Last month, the US Department of Labor announced that it settled with a staffing provider over unpaid overtime for more than $400,000. In the case, the staffing firm paid its assigned workers time-and-a-half for hours they worked between 41 and 47 in a workweek, but then paid only straight time for any hours worked beyond 47.
While that settlement did not involve the buyer organizations, in many parts of the US the workers could have included the customer in their lawsuit — and if the buyer has the deeper pockets, it might just be included.
Even without the buyer’s involvement in the case, such a scenario could tarnish an organization’s image if it is perceived to be partly to blame for short-changing assigned agency workers.
There are steps you can take to mitigate your organization’s risk.
Self-reflection. Many companies stipulate in their contracts with their staffing provider that there be no overtime, so any overtime actually worked would be at the expense of the provider, says long-time staffing attorney George Reardon. But a no-overtime contract clause may not be enough if your own policies and procedures result in incorrect time reporting that leaves workers underpaid.
Are your systems set up for accurate time reporting? For example, are your timeclocks placed such that workers can punch in and out easily and quickly, or do workers have to undergo lengthy entry-exit procedures outside of clocked time? While the US Supreme Court ruled that the time contingent workers spent undergoing security screening to exit an Amazon.com warehouse was not compensable, the matter is far from settled, as that ruling hinged on federal law, and some states have stricter wage and hour laws.
Another example: Are your site supervisors incentivized to cut costs, or hours specifically, leading to incorrect time reporting? If your own policies create a situation that leads to wage and hour violations on the part of your supplier, you may still be found culpable, if not in a court of law, then certainly in the court of public opinion.
Classification. Worker classification — i.e., exempt or nonexempt status — is tricky for agency-provided staff as well as your own W-2 employees. If you are asking your staffing provider to classify certain workers as exempt, be prepared to provide solid justification based on the job description. And be sure to audit such classifications regularly to ensure there’s been no migration of actual job tasks from the job description. What may have started out as a legitimate classification as exempt may no longer be the case if the job tasks have changed.
Think about whether overtime exemption is really valuable to you. “Many employers instinctively love overtime exemptions,” Reardon says, “but if a job’s hours are predictable, a nonexempt regular pay rate can be set to produce approximately the same total pay that an exempt salary or straight overtime policy would produce, without incurring the substantial litigation risks of exemptions or the extra expense of paying for partial-day absences.”
Your billing statements. If your contracts do not have a no-overtime stipulation, your billing statements may provide a clue as to whether you are indeed paying for your contingents’ overtime hours. But overtime billing in the staffing context is complicated; it is not a simple matter of looking for 1.5 times your base bill rate, as the agency markup and other factors would be taken into account in the billing calculation.
Plus, how overtime is calculated varies, explains Diane Geller, a partner with law firm Fox Rothschild LLP. Per federal law, overtime is anything over 40 hours in a week, but in California, for example, hours beyond eight in a workday typically is overtime, though even that threshold can vary, Geller notes. The state also requires paying double time when certain criteria are met. Your contract should be built to address accurate calculations for overtime billing, if it is not outright prohibited. So make sure someone versed in applicable laws is part of the contract process, Geller advises.
But if you are armed with accurate time sheets as well as billing statements that prove you’ve done your part, you have a better chance of defending yourself if included in a wage and hour dispute.
Wage and hour is a complicated area of employment law, and not a topic that can be addressed fully by any one article. Always seek the advice of counsel when developing and negotiating contracts with your staffing suppliers.