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The Many Ways Overtime Can Create Risk For Family Employers

A woman sued her former railroad employer for disability discrimination. She alleged the employer violated disability discrimination laws by terminating her when she could no longer work overtime because of a disability.

Her employer requires all emergency dispatchers, like the plaintiff, to work mandatory overtime.

The employer argued that the plaintiff was not a qualified individual because she was unable to perform an essential function of her job: working mandatory overtime. It contended that if one dispatcher cannot work overtime, others must work more, which creates a public safety risk. The employer's attendance policies state that overtime work is mandatory for the position.  

The Eighth Circuit Court of Appeals affirmed the district court's decision that overtime work was an essential function of the emergency dispatcher position. Reed Smith LLP "Eighth Circuit affirms working overtime can be essential job function" (Sep. 17, 2019).

Commentary and Checklist

In this matter, the successful argument was that overtime was required to perform the job of a dispatcher. In the family context, overtime is most likely not considered an essential function because there is no risk to the public's safety.

Most overtime risks for family employers come from employees working overtime, but not being compensated properly (or at all) for the overtime worked.

Other risks arise when family employers who want to control wages, including overtime costs, forbid overtime without prior, written permission from a supervisor.

However, what if a staff member works overtime without permission?

In that case, the staff member must be paid for the overtime hours worked; however, the violation of the written overtime policy becomes a separate, disciplinary issue to be addressed.

To reduce wage and hour risk, have a timekeeping system in place and insist that all staff use it without exception. Review time records weekly or bi-weekly with each staff member to make sure the time record for that period is accurate. Have them initial it.

Work with your legal counsel to periodically audit your wage and hour practices. Here are some pertinent issues:

  • Are your exempt staff members properly classified? Too many family employers classify staff as exempt when they are not.
  • Exemption requires a certain salary level but also a duties test.
  • Make sure independent contractors pass all Department of Labor and Internal Revenue Service tests for an independent contractor. Otherwise, the staff member must be considered an employee.
  • All overtime, no matter how short a time period, must be accounted for and compensated.
  • Are your staff receiving their breaks and other compensated time as required by federal and state laws? Laws differ, but many state laws require mandatory paid breaks during the day.
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