. To fall within the executive exemption, an employee must be compensated at least $455 per week; their primary duty must be managing the enterprise, or managing a department or subdivision of the enterprise, and they must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent. In addition, the employee must have the authority to hire or fire other employees, or their suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
The Professional Exemption
The professional exemption requires, among other things, that the employee's primary duty be the performance of work requiring advanced knowledge, which is defined as work predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment and with knowledge that is customarily acquired through a prolonged course of educational instruction. The exemption does not apply to fields of work in which skills are learned through on the job experience. The professional exemption is applicable to positions such as doctors, lawyers, engineers, and other jobs in which advanced degrees are required.
Federal law permits an employee to recover two years of overtime pay and may include an additional year if the employee is able to demonstrate that the employer's actions were willful. Connecticut law permits an employee to recover up to two years of overtime pay. In addition, Federal law allows for liquidated damages (doubling of the total recovery) unless the employer can demonstrate that it acted in good faith, while Connecticut law provides liquidated damages upon the employee's showing of willfulness. Willfulness requires proof that the employer acted recklessly, which is a standard higher than unreasonableness. In addition, both Federal and Connecticut law permit the recovery of attorney's fees for a successful plaintiff.
Retaliation is Not Permitted
Often, employees fail to raise their concerns regarding their employer's failure to pay them overtime compensation. Both Federal and Connecticut law prohibit an employer from taking any adverse or retaliatory action against an employee who seeks to assert their rights under the law.