There Is No “Industry Standard” Defense To Overtime Claims

In overtime cases, I occasionally have employers try to justify their nonpayment of overtime by arguing that “no one else pays overtime to these types of employees, so why should I?”  That “industry standard” argument doesn’t work.  It’s been rejected by numerous federal courts over the years.

This argument’s sort of like getting stopped for speeding and arguing that you shouldn’t get a ticket because everyone in front of you was speeding too and none of them were stopped.  Well, sorry, the courts have made clear that there is no “industry standard” defense to overtime claims.  The fact that everyone may not be paying overtime to a certain type of employee or that no one’s been dinged on an overtime case for that sort of employee yet does not give your employer a free pass.

Otherwise, this would be great for employers — An entire group of employers could get together and decide that none of them will pay overtime to a certain type of employee, say computer technicians, thus creating the industry standard.  Then, when a computer technician claims that overtime should be paid and sues, the employer can argue that its self-imposed “industry standard” forecloses the claim.  That’s one reason why courts have declined to ever recognize an “industry standard” defense in overtime cases.

Another reason why courts reject an industry standard defense in overtime cases is that an employee’s entitlement to overtime and employer’s liability for liquidated (penalty) damages are supposed to be determined on an employer-by-employer, employee-by-employee basis.  Determining whether an employee should have received overtime pay requires an analysis of that employee’s specific, actual, individual job duties for the employer.  And evaluating whether an employer should be hit with liquidated damages for failing to pay overtime when it should have implicates that specific employer’s decisionmaking process concerning whether it should pay overtime to certain employees.   Industry standards are irrelevant to those case-by-case, specific inquiries.  In fact, one federal court of appeals upheld an award of liquidated damages against an employer precisely because that employer relied on “industry standards” and nothing more and did not conduct an independent analysis of its own in concluding that an employee was not entitled to overtime.


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