As performance and compensation specialists HRN Performance Solutions works with nearly 1000 clients annually to ensure they are paying their workforce according to current market rates for location, industry, employee position, responsibility and performance level. I know from firsthand experience how important it is to a company to manage workforce compensation cost, both from a fiduciary/competitive responsibility but also from a workforce retention standpoint. Companies don’t want to lose top performers. Why then do we continue to see that companies will invest in paying HR consultants to provide and analyze salary survey data and advise them on compensation matters but will be completely in the dark when it comes to basic payroll matters such as overtime or exempt vs. non-exempt classification.
For example, Corporate Counsel magazine recently reported that the number of wage and hour lawsuits filed against employers in federal court have increased for the fifth straight year. Claims are up 10% over a twelve month period measuring part of 2012 and three months of 2013. Typically, these are claims brought under the Fair Labor Standards Act (FLSA) involving misclassified employees seeking overtime pay, hourly workers claiming they were not paid for all hours worked, or restaurant workers claiming they were not properly paid under tip credit rules. Wage and hour claims can also result from state law issues. For example, a national coffee company recently had to pay $3 million for allegedly not providing California employees with required meal breaks and for issuing inaccurate wage statements.
I don’t mean to suggest that the ‘rules’ for payroll matters are easy to understand and apply. They vary by state and in some instances the language is difficult to understand and can be open to interpretation. However when headlines such as those made by the national coffee chain noted above become commonplace, as they are today, doesn’t it make sense to review all wage and hour pay policies for overtime, breaks, tips, position classification, etc. with an experienced legal advisor to avoid very expensive and negative litigious legal proceedings. Employees are much better informed today and jury’s are historically sympathetic to the worker vs. employer during periods of economic challenge and high unemployment. As the saying goes . . . an ounce of prevention . . .
It’s that time of year…chestnuts roasting, festive decorations and holiday or year-end bonuses. Of course, that means it is also that time of year for employers to remember that
bonuses must be counted as part of the compensation on which nonexempt employees are paid overtime. This is required by the Fair Labor Standards Act (FLSA), unless the bonuses are completely discretionary both in terms of amount and whether they will be given at all. Thus, for example, a bonus based on productivity that is determined by the employee’s action in meeting set goals must be rolled into the employee’s total compensation on which overtime is paid. In contrast, a holiday bonus paid at management’s discretion alone with the amount also left to management discretion need not be included as part of employee compensation when determining overtime pay. Keep this in mind, lest your holiday “Ho-Ho-Ho” is drowned out by an unwanted visit from the “D-O-L”.
For the past three years, the Chicago Police Department has handed powerful new tools to officers in the field—BlackBerry smart phones. But the BlackBerry may have backfired on the department, which is now being sued by a sergeant in the gang investigations unit for the overtime he claims he earned while using his smart phone off the clock.
The department “has willfully violated the FLSA [Fair Labor Standards Act] by intentionally failing and refusing to pay Plaintiff and other similarly situated employees all compensation due them under the FLSA” for their after-hours Blackberry use, Sgt. Jeffrey Allen said in a suit filed in May as a proposed class action. A judge has to certify the case as a class action for it to proceed.
The case is one of a handful nationwide in which employees have claimed overtime pay for smart-phone use—and apparently the first involving public employees. But lawyers say such cases are a clear warning to employers to put a smart-phone usage policy in place before they end up in potentially costly litigation. Smart phones “are very dangerous and risky for nonexempt employees to have if you’re worried about overtime,” says Jeremy A. Roth, a partner at San Diego law firm Littler Mendelson.
“Clearly there’s a tremendous benefit to being able to access work remotely,” says Howard S. Lavin, an attorney at the law firm Stroock & Stroock & Lavan in New York. “It’s a fabulous tool. The problem is when you take technology and apply it to longstanding laws, there are unintended consequences.”
Employers can minimize the risk of litigation by restricting smart-phone use to exempt employees or by instructing nonexempt employees to take calls from customers or clients only during regular work hours.
Under the FLSA, nonexempt employees are entitled to overtime compensation for “time spent working” beyond a 40-hour workweek. An employee does not even need to be required by the employer to work overtime but must merely do so for the employer’s benefit.
Source: Mathew Heller, workforce.com, Sept. 2010
Mortgage Loan Officer Doesn’t Meet Administrative Exemption
Your World Just Got More Confusing
As if your HR world isn’t perplexing enough, the Department of Labor (DOL) has abandoned its former position (Opinion Letter, FLSA 2006-31) that mortgage loan officers could potentially qualify as exempt employees under the Administrative test of the Fair Labor Standards Act. In a new “Administrator’s Interpretation” the DOL concludes that the earlier Opinion was based on an inappropriate assumption, that mortgage loan officers provide work directly related to an organization’s business operations. The consequence for employers is that mortgage loan officers will generally be required to be treated as nonexempt and paid overtime.
It’s not all bad employment news this week. Nor is it bad news for workers who have a grievance against their employer and plan to file a wage related complaint. The Department of Labor’s Wage and Hour Division is hiring . . . in fact they will be adding 250 investigators, a staff increase of more than a third, announced U.S. Secretary of Labor, Hilda L. Solis.
Solis made the announcement after the release of a Governmental Accountability Office (GAO) report that found the department’s system for receiving and responding to wage and hour complaints is ineffective and discourages wage-theft complaints.
Of the 250 new investigators, 100 will focus on contractor compliance under the American Recovery and Reinvestment Act, the economic stimulus package.
Think you are safe from California’s employee-friendly labor laws just because some of your employees who sometimes work there don’t actually live there? Think again!
Like Dickens’ Ghost of Christmas Present, California’s laws may come to haunt you in the here and now if you’re not careful. A recent decision from the federal appeals court with jurisdiction over California has ruled that California’s overtime laws may apply to employees who lived in Arizona and Colorado, but who worked for temporary periods of time in California.
The employees were trainers for a large computer company who trained California clients for time periods ranging from several weeks to several months. Their employer also had a corporate presence in California and other employees who lived and worked there.
The federal appeals court concluded that these facts were enough to subject the visiting employees to rules like daily overtime pay for work in California of a day or longer. Consider the implications of this decision as you send your employees off to work in California.