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The Role Of Employee Contracts In Defending Wage And Hour Claims

An attorney in a black suit holds a clock in his right hand and a stack of paper money in his left hand after successfully winning wage and hour claims due to employee contracts.

Wage and hour claims are among the most severe types of claims that can be filed against an employer. A successful claim can result in an award of back pay, interest, and statutory penalties. If an employee wins their wage and hour claim, the case outcome can also damage your business’s reputation and erode worker morale. One of the best ways to avoid such claims is to have strong employee contracts in place that provide specific guidelines about pay, overtime, and employee expectations. An employment lawyer can help devise such contracts and provide advice about best practices to avoid these types of claims. Consider contacting Schwab & Gasparini for a confidential case review. You can arrange a consultation at their Syracuse Office at (315) 422-1333, Albany Office at (518) 591-4664, or the firm’s White Plains or Hudson Valley Offices at (914) 304-4353.

Basis of Wage and Hour Claims

Wage and hour claims may be based on local, state, or federal law. Employers may want to meet with an attorney whenever they open a new location to ensure their employee contracts are wage and hour compliant and meet all applicable laws. 

New York State Law

In New York, there are different minimum wages in various parts of the state. The minimum wage is $16 per hour in New York City, Long Island, and Westchester, but $15 per hour in other parts of the state as of Jan. 1, 2024, according to the New York Department of Labor

The New York Department of Labor states that most employees are entitled to overtime pay under state labor law for any hours they work over 40 in any workweek. Their overtime pay is 1.5 times the minimum wage rate for each hour of overtime, regardless of what their regular rate of pay is. Certain residential employees are entitled to overtime pay for any hours worked over 44 hours in a workweek. 

Federal Law

The Fair Labor Standards Act (FLSA) is the federal minimum wage and overtime pay law. Under this law, covered employees must receive overtime wages at 1.5 times their normal pay rate for any hours they work beyond 40 in a given workweek. Employee contracts can provide for greater overtime payments than those required by state or federal law. 

Under state labor law and the FLSA, certain occupations may exempt from overtime pay calculations, including:

  • Executive employees
  • Administrative employees
  • Professional employees 
  • Federal, state, or municipal government employees
  • Workers for religious or charitable institutions 
  • Members of religious orders
  • Outside salespeople
  • Farm laborers
  • Taxicab drivers
  • Camp counselors
  • Part-time babysitters
  • Individuals working for fraternities, sororities, or student or faculty associations

Only workers classified as employees are covered under these overtime laws. Therefore, independent contractors would not be entitled to overtime pay. 

Common Wage and Hour Claims 

When workers make wage and hour claims for overtime pay, they may allege that they worked over 40 hours in a workweek and were not compensated for that time according to the overtime laws. They may claim they worked under conditions such as being required to:

  • Work “off the clock”
  • Change into their uniform or do other preparatory tasks for work without compensation
  • Work during their unpaid lunch break
  • Be on call for work assignments during their time off
  • Run errands for their boss without pay

While not all of these claims are meritorious, they can still disrupt your business. Employee contracts can deter some of these claims by clearly outlining the employee’s role and duties, working hours, and other details. 

What Are the Defenses to FLSA Overtime Claims? 

There may be several defenses that an employer can raise to FLSA overtime claims. Which defense the employer will want to use will depend on the specific circumstance of the claim. 

Exempt Employee

Not all employees are covered under the FLSA. If the employer can establish that the employee is properly classified in an exempt category, they may be able to prove that the employee was not entitled to overtime pay.

Independent Contractor

FLSA only applies to employees. Therefore, if the employer can show the worker was an independent contractor and not an employee, they may be able to show that the worker is not legally entitled to overtime pay. FLSA also exempts certain volunteers, interns, and apprentices. 

Hours Not Correct

Employers who systematically use highly accurate tracking tools to log hours their employees work position themselves to maintain documentation that will stand up to scrutiny. This may help show the employee is demanding pay for hours they did not work. 

Reliance in Good Faith

Another potential argument is that the employer relied on a ruling or interpretation by the Department of Labor. If the employer can show they relied on information found in a ruling, order, administrative regulation, or approval issued by the United States Department of Labor, interpreting the FLSA as allowing what the employer did, the employer is not liable. 

Terms of an Employee Contract

If the employer has a contract with the employee, its terms may help establish the employee’s role and occupation, which may show they are exempt. The contract may also show that the employer complied with the terms of the agreement. An experienced employment defense lawyer from Schwab & Gasparini can review your contracts and determine if this is a defense they can raise in your case. 

Are Employment Contracts Legally Enforceable? 

Any employee contract regarding overtime pay in New York must provide for at least the same overtime pay as required by state or federal law. Additionally, the New York Department of Labor states that if an employee works under a contract, whether that is an individual contract or a collective-bargaining agreement, the employer must pay them the wages outlined in the contract. 

With proper adherence, employment contracts can provide essential information and protections for employers, including:

  • Information about employee duties and expectations
  • Information about how hours should be tracked and reported
  • Instructions that employees should clock out during unpaid lunch breaks
  • Statements regarding when a workweek begins and ends for hour tracking purposes
  • The employee’s job title and occupation, which may help establish whether they are exempt
  • Statements that the employee is exempt from overtime pay
  • Non-compete and non-solicitation clauses that prevent employees from quitting, filing a claim against their employer, and then working for a competitor or trying to steal clients
  • Arbitration clauses that state how disputes are to be resolved

For employment contracts to be valid in New York, they must be written documents signed by both parties. They must also be backed by consideration, of which employment for pay usually constitutes an example.

Contact an Experienced Employment Lawyer for Legal Advice and Representation 

Do not let wage and hour claims disrupt your business. Employee contracts that clearly describe employees’ rights and responsibilities can help avoid disagreements and provide protection. An experienced labor and employment lawyer from Schwab & Gasparini can help craft solid agreements and policies to prevent these types of claims from arising. They may also be able to defend you in an action for collection of overtime pay. Consider calling them today to set up a confidential case review at their Syracuse Office at (315) 422-1333, Albany Office at (518) 591-4664, or their White Plains or Hudson Valley Offices at (914) 304-4353.

Sun Mar 24 2024, 12:00am