Blog Post
Employer's nightmare: back wages, penalties for unpaid overtime
Mike Thal • June 16, 2016
As one more Arizona contractor learned the hard way, paying employees for piece work does not trump overtime and minimum wage requirements.
In March 2018, a Tucson framing contractor that failed to pay overtime was ordered to pay more than $214,000 in back wages to 145 employees. Because of the "willful and repeated nature" of the violations, the contractor was also hit with more than $25,000 in penalties.
The overtime violations stemmed from the contractor paying its employees on a "piece work" basis (which is legal) but not paying time-and-a-half for hours exceeding 40 in a workweek (which is illegal).
Record Keeping.
This case is a good reminder that paying employees on a piece-rate basis does not excuse employers from overtime and minimum wage requirements. Contractors that pay for piece work must still keep time records that:
- track all employees' hours;
- show that all non-exempt employees who worked over 40 hours in a workweek were paid time-and-a-half for their overtime hours; and
- all workers were paid at least the minimum wage.
Record Retention. Keeping track of hours worked and paying the proper wages aren't the only required steps. The Fair Labor Standards Act requires that you preserve:
- all payroll records for at least three years, and
- wage computations for at least two years (e.g., time cards that comply with FLSA timekeeping requirements, piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages).
The Bottom Line. A Department of Labor investigation can have devastating financial consequences for employers who violate the FLSA's overtime and record-keeping provisions, including, potentially, personal liability imposed on the company's corporate officers and/or supervisors.
Knowing and obeying complex requirements can be challenging, but it pales in comparison to the consequences for employers that "roll the dice" in ignoring the rules.
See also: " Piece Work: Pay Your Employees by the Task - Legally"
