Is it legal to charge overtime rates but not pay overtime to your employees?

Bibliophilia asked:

My employer just won a bid on a job where I will be working a night shift. They are charging the customer our overtime rates, but apparently won’t be paying the employees overtime pay. I was wondering if this is legal or not, it certainly feels unethical but I can’t determine if it is actually illegal. I live in Washington State, I’m not sure if this makes a difference or not.

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