Many employers have found themselves on the wrong end of a federal or Kentucky wage-hour investigation because of a misunderstanding of their obligations under the Fair Labor Standards Act and Kentucky's equivalent wage-hour statute. Because the federal and state regulations relating to minimum wage, overtime pay, record keeping and child labor are relatively complex, they present a significant compliance challenge. Unfortunately, penalties for noncompliance can be substantial.
We'll consider in this column the hypothetical case of Elmer Employer, who knew just enough about his legal obligations to get himself in some serious trouble. See if you can spot the places where Elmer went wrong in the following story.
Facts
Ellie Employee was one of several clerical workers for Elmer Employer. She was scheduled to work a 40-hour week. At some point, Elmer noticed that Ellie was not leaving the office at 5 p.m., according to her schedule, but would stay until 5:30 p.m. or 6 p.m. In fact, sometimes Ellie would stay behind even as Elmer was leaving the office at 6 p.m. Recognizing that there might be a problem with Ellie regularly working over 40 hours a week and not receiving any extra pay at either her regular rate or an overtime rate, Elmer told Ellie of his concern. He told her that she was going to have to work only the hours he had specified, because he did not have any room in his budget for any extra pay. Ellie, visibly disappointed, told Elmer she only stayed late because she wanted to catch up on work. She told Elmer she did not expect to be paid when he was not requiring her to work. Elmer was still concerned, but Ellie reassured him, agreeing to give him a written waiver. She typed it out right then: "I, Ellie Employee, acknowledge that Elmer has told me that I am not to work more than 40 hours a week. If I ever do so, it will be because I want to, not because Elmer requires it. I voluntarily waive any right to payment for hours over 40 in a week. Ellie signed the waiver