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Recent court rulings could impact FLSA claims

Employers in California and around the country are required to pay their workers overtime pay when they work more than 40 hours during a workweek, but certain employees, such as executives, managers and salespeople are not covered by the landmark federal law. However, these distinctions can become blurred when workers perform jobs that involve selling as well as other duties. Decisions about whether or not an employee is covered by the FLSA have generally been left to the courts, and a case dealing with these issues was recently argued before the Supreme Court of the United States.

In a 5-4 decision that followed party lines, the justices ruled that service writers at automobile dealerships are salespeople and are therefore not covered by provisions of the FLSA. The 9th Circuit originally ruled that service writers were entitled to overtime pay under a Department of Labor interpretation of FLSA exemptions, but the Supreme Court felt that the 2011 regulation should not be deferred to because the agency failed to adequately explain it.

The Supreme Court of California ruled on another case involving FLSA issues on March 5. In that case, the justices addressed the issue of flat sum bonuses. Workers covered by the FLSA must be paid an overtime rate of at least one and one-half times their regular pay, but the regular rate of pay in this case was disputed because it included a bonus for all hours worked. The justices decided that this type of bonus should be divided only by the number of non-overtime hours worked to determine the base rate of pay. However, the ruling only applies to flat sum payments and not bonuses awarded to recognize performance or attendance.

The FLSA was signed into law in 1938, but these cases reveal that its provisions are still the subject of contentious legal arguments. Attorneys with experience in this area may recommend that workers who feel that they have been paid unfairly take nothing for granted and gather as much evidence as they can before filing overtime claims. Documents that could support such claims include employment agreements, pay stubs, bonus plans and human resources memorandums and emails.

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