Posts Tagged ‘Wage and Hour’

Wage and Hour Issues: Allowed Deductions From an Exempt Employee’s Salary

Thursday, August 7th, 2014

In today’s video blog, CAI’s Senior Executive of Government Relations and member of the Advice and Resolution team, George Ports, discusses allowed deductions from an exempt employee’s salary. George starts with a reminder: exempt employees are paid on a salary basis. Deductions are allowed but are limited. George shares an example in the video.

Another question that George explores is whether an employer is allowed to suspend an exempt employee without pay for violating a major work rule. He says the answer is yes, but the work rule must be major. He gives suggestions of what counts and what doesn’t.  George points out several scenarios that illustrate why you would have to pay an employee based on when he or she was suspended.

George offers additional deductions that can be made to an exempt employee’s salary in the video. One of the deductions he explains is the entire week concept. If there is not work completed by the employee in an entire week, the employer does not have to pay the employee for that week. Highlighting today’s technology, George emphasizes that if an employee is responding to emails or voicemails during this week, the entire work week exception is invalid.

Improper deductions from an exempt employee’s salary can destroy the exemption status for that employee and the exemption status of employees in that same classification, George says in the video. He also lists deductions that an employer is not allowed to take from an exempt employee’s salary.

If you have any questions about wage and hour regulations, please call CAI’s Advice and Resolution team at 919-878-9222 or 336-668-7746.

Wage and Hour Law – Lectures, Seminars and Meetings

Thursday, May 1st, 2014

In today’s post, John Gupton, CAI’s General Counsel and HR Advisor on CAI’s Advice and Resolution Team, shares important information about wage and hour compliance.

john g editUnder the Fair Labor Standards Act (FLSA), an employer must pay its employees at least the minimum wage for all hours worked, and time and one-half overtime pay based on an employee’s regular rate of pay for all hours worked in excess of 40 in a workweek unless the employee is exempt for some reason. The time an employee spends in meetings, training, attending a class or course, or attending a workshop may or may not be hours worked based on the circumstances and under certain conditions.

Employee attendance at meetings, lectures, training programs and similar activities need not be counted as working time if the following criteria are met:

  • Attendance is outside the employee’s normal working hours;
  • Attendance is voluntary;
  • The course, lecture or meeting is not directly related to the employee’s job; and
  • The employee does not perform any productive work during such attendance.

Attendance is not voluntary, of course, if it is required by the employer. It is not voluntary if the employee is given to understand or led to believe that his or her present working conditions or the continuance of his or her employment would be adversely affected by nonattendance.

The training is directly related to the employee’s job if it is designed to make the employee handle his or her job more effectively as distinguished from training him or her for another job, or to a new or additional skill. Where a training course is instituted for the purpose of preparing for advancement through upgrading the employee to a higher skill, and is not intended to make the employee more efficient in his or her present job, the training is not considered directly related to the employee’s job even though the course incidentally improves his or her skill in doing his or her regular work.

Of course, if an employee on their own initiative attends an independent school, college or independent trade school after hours, the time is not hours worked for the employer even if the courses are related to the employee’s job.

Additional information regarding wage and hour issues will be shared at the 2014 Employment and Labor Law Update. The conference will take place at the McKimmon Center in Raleigh on May 14 and May 15. In addition to wage and hour compliance, , presenters will cover immigration law, NC legislature, ADA, minimizing lawsuits, protecting proprietary information, and more. Register today at www.capital.org/lawupdate.

Cash Shortage Deductions from Commission Payments

Thursday, April 3rd, 2014

CAI’s Advice and Resolution Team answers several questions from members daily. Many questions the Team receives deal with Wage & Hour issues and what is right under the Fair Labor Standards Act (FLSA) Here’s a recent question the team received:

George Ports, Senior Executive and HR Advisor

George Ports, Senior Executive and HR Advisor

Are Employers Allowed to Deduct Cash Shortages from a Salaried Exempt’s Commissions?

In today’s post, Advice and Resolution Team Member George Ports offers guidance for this employer question:

According to the US Department of Labor’s Wage & Hour Division, cash shortage deductions from commission payments made to salaried exempt employees would not affect their exempt status under section 13(a)(1) of the Fair Labor Standards Act (FLSA) as long as the affected employee meets both the duty and the guaranteed salary level tests required.

An employee will be considered to satisfy the salary level test if the employee is paid on a salary basis at a rate of not less than $455.00 per week. The salary basis test is met if the employee regularly receives each pay period “a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed.” An exempt employee must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked. [Note: There are limited exceptions regarding deductions from exempt pay. For more information, go to http://j.mp/ex-su.]

An employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis. Thus, for example, an exempt employee guaranteed at least $455 each week paid on a salary basis may also receive additional compensation of a one percent commission on sales.

An exempt employee may receive a percentage of the sales or profits of the employer if the employment arrangement includes a guarantee of at least $455 each week paid on a salary basis. Similarly, the exemption is not lost if an exempt employee who is guaranteed at least $455 each week paid on a salary basis also receives additional compensation based on hours worked for work beyond the normal workweek. Such additional compensation may be paid on any basis (e.g., flat sum, bonus payment, straight-time hourly amount, time and one-half or any other basis), and may include paid time off. In other words, additional compensation paid on any basis besides the guaranteed salary is not inconsistent with the salary basis of payment.

Wage and hour regulations require only that exempt employees be paid a guaranteed salary of at least $455 per week, and any additional compensation above this salary amount is generally something that may be agreed upon between the employer and the employee. The prohibition against improper deductions from the guaranteed salary does not extend to any such additional compensation provided to exempt employees.

Cash shortage deductions, therefore may be made from a salaried exempt employee’s commission payments without affecting the employee’s exempt status as long as the commission payments are bona fide and are not paid to facilitate otherwise prohibited deductions from the guaranteed salary.

If you have wage and hour regulation questions, please contact a member of CAI’s Advice and Resolution Team at 919‑878‑9222 or 336‑668‑7746.

Wage and Hour Compliance: Look Out, Here Comes 2014!

Thursday, December 19th, 2013

This is a guest post from Diane Aull. Diane is the Website Manager for Acroprint Time Recorder Company and editor of their Time for Business blog.

2014 wage and hour“Forewarned is forearmed,” goes the old saying. And it’s definitely true where wage and hour law is concerned. To minimize our wage and hour liability, what issues should we be focusing on for 2014?

Worker Classification

For several years now, various agencies have been on alert for employees who have been misclassified as “independent contractors.” All indications are this will continue to be a big issue in 2014.

There are powerful incentives for employers to classify workers as contractors, including savings on taxes, paperwork reduction and more. But strict criteria must be met for that classification to be valid. A significant number of so-called “contractor” positions don’t meet the standard.

Since 2011, the IRS and 15 states have signed on to the Department of Labor’s Misclassification Initiative, agreeing to share information, leads and referrals with each other to help catch employers who misclassify their workers. New York was the most recent addition, signing on to the Initiative in November 2013. The DOL continues to promote the initiative, and more states are expected to sign up in the future.

Action item: If you have any workers you currently classify as contractors, carefully review their situation to make sure that classification is correct.

Internships

Several lawsuits were filed in 2013 on behalf of unpaid interns, claiming they were actually performing compensable labor and should have been paid. In most cases, the courts ruled the interns were right — they were actually serving as unpaid employees and should have been compensated.

Because of the publicity these cases received, we can expect more such cases to emerge in 2014.

Just as with worker classification, there are strict criteria that must be met in order for someone to be classified as an unpaid intern. If the “internship” doesn’t meet those criteria, the workers must be paid at least minimum wage.

Action item: Don’t count on unpaid interns as a source of free labor. Your best bet to avoid potential liability is to pay interns at least minimum wage.

Off the Clock Work

Mobile devices — such as smartphones and tablets — are incredibly convenient but open employers to potential liability. If employees use their mobile device to check email or do a bit of work outside the office, they must report their hours and you must pay them for that time.

Whether employees neglect to report time because they mistakenly believe they’re doing the business a “favor,” or they fail to report time because it’s simply too inconvenient — either way they’re opening your business up to potential liability. All it takes is one disgruntled worker complaining to the state or federal labor department, and you could find yourself on the hook for thousands of dollars in unpaid overtime.

Expect this to become a bigger issue in 2014, as mobile devices become less expensive and their usage more widespread.

Action items: Prohibit off the clock work. If you allow employees to work outside the office, provide an easy method for them to record their hours. Be sure to pay them for all their work time.

Class Actions

We’ve heard a lot of good news (and a bit of bad news) in the area of class actions over the past few years.

Good news: it’s become harder to certify large class action lawsuits. One quarter of these suits now involve classes of fewer than 1,000 plaintiffs.

More good news: according to a study compiled by NERA Economic Consulting, the total dollar amounts of class action settlements have declined from their high in 2007, actually stabilizing over the past several years.

Bad news: the average settlement amount is still nearly $5 million each.

Action items: About 39% of class action suits involve overtime, while missed lunch breaks, misclassification and off-the-clock work comprise 16% to 18% each. Focus on these areas to get the biggest bang for your buck.

You may also wish to include an arbitration clause in your employee handbook or employee agreements. Properly worded, an arbitration agreement can forestall most class action cases. Don’t try to “do it yourself” here. Consult your employment law attorney to ensure the clause is valid and enforceable.

Conclusion

When in doubt, consult your employment law attorney to ensure your policies and procedures are up to date with the latest developments.

Class action suits continue to pose a threat to businesses in 2014 and beyond. Unpaid overtime represents a huge risk. Having an accurate and reliable time tracking system has become imperative to protect your business against overtime claims. Make it as convenient as possible for workers to report their time, no matter where the work is performed.

Finally, make sure your employees understand the importance of reporting all the time they work, and pay them properly for all reported time. With vigilance, strong procedures and effective enforcement, you can minimize your risk.

Acroprint offers a full range of workforce management products including the timeQplus Product Suite, Pendulum workforce management software and AcroTime, their flexible and powerful cloud-based solution.

Workplace Insights is taking a break during the holidays. Check out a new post on Thursday, January 2, 2014. Enjoy the holidays and have a Happy New Year!

Photo Source: danielmoyle

Working While on a Leave of Absence

Tuesday, August 20th, 2013

Pat Rountree 5x7 300dpiCAI’s Advice and Counsel Team answers several questions from members daily. The team often receives questions concerning leaves of absence, such as this one:

Should we allow employees to work from home while on a Leave of Absence?

In today’s post, Advice and Counsel Team Member Pat Rountree offers guidance for this employer issue:

There are several considerations in answering this question:

1) Most importantly, what are the employee’s medical restrictions while on leave and what is your policy?

You do not want to require or allow the employee to perform any work that would violate their medical restrictions. If they want to continue to work on projects at home, monitor emails to keep up with what is going on, or manage employees remotely, it will be determined by your policy/practice if the work is within their restrictions. It will also depend on their job and whether work from home is possible during leave.

2) Is the employee exempt or non-exempt?

If they are exempt and on unpaid leave, under wage and hour laws, you may be required to pay them for the entire week if they work any part of the week unless they are on FMLA (the only time you can pay only for hours worked for partial days) or there is available a permissible deduction for a full day’s absence (not a partial day absence).

If they are non-exempt and you allow them to work they must track, and you must pay them for, all hours worked.

3) Are they on company-paid leave (salary continuation, exhausting paid time under an FMLA policy, etc.)?

If they are on company-paid leave, they are being paid by you so there is no Wage and Hour violation if they work.

4) Are they receiving third party payments (short-term disability or Workers’ Compensation)?

If so, supplemental pay may affect their eligibility for third party payments. Check your disability insurance plan document to see if this is allowed. If on Workers’ Compensation leave, you would report any earnings.

Remember, if the employee is on a company leave of absence, the employee must volunteer to work and it must be approved by management. However, if the employee is working while on a leave of absence, then, in reality, they are not on a leave of absence but working remotely. This may have other unforeseen implications, for example, if out on a FMLA absence, the time they are working should not count against the employee’s FMLA time.

If you have questions regarding leaves of absence, please contact a member of CAI’s Advice and Counsel Team at 919‑878‑9222 or 336‑668‑7746.