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Donald Trump Is Facing (Yet Another) Lawsuit – Watch Out When Classifying Your Employees for Overtime Purposes

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Donald Trump is no stranger to lawsuits, but this time, he’s not opposing the government. Trump’s former chauffer is suing the Trump Organization, claiming the organization failed to pay overtime wages for thousands of hours of overtime worked over a 6-year period of time. Noel Citron worked for Trump for more than 20 years, averaging 50 to 55 hours a week. Citron argues that Donald Trump never compensated him for his overtime hours, reduced his health benefits, and consistently denied Citron the opportunity for a raise in his pay rate. If Citron was mis-categorized as an exempt employee, the Trump Organization could be facing hefty damages. Citron is seeking $178,200 in overtime pay plus $5000 in penalties under New York’s Labor Law. Overtime compensation is regulated by the Fair Labor Standards Act, which is enforced by the Department of Labor. The FLSA does not limit the number of hours employees may work in a week, but states that, unless exempt, employees must receive overtime pay for any hours worked over 40 in a workweek. The FLSA states that an employee may be exempt from overtime pay if they meet all of the following criteria: (1) the employee is paid wages on a salary basis versus hourly, (2) the employee’s job duties fall under the “white collar” exemption, i.e. a “bona fide executive, administrative, professional, and outside sales employees” and “certain computer employees”, and (3) the employee is paid a minimum weekly salary of $455, or $23,660 annually. The Department of Labor requires that employers keep accurate records of the number of daily hours and employee works.

Employers who violate the FLSA’s overtime regulations face a myriad of penalties through administrative procedures, litigation, and even criminal prosecution. Employees may recover back pay as well as liquidated damages up to the amount of back pay owed, essentially doubling the amount of unpaid overtime owed to the employee. There is a strong presumption under the FLSA in favor of awarding liquidated damages unless the employer can overcome this presumption by showing a good faith, reasonable belief that they were in compliance with the FLSA. Those employers who repeatedly or willfully violate overtime regulations can face civil penalties for each violation. Further, employers who willfully violate the FLSA could be subject to criminal prosecution.

To avoid violations of the FLSA, it’s imperative that employers not only track employees’ daily hours worked but also ensure that employees are properly categorized as exempt or non-exempt from overtime requirements. It’s important to consult with an HR professional to make sure that your job descriptions and compensation guidelines are in compliance with the FLSA to avoid potential violations of overtime requirements.

In Trump’s case, it’s still unclear as to whether the main issue is misclassification of an employee or simply that Trump didn’t pay overtime, which goes to the issue of proper time keeping. We will follow up with this issue as the case moves forward.

Please contact our HR Consultant Chisa Chevernick if you have any question about HR or overtime compliance.