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Solutions at Work Avoiding the Violations, Penalties and Lawsuits – Time to Hunker Down on the Wage and Hour Laws PRESENTED BY: David Buchsbaum.

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Presentation on theme: "Solutions at Work Avoiding the Violations, Penalties and Lawsuits – Time to Hunker Down on the Wage and Hour Laws PRESENTED BY: David Buchsbaum."— Presentation transcript:

1 Solutions at Work Avoiding the Violations, Penalties and Lawsuits – Time to Hunker Down on the Wage and Hour Laws PRESENTED BY: David Buchsbaum

2 Over 70,000 FLSA lawsuits filed nationwide since 2000 Over 22,000 of those in Florida Upward trend every year since 2007 Both individual claims and “collective actions” Same phenomenon under state and local laws The Danger Is Real

3 U.S. Labor Department USDOL hired over 350 new investigators Now trained and experienced, “true believer” mindset “We can help” program, “community outreach" USDOL/ABA “bridge to justice” program Aggressively pursuing enforcement – not assistance Adversarial, “employers-are-scofflaws” attitude Demanding, intrusive investigative approach Happy to use adverse publicity, embarrassment

4 1.Minimum wage 2.Premium pay for overtime work 3.Recordkeeping, including accurate time records 4.Limitations on the employment of minors under 18 Non-exempts may be hourly, salaried, commissioned, paid by the day, paid by the job, paid a piece-rate, or paid in many other ways, but these requirements still apply Basic FLSA Requirements

5 Minimum Wage Federal minimum wage is now at $7.25 per hour –More increases could well be on the way Florida minimum wage is now $7.79 per hour and will rise to $7.93 on January 1 –Increases every year if there is inflation Most deductions or payments cannot “cut into” the minimum wage –Examples: tools, equipment, supplies, mileage costs, shortages, uniforms, unreturned property

6 Deduction Example Alice takes a part-time job as a stagehand at The Dinner Theater, where she will be making $8.50 an hour and will be working exactly 20 hours every workweek. The only thing she doesn't like about the job is that she must buy three costumes from The Dinner Theater at the cost of $50 each, which includes a $10-per-costume profit to The Dinner Theater. The Dinner Theater is going to deduct $15 each workweek from her wages until the $150 is paid. Does this present a minimum-wage problem? In a 20-hour workweek, Alice makes [($8.50 - $7.79) × 20 hrs.] = $14.20 more than the minimum wage. A $15 uniform deduction will take her pay below the minimum wage.

7 Overtime Employers must establish and document a seven-day “workweek” Employers must pay nonexempt employees 1.5 times the “regular rate” for time worked over 40 hours in the “workweek” The regular rate is “all remuneration for employment” divided by all hours the pay covers This usually includes things like bonuses, commissions, incentive pay, and exclusions are very limited

8 Lisa is paid $8.50 an hour and is eligible for a production bonus of $100 for a workweek if she meets a certain weekly quota. In a particular workweek, she works 55 hours and meets the quota. Her total gross wages due come to: [($10.00 × 55 hrs.) + $100] = $650.00 Total ST Wages ($650.00 ÷ 55 hrs.) = $11.82 Regular Rate [($11.82 × 0.5) x 15 OT hrs.) = $88.65 OT Premium Pay ($650.00 + $88.65) = $738.65 Overtime On Bonus

9 If the bonus, commissions, or other incentive pay is not weekly, they must be apportioned back over the workweeks of the period in which they were earned Where it is not possible or practicable to allocate among the workweeks in which they were actually earned, another reasonable and equitable method must be used Allocate equal amounts to each week in the computation period Allocate equal amounts to each hour worked in the computation period Overtime On Bonus

10 Deductions And Overtime Must watch for deductions that “cut into” overtime pay The Analysis Is Different From Minimum Wage: –No part of the overtime pay may be offset by tools, equipment, supplies, mileage costs, shortages, uniforms, unreturned property, etc.

11 Deductions And Overtime Alex is paid $10.00 an hour. During one workweek, he loses a $150 tool. Alex’s employer is going to recover that sum from his pay for that workweek, in which Alex works 48 hours. The maximum amount Alex’s employer can take from his week's wages for this purpose is [($10.00 − $7.79) × 40 hrs.] = $88.40. Alex must be paid the full [($10.00 × 1.5) × 8 OT hrs.] = $120 for his overtime work. None of that amount can be withheld for the tool. If Alex’s employer wants to recover the balance of ($150 − $88.40) = $61.60, it will have to do so in one or more future workweeks.

12 Deductions And Overtime However, the U.S. Wage And Hour Division has said that it will challenge overtime-workweek deductions made even to this limited extent unless: –There is an advance agreement or understanding (to which the employee affirmatively agrees or assents) covering both the items for which deductions will be made and how the amounts will be determined, –The deductions must be bona fide ones, including that they must fall within the agreement or understanding and are not prohibited by federal, state, or local law –The regular rate is computed before the deductions are made, and –The deductions do not otherwise evade the FLSA's overtime requirements (such as where the deductions are made only in overtime workweeks )

13 “Comp Time” And Overtime SPECIAL BONUS TIP! There’s no such thing as “comp time” for nonexempt employees in the private sector! A 50-hour workweek and a 30-hour workweek are not the same as two 40-hour workweeks True even if a two-week pay period.

14 Timekeeping And Hours Worked The basic obligation: to keep accurate records of all time a nonexempt employee works each workday and each workweek This includes all time the employer knows or has reason to know the employee worked U.S. Labor department's view: don’t want to pay for the work? Prevent it from being done!

15 Timekeeping And Hours Worked “Work”: Physical or mental exertion (whether or not burdensome) that the employer controls or requires and that necessarily and primarily benefits the employer Typical trouble spots: Meals, breaks, training/meetings, remote work, travel If “rounding” is it being done properly?

16 Key Steps: –Know everything that counts as “hours worked” –Have a system and policies for capturing the time –Train non-exempt employees about them –Train supervisors/managers to enforce them –See whether the time records appear to be accurate Timekeeping And Hours Worked

17 Exempt Employees There are many FLSA exemptions, but they are strictly interpreted Specific criteria apply, and it’s the employer’s burden to prove they are met Exemptions relate to individuals – not to job descriptions, pay classifications, positions, job groups, conventional wisdom, etc. Detailed, accurate, current job information is essential Most common are the “White Collar” Exemptions

18 The exemption’s requirements: 1.“Primary duty”: Management of the organization or of a recognized unit or subdivision 2.Supervises at least two other full-time employees or the equivalent 3.Hires/fires, or makes suggestions about that or about other status changes that carry particular weight 4.Paid on a “salary basis” at rate of least $455 per week Executive Exemption

19 The exemption’s requirements: 1.“Primary duty”: Office/non-manual work directly related to management or general business operations of employer or employer’s customers 2.Work includes discretion and independent judgment in “matters of significance” 3.Paid on a “salary basis” at rate of least $455 per week (Special rules for certain employees in educational establishments) Administrative Exemption

20 The exemption’s requirements: 1.“Primary duty”: Work requiring advanced knowledge in a field of science or learning, usually gained through prolonged instruction and study 2.Work is mainly intellectual, includes consistent judgment and discretion 3.Paid on a “salary basis” at rate of least $455 per week (Special rules for teaching, practice of law or medicine) Learned Professional Exemption

21 The exemption’s requirements: 1.“Primary duty”: Work requires invention, imagination, originality, or talent 2.In a recognized field of artistic or creative endeavor 3.Paid on a “salary basis” at rate of least $455 per week Creative Professional Exemption

22 The exemption’s requirements: 1.“Primary duty”: Making sales, or obtaining orders or contracts for services or for the use of facilities for which the customer or client will pay 2.The employee is customarily and regularly engaged in this activity away from the employer's place or places of business (No pay requirement for this exemption) Outside Sales Exemption

23 The exemption’s requirements: 1.Compensation Requirement: a)Paid on a "salary basis" or a “fee basis” at a rate of at least $455 per week, or b)Paid on an hourly basis at a rate of not less than $27.63 an hour 2.Applies to computer systems analysts, computer programmers, software engineers, or other similarly- skilled workers Computer Professional Exemption

24 3.“Primary duty”: a)Applying systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications; or b)Design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; or Computer Professional Exemption

25 3.“Primary duty”: c)The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or d)A combination of these duties, the performance of which requires the same skill level Computer Professional Exemption

26 Bill is employed as an Administrative Assistant to the company’s President. He is paid on a salary basis at the rate of $750 per week. According to his position summary, his job is to troubleshoot administrative matters, to attend meetings of the company’s Board and its Executive Committee, to assist with the annual budgeting process, to provide administrative support to senior management as needed, and to coordinate activities in which the President is involved. Is Bill an overtime-exempt “administrative” employee? Exempt?

27 Job Description No. JD-04-00014 Classification: ??? Issue Date: June 24, 1996Revision Date: 1/18/00 Title: IS Coordinator JOB DESCRIPTION Basic function: Coordinate, develop, and support all plant information systems and services. Essential functions: 1.Maintain plant Local Area Network and PC software 2.Assist Company and Division IS Managers in development of an IS strategy 3.Develop and maintain full disaster recovery program 4.Support and maintain all on-site information systems hardware and equipment 5.Maintain software legality. 6.Coordinate the purchase and inventory of all information systems supplies. 7.Develop and maintain security systems for all plant information. 8.Participate in the “Ideas for Success” program. 9.Maintain appropriate records 10.Maintain a clean, safe and well organized work area. 11.Perform additional duties as assigned. Exempt?

28 “Salesmen, partsmen, mechanics” at automobile dealerships (overtime only). “Salesmen” selling trailers boats, or aircraft at dealerships (overtime only). “7(i)” exemption for certain commission-paid retail employees (overtime only). “Motor carrier” exemption: Certain drivers, drivers’ helpers, loaders, mechanics (overtime only). Some Other Exemptions

29 Child Labor The child-labor requirements are very strict The limitations are for minors under 18 Substantial monetary penalties: –Up to $11,000 for each person employed in violation –Up to $50,000 if violation causes death or serious injury (doubled if “willful” or “repeated”)

30 Child Labor 14- and 15-year-olds may be employed in very limited occupations, and only within strict hours-worked and times-of-day limitations (including on weekends) Age-18 minimum for 17 “hazardous” occupations (Examples: driving, electric meat slicers, trash compactors, paper balers) Age-16 minimum for working in general occupations Employers bear the risk of misjudging A minor’s age

31 Labor Department Audits Usually go back two years Often cover all FLSA compliance areas -- not just the issue a complainant raised Investigator's goals: future compliance, back wages Buy time to: –Evaluate where things stand –Plan strategy

32 Comply, Comply, Comply! More important than ever to be sure you have it right Right now, review your pay policies and practices Quickly consider what to do to correct any problems Be careful about how you implement the changes Compliance does not necessarily mean higher wage costs

33 Famous Last Words... Don’t fall for “conventional wisdom” –“Everybody I know of pays this way.” –“Salaried people don’t have to be paid overtime. –“This is what our employees want us to do.” –“The employee agreed to this.” –“We're too small for anyone to sue us.”

34 QUESTIONS? David A. Buchsbaum (954) 847-4730

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