1. FEATURE STORY:
FBI's EXCESSIVE OVERTIME PAY OFFERS LESSONS FOR ALL EMPLOYERS
Employers both big and small, in the private and public sectors, and in all industries are susceptible to high overtime costs. But you've probably got nothing on the FBI. According to a U.S. Justice Department audit that was released in December, the FBI paid $7.8 million in improper wages to agents temporarily posted in Iraq from 2003 through 2007.
The report states that FBI agents uniformly claimed overtime for working 16 hours per day, every day of their 90-day assignments, even when they worked fewer than 16 hours. "We found that, on the whole, few if any employees in Iraq worked exactly 16 hours a day," said the report.
Here's where the agency went wrong, and what your company can do right to keep OT costs down.
1. Supervisors encouraged and condoned the practice of recording 16 work hours per day in an effort to maximize compensation for agents who volunteered for duty in Iraq and to reward them for enduring harsh conditions.
Pay pointer: Discipline managers who "reward" employees by allowing them to pad their time sheets. Find other, less costly ways to reward employees who volunteer for difficult assignments.
2. Agents averaged their work hours. Some days, agents worked around the clock. Other days, they worked fewer than 16 hours. They calculated a reasonable average between the two to be 16 hours. Agents' rationale for averaging their hours was that they were on standby status when they were not working.
Pay pointer: Educate managers and employees on whether waiting time is considered time worked. It is dependent upon whether employees are engaged to wait (which is compensable work time) or waiting to be engaged (which isn't compensable work time). The difference between the two hinges on whether employees are free to use the time for personal activities.
3. Agents included time spent on non-work activities, such as eating meals, exercising, and socializing, as hours worked.
Pay pointer: Time spent on personal activities generally does not need to be paid. However, if they occur during rest periods of short duration, usually 20 minutes or less, that time is customarily counted as compensable hours worked. Bona fide meal periods (typically 30 minutes or longer) generally need not be compensated as work time, if employees are completely relieved from their duties for the purpose of eating regular meals. Employees aren't completely relieved if they are required to perform any duties during this time.
4. The agency failed to properly examine time sheets. The forms that agents used to report their work hours were "certified" by supervisors in the United States who had no personal knowledge of the hours the agents were actually working in Iraq.
Pay pointer: Require supervisors with first-hand knowledge to attest to employees' hours and sign off on time sheets before they are submitted to Payroll. HR must conduct random audits in case supervisors are condoning or ignoring padded time sheets.
For more advice on how to avoid making mistakes with employees' pay, check out AHI's Complete FLSA Compliance Kit.
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