A total of $40,000 will be shared on a pro-rata basis by the 29 hourly-paid workers who are part of the FLSA collective. (An FLSA collective lawsuit is very similar to a class action lawsuit.) In addition, Bethel will receive a $10,000 service award and $26,500 will go toward attorney fees and costs.
Unpaid hours, overtime miscalculations
Members of the FLSA collective claimed that ServiceSource failed to pay workers for time spent performing pre-shift tasks, including booting up and logging on to computers, or for tasks they performed during meal breaks.
This, they claim, contributed to the miscalculation of overtime pay. In addition, the nonprofit allegedly failed to include performance-based awards, holiday pay, and health and welfare payments in the overtime equation.
Fair Labor Standards Act
The FLSA sets certain minimum national standards for the payment of hourly workers. The basic formula is deceptively straightforward – a minimum hourly wage plus time and a half for hours worked over 40 in a week. But there is less simplicity than meets the eye in this equation, and employers frequently stumble on the math.
Simply in the interest of self-protection, workers should carefully review their wage statements for several kinds of errors. Among the hot button issues are:
- who is an hourly worker protected by the law;
- what is the applicable minimum wage; and
- how to count time worked.
Who does the FLSA protect?
Workers who earn less than a certain amount are protected by the law, presumably because they have less bargaining power over wages and benefits than more highly paid workers. The issue of what that threshold should be, has been the subject of recent litigation.
According to the Department of Labor, the FLSA’s overtime requirements generally protect workers who make $684 per week or less or total annual compensation of $107,432 per year. Lawsuits regarding this rule are currently pending in two federal district courts.
What is the minimum wage?
The federal minimum wage is $7.25 per hour, unchanged since 2009. States and localities have set higher minimums, and this is often indexed annually. The 2026 minimum wage in Virginia, for instance, is $12.77 per hour. Employers must pay the higher minimum if it applies in the state or city where workers are located.
Counting “work time”
Bethel focused primarily on this question. Under the FLSA, hourly paid workers must be compensated for the time they spend in employment. The term “employ” means “to suffer or permit to work.” It is an expansive definition and normally includes all time during which an employee is necessarily required to be on the employer’s premises, on duty or at a prescribed workplace. It includes:
- time that a worker voluntarily stays late to finish an assignment, unless the employer objects;
- time that a worker spends “on call” even if at home and even if not performing a task that is otherwise part of his or her principal duties;
- short rest periods of 20 minutes or less;
- bona fide meal periods (typically 30 minutes or more) if the worker is not completely relieved from duty. If an employee is checking invoices while eating her sandwich, the time must be paid; and
- time spent performing any tasks that are integral and indispensable to an employee’s job, especially those completed at the beginning or end of a shift is also generally compensable. This includes activities such as booting up a computer, logging into or out of an employer’s computer network, donning or doffing protective gear, or going through mandatory pre-and post-shift bag-checks.
Although not at issue in Bethel, compensable time may include travel time, if required for the worker’s job, but not commuting time to or from work. It may even include time asleep, if the employee works for less than 24 hours and the employer permits the worker to nap when not busy.
Overtime calculation
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Overtime must be calculated using a similarly expansive definition of compensation for time worked. With certain exclusions, the base to be multiplied by 1.5 should include:
- the employee’s regular hourly rate of pay for overtime hours;
- non-discretionary bonuses and commissions and shift differentials; and
- holiday pay.
Settle rather than sue
Given the dollar amount at issue, the narrowness of the dispute, and the size of the collective, it is hardly surprising that the parties chose to settle rather than sue. Nonetheless, Bethel is a useful illustration of why workers need to be vigilant about checking wage statements to ensure that they are being correctly paid.
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