Delaware Overtime Laws Overview
Delaware overtime laws, like those in most states across the country, require that most employees be paid a higher wage for any work performed over 40 hours in a given week. The "overtime" rate is typically 1 ½ times the employee’s regular rate of pay. For employees on a salary, the calculation is done by dividing the salary amount by 40 to determine the regular hourly rate.
For salaried employees, there are some exceptions to this general rule and some likely confusion as to whether the law mandates payment for overtime. The salary basis requirement applies only to those employees who are considered "exempt" employees. This means that as long as the employee is earning at least $744 per week ($37 , 440 annually), is not paid hourly, and is not engaged in creative duties, these employees are likely exempt from overtime pay requirements. There are also other exceptions for outside salesman and those involved in teaching or the professional duties under federal law.
Delaware overtime laws apply to most employees working for Delaware employers. Whether the employer is a private or public employer, as long as the employee works for a permitted employer, the Delaware overtime laws will apply.
Delaware Laws vs. Federal Overtime Laws
In examining the nuances of overtime regulations, it is crucial to understand the differences and areas of convergence between state and federal laws. While many states, like Delaware, align closely with federal standards, there are notable deviations that could be significant depending on your particular circumstances.
In Delaware, the law aligns closely with the Fair Labor Standards Act (FLSA) in its fundamental principles, including the identification of employees who are exempt from overtime and the establishment of the 40-hour workweek as the threshold for defining overtime. The key factors that define the applicability of Delaware state law to your situation include:
(i.) whether your company is a covered employer under the FLSA,
(ii.) whether your employee is entitled to overtime under federal law,
(iii.) whether your employee is entitled to overtime under Delaware law, and
(iv.) whether your organization is a type of employer whose employees are not covered by either federal or state law.
Unlike federal law, Delaware law does not require your company to maintain any records of employee hours worked: if you don’t maintain records in the ordinary course of business, as a practical matter you may have no way of proving that your employee did not work more than 40 hours to trigger overtime under the Delaware law. On the other hand, Delaware law does not have a de minimis damage provision, so a less than half hour of overtime could be actionable under Delaware law. Delaware law allows an employer to offset over time compensation due to an employee under state law for an overpayment due to the employer’s clerical or comparable error.
If your organization is a company engaged in commerce (including a business that is part of a closely related chain of two or more businesses that together have an annual gross volume of sales made or business done of at least $500,000), your employees typically will be covered by the FLSA.
If your company is not otherwise covered by the FLSA and you employ creative artists in the motion picture or film industry, your company is a motion picture studio and your employees will be covered by the FLSA if your employees are involved in physical production of films or videos or incorporated into an exhibition during the principal photography.
Who Is Eligible for Overtime Pay?
The general test of eligibility for overtime pay assumes the following four conditions: (1) The employee must be a "nonexempt" employee so that overtime pay laws apply; (2) The employee needs to work more than 40 hours per week; (3) The work performed is not exempt from overtime pay; and (4) The employment is an included type of business under overtime laws. Who is nonexempt? Generally, employees who are "white collar" workers in salaried positions and who are supervisors and managers, including professional and administrative workers, are generally considered to be exempt managers even when they spend significant time performing non-managerial or non-professional work. This general rule does include supervisors whose performance management duties are minor in relation to their other job duties. For example, a manufacturing plant manager with significant responsibilities and control over his facility who manages professional, administrative, and hourly employees is likely to be exempt from the overtime provisions while an hourly shift supervisor who has only minor responsibilities such as scheduling and assigning work is likely to be "nonexempt" and entitled to premium pay for overtime hours worked. In addition to the definition of exemption, overtime premiums apply only after 40 hours of work have been performed in a single workweek. Consequently, an employee under Delaware law who is considered to be nonexempt and who works more than 40 hours will be entitled to overtime pay for that work week. As discussed below, employers should be aware of non-typical work schedules and variations in days worked and the impact those variances have on overtime calculations. Delaware overtime pay includes employees in the following job categories and industries:
How Is Overtime Pay Calculated?
The calculation of overtime pay in accordance with Delaware law is not quite as straightforward as it would seem on the surface. Indeed, even where an employee is entitled to overtime, determining exactly what the employee is owed can require more than a simple calculation.
The first step in determining whether an employee has been paid the full amount of overtime that he or she is owed is determining whether the employer has paid the employee for all hours worked under Delaware law. The concept of an "hour worked" is broadly defined and includes:
Decision of Blethen v. City of Wilmington, 1995 Del. Super. LEXIS 173, May 15, 1995.
Once the "hours worked" have been determined the "regular rate of pay" must be calculated. Under the FLSA, employers can exclude certain "extravagances" in fringe benefits from the calculation of the "regular rate of pay" but the exclusion must be agreed upon by both the employee and the employer. See, Decastro v. New York City Dept. of Corr., 558 U.S. 98, 104 (2010). Delaware, however, provides no such exclusions and the only adjustment that can be made to the regular rate of pay for the purposes of calculating overtime are those made by statute. The statute adjusting the regular rate of pay for the purposes of overtime in Delaware is the Second Injury Fund Assessment set forth in 19 Del. C. § 2363. Id. Thus, under Delaware law, the calculation of overtime must be done by multiplying the employee’s "regular rate of pay" by 1.5 and then multiplying that number by the "overtime hours worked" as follows:
Regular rate of pay x 1.5 x Overtime Hours Worked = Overtime Pay Due
If the employee is covered by the federal overtime law and Delaware law, the employer can simply multiply the overtime hours worked by the greater overtime rate. For example, if an employee’s regular rate of pay is $10 and the employee earns overtime under both the FLSA and Delaware laws, the employee’s overtime rate of pay would be $15 (1.5 x $10 = $15). If the employee’s regular rate of pay is $10 and the employee only earns overtime under Delaware laws the employee’s overtime rate of pay would be $10.23 (19 Del. C. § 2363) ($10 x 1.5 ÷ 0.982 = $10.23).
If the employee is subject only to Delaware’s overtime law and not the FLSA, the employer should make two calculations, i.e., one under the FLSA and one under Delaware law, and pay the employee the amount which yields the greater recovery. Whereas Delaware’s regular rate of pay statute is indexed, meaning the amount will increase every year, the DOL’s regular rate of pay under the FLSA has remained unchanged since the early 1970s.
An employer must be aware that the 40-hour work week in Delaware is not necessarily 8 hour-days, meaning overtime may be owed for hours worked on a weekend if the employee surpasses 40 hours worked. Additionally, if the employee reaches the 40-hour work threshold at encumbered overtime, then the employee is entitled to overtime for the encumbered overtime, Enty v. Kyger, 387 F. Supp. 2d 548, 550 (M.D. Pa.), the employer may be required to consider a work week in its entirety, In Re: Carmichael, M.D., Inc., 2005 U.S. Dist. LEXIS 4051 (E.D. Pa. 2005), and the employer may be required to make payment for "donning and doffing time" and "compensable waiting time," Conopco, Inc. v. N.L.R.B., 108 F.3d 178, 180 (3rd Cir. 1997).
Exemptions to Delaware Overtime Laws
Exempt from the overtime rules are the following classes of workers: (1) employees employed in a bona fide executive, administrative, or professional capacity; (2) employees subject to Section 213(a)(6) of the FLSA; and (3) employees of certain institutions and a number of other types of employers as set forth in Section 302(b) of the regulations – 29 C.F.R. 778.1(a), 778.2 (1981). Such exemptions are commonly referred to as the "white-collar exemptions," and apply to certain executive, administrative, and professional employees as defined by DOL. Accordingly, workers in these categories are not entitled to overtime pay as is mandated by the statute for non-exempt employees, i.e., non-executive, administrative, or professional employees.
As for categories of workers who may evade the overtime requirements based on either collective bargaining agreements or under the provisions of the FLSA itself, these include: (1) seasonal workers who are engaged in amusement or recreational establishments; (2) employees of a small number of businesses engaged in the operation of public entertainment facilities; (3) employees of certain retail establishments; (4) certain employees of hospitals and educational institutions; (5) employees engaged in the operation of certain farms in Delaware; (6) employees engaged in the operation of paper mills; (7) employees in agriculture; (8) employees in certain small businesses; and (9) employees in the District of Columbia who work on businesses or establishments with an annual gross sales of not less than $1,000,000. (All of the above exemptions are set forth in Section 303(a) of the regulations, see 29 C.F.R. 778.1(a), (e), (g) (1981). See also Section 606 of the FLSA, 29 U.S.C. § 206, (d) (exempting certain employees of schools, colleges and universities from the overtime provisions of the FLSA)).
Recent Developments in Delaware Overtime Laws
Recent Changes to Delaware Overtime Laws
Delaware updated its overtime laws in August 2014. One of the primary changes of the law was that the minimum amount that employers could pay their workers to be exempt from overtime increased to a weekly salary of $684. This change affected workers who were considered salaried and who were previously paid less than $684 per week, or $35,568 annually. These changes brought Delaware’s overtime policies more in line with the federal government’s , as the federal government had increased the federally mandated minimum salary for exempt workers from $455 to $684 in 2019. Delaware’s salary increase did not go into effect until 2020, making Delaware’s 2019 requirement of $455 lower than the federally mandated requirement.
These changes to Delaware’s overtime laws did not affect cases that were already pending before the Delaware Department of Labor or courts. The new law only applied to those claims filed after August 2014, when the law changed.
Employer Obligations Under the Law
As employees begin arriving at workplaces this morning, Delaware employers are reminded of their obligations under the state’s overtime law to pay time-and-a-half for those non-exempt workers who work in excess of 40 hours per week. Of course, as any employer can attest, it is not as easy as that. For example, an employer must be cognizant of how "workweek" is defined, and what hours are not necessarily included in that calculation (such as paid holidays or paid sick time). Moreover, employers must be aware that payment must be made in "lightning speed"-or else they risk penalties under state law. Finally, employers must be diligent in how they track and maintain the records of its employees, as all violations are concentrated on this area.
"[O]verall what we found, was that clearly, employers simply do not follow the state’s overtime laws. They make a lot of mistakes," stated the state labor commissioner, in a recent press conference.
What are the takeaways to help employers avoid being a "top target"?
First, employers should be mindful of the state’s definition of "workweek." The state defines "workweek" as "a fixed and regularly recurring period of seven consecutive days." 19 Del. C. § 901(27). A workweek will be a fixed period of time, regardless of the individual worker’s schedule. While an employer can establish its schedule, this workweek may not exceed 168 hours, or seven 24-hour days. Additionally, at least one day must be included in the defined workweek. 19 Del. C. § 904(e)(6).
Second, unless otherwise directed by the employee, all time shall be paid to the employee within one (1) working day after any regular payday. 19 Del. C. § 1103.
Third, an employer must maintain an accurate record of each employee’s hours worked, and wages paid. 19 Del. C. § 708(b) ("Delaware law expressly requires employers to maintain true and accurate payroll records."). This record must contain the following information:
Finally, employers should understand that violations in this area will draw the most attention. For instance, the state Department of Labor has made a large effort to count timecards as being a "payroll record." 19 Del. Admin. C. 701-3.3 (timecard is an employee’s "true and accurate payroll record."). Thus, employers should be especially vigilant of this department’s (and the state’s) concern with keeping an accurate record.
What Are My Rights as an Employee?
If an employee believes that he or she has been deprived of overtime wages, a number of recourses are available under the Delaware law. If the employer fails to pay wages of one or more employees for any workweek, failing to pay overtime wages owed from a planned or contemplated workweek, "the employee may recover the unpaid wages due at law or in equity, and with or without liquidated damages." The employee is further entitled to recover reasonable attorney’s fees and cost from the employer. Thus, the Delaware overtime statute contemplates the payment of both back wages and liquidated damages to an employee, which is awarded at the court’s discretion. Delaware courts, however, have made clear that once liquidated damages are awarded, they cannot be reduced or eliminated "even if the court subsequently finds that the employer acted reasonably, and that he did not willfully underpay the employee, in general, because I must presume that Congress intended to act as a substantial deterrent against the willful underpayment of wages."
In addition to the awarded damages and attorney’s fees, the employer "may be fined by such amount as the court deems proper, not exceeding $100 for each offense." However, as with liquidated damages, "Congress has directed that no fine shall be assessed against an employer for a violation under [the statute] in any case where the employer shows to the satisfaction of the court that the act or omission giving rise to the action was in good faith, and that he had reasonable grounds for believing that his act or omission was not a violation of the act." In summary, rather than limiting recovery to back overtime dues, the state overtime law creates a cause of action to recover back wages and an additional penalty of $100 for each offense. Both remedies, though, are subject to the employer showing that it acted in good faith. As remedies differ, these policy considerations may prompt different strategies for invoking the statutes.
Common Misconceptions and Challenges
Employers and employees both face familiar challenges and misunderstandings when it comes to Delaware overtime and wages under 19 Del. C. § 904 et seq. Given the complexity of Delaware law, as well as the variety of federal laws that address the issue, it is not surprising that violations of Supreme Court precedent on overtime requirements under the Fair Labor Standards Act (FLSA) are as common as they are. It doesn’t help, either, that Delaware wage laws govern certain occupations not covered by the FLSA and vice versa.
Many employers may wrongly presume that the FLSA governs all their employees. This is not so with Delaware, and often catches employers by surprise. Typically, employers encounter two scenarios where workers are not protected by the FLSA: Outside salespersons, who are often misclassified as exempt from overtime and paid straight commission, and agricultural workers, such as landscapers and farm hands, whose frequent off-the-clock work goes unreported and unpaid.
Employers who do pay workers for overtime hours must take care when calculating their weekly hours. Harried managers who , for example, enter a start time of 8 a.m. rather than 8:10 a.m. can be in for a rude awakening when they find they are now liable for unpaid overtime, since the company has made a false record of daily hours worked. Even if the monitoring and recording of hours is accurate, there are multiple ways to miscalculate the final weekly result. Errors potentially occur when the company incorrectly prorates the salary, adds in stipends or computes the rate of overtime to determine the amount due. The single most common mistake employers make, though, is failing to include any extra time a worker may have been required to work or was permitted to work but not required to do so. Supervisors and managers frequently do not consider that when they ask a subordinate to perform work beyond their usual hours, that person is not being "punished" or given extra work that is unbeneficial to the employer, but rather, is fulfilling a direct work requirement.