By: William P. Dale
For the most part, individuals and employers entering into an employment relationship have a wide latitude in structuring their contractual relationship. But there are a number of federal and state laws that are designed to provide protection to workers in multiple circumstances. One such set of laws relates to the amount of wages that must be paid to an employee.
The federal Fair Labor Standards Act, which was enacted in 1938, was designed by Congress to protect “the minimum standard of living necessary for health, efficiency and general well-being of workers.” The Act contains two important substantive provisions affecting the wages of workers. First, it establishes a minimum wage for workers covered by the law, a rather well known provision of the statute. Second, it requires employers to pay time and a half hourly wages for overtime beyond a 40 hour work week. The Supreme Court has held that the employer has an affirmative duty to maintain accurate business records establishing the time during which an employee works.
There are certain exclusions from application of the law for executive, administrative and professional employees. And employers engaged in certain activities enumerated in the statute are not bound by the law either.
But, for employment relationships covered by the overtime law, the regulations and burdens of proof heavily favor employees. Among other pro-employee provisions of the statute is a liquidated damages provision requiring the employer to pay an amount equal to the unpaid overtime obligations in addition to payment of the required wages themselves. Furthermore, entities who may be held personally liable for making these payments include certain individuals who own the employer, or otherwise control the payroll process, and therefore the employee’s ability to recover is not limited to the company whose name appears on his paycheck.
The State of Maryland has also enacted similar overtime laws that operate in coordination with the Fair Labor Standards Act. Also, under Maryland state law an employee may obtain up to “treble damages” (triple damages) if forced to sue to recover unpaid wages.
These laws are designed to protect employees and ensure that they are compensated for their efforts, even in circumstances in which the employer seems to have an upper hand in the employment relationship. The issues involving wages and the Fair Labor Standards Act can become complex, and employers need to be aware of these laws in order to ensure that they are in compliance with the requirements. Employees need to be aware that they may have rights under these laws beyond simply what their employment agreement or oral employment understanding says.