My Business’s Ex-Employee Just Sued My Business In Federal Court In New York For Unpaid Overtime Pay. What Should My Business Do?

This article addresses the following issues:

• Which wage laws impact your business as an employer in New York;
• The ways in which employers commonly violate the Fair Labor Standards Act and the New York Labor Law, and the consequences, to employers, of these violations; and
• In New York, some defenses that, depending on the particular facts and circumstances, may be available to your company in your company’s former workers’ lawsuits, in federal courts sitting within New York. for unpaid overtime pay.

Executive Summary

When one of your business’s ex-employees sues your business in federal court in New York for unpaid overtime pay, and unless your business’s ex-employee falls within one of the white-collar exemptions from federal and New York overtime pay requirements, your business may (or may not) owe him overtime pay for the hours he worked in excess of 40 hours in any given work week. Depending on your business’s particular circumstances, your business may have several defenses available to it in your business’s ex-worker’s lawsuit against your business in federal court in New York for unpaid overtime pay.

Further, there may be many disputed issues of fact and law in your company’s ex-employee’s lawsuit. These disputed issues may include the number of hours that your business’s ex-employee worked, the amounts that your business paid to your ex-employee, and whether your business acted willfully such that your business is liable for 100% liquidated damages.

What Should My Company Do If A Former Worker Sues My Company For Unpaid Overtime Pay?

Your company needs to promptly retain a New York City Employment Lawyer to effectively defend your company against your former worker’s lawsuit for unpaid overtime compensation. As soon as possible, contact an experienced New York City Employment Lawyer about your former worker’s unpaid overtime lawsuit against your business.

Which Wage Laws Impact My Business As An Employer In New York?

Most employers are bound by both federal and state wage-and-hour laws and must comply with both sets of laws. Wherever state law and federal law differ from one another, the law more beneficial to the worker applies.

Federal Law

The federal Fair Labor Standards Act, 29 U.S.C. §§ 201 – 219 (the “FLSA”) requires that most workers in the U.S. be paid at least the federal minimum wage of $7.25 per hour for all hours worked and overtime pay at 1½ times the regular rate of pay for all hours worked in excess of 40 hours in a workweek.

However, the FLSA sets forth exemptions from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. In general, to qualify for exemption, workers must meet certain tests concerning their job duties and be paid on a salary basis at not less than $684 per week ($35,568 per year). Job titles do not decide exempt status.

New York State Law

The New York State Minimum Wage Act, N.Y. Labor Law § 650 et seq., mandates that workers in New York State be paid at least the state minimum wage — which, depending on the county, ranges from $15.50 per hour to $16.50 per hour — for all hours worked. Covered employees who work overtime must be paid at a rate that is 1½ times their regular, straight-time hourly rate of pay.

For non-residential employees in New York, this overtime rate applies to all time in excess of 40 hours in a payroll week.

For residential employees (in other words, live-in workers), this overtime rate applies to all time in excess of 44 hours in a payroll week.

In New York, Are Certain Employees Exempt from Overtime Pay?

Yes. the FLSA sets forth exemptions from overtime pay for certain categories of workers. New York State follows these exemptions, but mandates that these categories of workers be paid at least 1½ times the New York minimum wage for their overtime hours.

How Do Employers Commonly Violate The Fair Labor Standards Act and the New York Labor Law, And What Are The Consequences, To Employers, Of These Violations?

Violating the FLSA and the New York Labor Law (the “NYLL”) can result in severe legal and financial consequences for employers. One of the most common and costly errors that employers commit is to misclassify employees as exempt from overtime pay requirements. Misclassifying your business’s employees may result in monetary fines and penalties, including the payment of back wages and 100% liquidated damages.

Another common violation is the failure to pay non-exempt employees for all time worked, including unauthorized overtime. Your company must compensate its employees for all hours worked, even if your employees performed their work off-the-clock. Employers’ obligations include the duty to pay workers for rest breaks of short duration, typically five to 20 minutes.

Common allegations in workers’ lawsuits for unpaid hourly wages include:

• failure to pay compensation for time spent in company meetings and in employee training sessions; and
• neglect to pay compensation for time expended by employees traveling from one work site to the next.

Unpaid overtime pay is a critical issue relating to unpaid wages. Your business’s workers may bring, against your business, an unpaid overtime lawsuit alleging:

• that your company failed or refused to pay overtime pay at 1½ times the regular rate of pay for all hours worked in excess of 40 hours in a workweek;
• that your business required the employees to work without clocking in; or
• that your company falsified the workers’ records or hours worked so as to avoid paying, to them, overtime compensation.

Attorney David Rich is a knowledgeable, experienced Manhattan Employment Lawyer.  For nearly 30 years, he’s helped employers, just like your business, to build strong defenses and to comply with wage-and-hour laws when former workers sue these employers for unpaid overtime.

Have questions, or in need of legal help?  Reach out to the Law Offices Of David S. Rich, LLC for an initial consultation today.

What Circumstances May Be Defenses, For My Company, Against My Company’s Worker’s Unpaid Overtime Lawsuit?

If one of your business’s ex-workers sues your business in federal court in New York for unpaid overtime pay, and depending on your business’s particular facts and circumstances, your business may have several defenses available to it. Some common defenses, by employers, to former workers’ unpaid overtime lawsuits include:

• Statutes of Limitation. Under federal law, employees must file unpaid overtime lawsuits within two years after the date of the violation. For willful violations, the federal statute of limitations extends to three years. Under New York law, employees must file unpaid overtime actions within six years after the date of the violation.
• Overtime Exemptions. Your business may have properly classified its ex-employee as exempt from both minimum wage and overtime pay because he or she worked as a bona fide executive, administrative, professional or outside sales employee.
• Independent Contractor. Your company may have correctly classified its former employee as an independent contractor, rather than as an employee of the company.
• Employer’s Accurate Records of Hours Worked. To the extent that your business has kept accurate payroll records concerning employees’ wages and hours, your business may use these records to rebut your ex-employee’s assertions that he or she worked more hours than are reflected on his earnings statements.
• Employer’s Annual Gross Revenue of Less Than $500,000 Per Year. In general, that your business generated annual gross revenue of less than $500,000 per year is a defense to unpaid overtime claims brought under federal law. By contrast, that your business generated annual gross revenue of less than $500,000 per year is not a defense to unpaid overtime claims brought under New York law.
• Good Faith. The absolute good faith defense under the FLSA allows your company to avoid liability for an FLSA violation by proving that your company acted in conformity with any U.S. Department of Labor interpretation or ruling, even if the U.S. Department of Labor subsequently rescinded that interpretation or ruling.

The good faith defense to liquidated damages under the FLSA allows your company to reduce its payments of, or to avoid paying, liquidated damages by proving that your company acted in good faith and had reasonable grounds to believe it was not violating the law.

What Evidence Do Employers Need To Contest Their Workers’ Unpaid Overtime Lawsuits?

You, the employer, must be able to present credible testimony, or contemporaneously prepared documents, countering your ex-employee’s claims in his or her lawsuit against your business in federal court in New York for unpaid overtime pay. This evidence must tend to show:

• that your former employee worked fewer hours per week than he or she claims; and/or
• that you, the employer, paid, to your ex-employee, greater wages than he or she asserts.

If you, the employer, failed to maintain the required records of hours worked by, or of wages paid to, your employees, then the employee suing you need only prove the hours he or she worked or the wages you paid him or her to a just and reasonable inference.

In practice, in a lawsuit in which you, the employer, failed to maintain wage and hour records, your ex-employee will meet this burden of proof by testifying, at deposition and/or at trial, as to the number of hours per week that he or she worked and the amounts of wages that you, the employer, paid to him or her.

In order for you, the business, to rebut this testimony by your ex-employee in a no-wage-and-hour-records case, you need a representative of your business who has personal knowledge to testify under oath, either at deposition or at trial or both, to their personal knowledge as to the number of hours per week that the ex-employee worked and the amounts of compensation that you, the business, paid to the ex-employee.

If you, the employer, failed to maintain the required wage-and-hour records, and there is no company representative, such as a supervisor, who personally observed, and who testifies to, what hours the employees worked, then the court or the jury, as the case may be, is likely to credit any reasonable testimony by the plaintiff employee as to the hours that he worked for your company.

What Circumstances Are Not Defenses, For Employers, Against Their Employees’ Unpaid Overtime Lawsuits?

In the author’s experience, many business owners believe that some or all of the following circumstances constitute defenses against ex-employees’ lawsuits against their businesses, in federal court in New York, for unpaid overtime pay. To the contrary, none of these circumstances are defenses, for companies, against ex-employees’ lawsuits against the companies for unpaid overtime compensation:

• Your company fired your ex-employee, whether or not your company had good reason to do so;
• Your business did not authorize your former employee to work more than 40 hours in a workweek;
• The employer required its employees to get permission, from a supervisor, before working more than 40 hours in a given workweek;
• Your company’s former employee is an illegal immigrant to the U.S.;
• Although your business’s ex-employee is lawfully present in the U.S. (for example, on a tourist visa), your business’s ex-employee lacks legally authorization to work in the U.S.;
• The employer’s ex-employee (supposedly) waived his or her right to be paid at 1½ times his or her regular rate of pay for all hours worked in excess of 40 hours in a workweek.

Still Have Questions? Are You Ready To Start?

Call Manhattan Employment Lawyer David S. Rich at (347) 472-1026 to retain a skilled minimum wage and overtime attorney to defend your company in unpaid minimum wage and unpaid overtime lawsuits or other wage-and-hour litigation.