Transcript What Wage & Hour Issues are Lurking in 2014?

Monsters of the Deep:
Lurking Wage & Hour
Issues for 2015?
Biggest FLSA “Monsters”
• Defining “employee”
• Defining “employer”
• Defining “work”
• Calculating overtime
• Misclassifying employees as exempt
• Blowing legitimate exemptions by not following
the rules
• The arsenal of “enforcement” weapons available
Basic Definitions
Employee: Any individual employed by an
employer
Employ: To suffer or permit to work
Employer: Any person acting directly or
indirectly in the interest of an employer in
relation to an employee
Application of Minimum
Wage & Overtime provision
Individual Employees
• Engaged in commerce or production of goods for commerce
• Employed in an enterprise engaged in commerce or
production of goods for commerce
What is an enterprise engaged in commerce?
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Has at least employees engaged in commerce, and
Has annual gross sales of $500K or more, OR
Is a medical facility, nursing home, school, or preschool, or
Is a public agency
Commerce is between an individual state and any other
place outside of that state
Are these employees?
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Interns
Volunteers
Independent Contractors
Cheerleaders
Student athletes?
Are Interns Employees?
Are Interns Employees?
• Is training similar to that given in a vocational
school?
• Is training for benefit of trainees (vs. employer)?
• Does the trainee displace a regular worker or
instead work under close observation?
• Does the employer receive any immediate
advantage from the actions of the trainees?
• Are trainees entitled to a job at the conclusion of
the training period?
• Do all parties understand that the trainees are
not entitled to wages for time spent in training?
Plus or Instead: Totality of Circumstances
Are Volunteers Employees?
Excluded by statute:
• Volunteers for public agencies excluded
by statute
• Volunteers for non-profit food banks
Per Department of Labor -3 part test:
– Freely donate services
– Only for religious, charitable, or other
non-profit organizations
– No expectation of pay
Courts will also look to economic reality
Independent Contractors
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Economic Realities Test
Degree of control
Worker’s opportunity for profit or
loss
Worker’s investment in business
Degree of skill required
Permanency of work relationship
Extent to which work performed
is integral part of employer’s
business
Independent Contractors
IRS 11 Factor Test
• Instructions business gives the
workers
• Training business gives the worker
• Unreimbursed business expenses
• Worker’s investment
• Services available to relevant market
• How business pays
• Realize a profit/loss
• Written contracts
Independent Contractors
IRS 11 Factor Test, cont.
• Employee-type benefits
• Permanency
• Aspect of the regular business of the
company
Bottom Line: Control
Independent Contractors
Liability for Misclassification
• Wages (Min Wage/OT)
• Benefits & Other Legal
Employee Protections
• Taxes
– Unemployment
– Workers’ Compensation
– Taxes
• Penalties
– DOL, IRS, and State
What about Cheerleaders &
Student Athletes?
Who is an “employer”
“Any person acting directly or indirectly in the
interest of an employer in relation to an
employee”
What about . . .
• Franchisors
• Successor entities
• Individuals
Who is an Employer?
Economic Realities Test
Does the alleged employer have the
ability to . . .
• Hire/fire
• Supervise and direct employee work
• Determine rate/method of payment
• Maintain employment records
Application of test to franchisors,
successor entities, and Individuals
The Difficulty in Defining “Work”
Taking a Closer Look at:
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Travel
Training
Remote Work
Changing Clothes
Standing in Security Line?
Eating, Sleeping, & Other Breaks
Rounding
When is Travel “Work”?
• Home to Work
– Typical commute
– When travel is “integral and
indispensable” to principal work activity
• Home to Work on Special Day
Assignment in Another City
• Travel all in a Day’s Work
• Travel Away from Home Community
– Time of Day Traveling
– Mode of Travel
When is Training “Work”?
Default is that training is work except when:
1. It occurs outside normal working hours,
2. Attendance is voluntary,
3. Training does not directly relate to
employee’s job, and
4. Employee does not perform any
productive work during training
“Working” Remotely
• Regular rules apply to work performed at
home
• De Minimus exception:
– Practical difficulty in recording time
– Aggregate amount of compensable time
– Regularity of additional work
• “Home worker” exception:
– Employee has periods of complete freedom
– Reasonable agreement re: hours worked
Changing Clothes/Security Lines
Portal-to-Portal Act: Time spent on incidental
activities before or after employee’s principal
activities are not “work”
• Are the activities “integral and
indispensable” to primary work activity?
– Protective clothing
– Special rule for unions with CBAs
• Exception for activities required by and
benefitting employer?
– Post-shift security screenings
Eating, Sleeping & Other
Circumstances
• General rule is meal breaks are not
“work”
– Minimum 30 minutes
– Must be completely relieved of duties
• Other Breaks
– Less than 20 minutes are paid
• Sleeping
– Up to 8 hours excluded only if not
working and employee on duty 24
hours+
A Word About Rounding
Rule: Rounding up to nearest 15
minutes okay but only if employees
properly paid for all time worked
Options
• Rounding both ways – 1-7 minutes
round down, 8-14 round up)
• Start-stop – in favor of employee on
punch in/employer on punch out
• Round in employee’s favor always
Tip – Keep Records of Actual Time Worked
When 1 + ½ doesn’t equal overtime
• Straight time/flat salaries – ONLY if
exempt
• Defining regular rate of pay:
– “per diem” payments & other
“reimbursements”
– Bonuses & Incentive Pay
– Piece-rate
– Flexible work weeks & fixed salaries
• Untimely payments
Defining Regular Rate of Pay
Rate per hour to be calculated by dividing employee’s total
remuneration (less statutory exclusions) in workweek by total number
of hours worked
Statutory exclusions
• Gifts
• Paid time off
• Expense
reimbursements*
• Discretionary
bonuses*
• Profit-sharing, thrift,
and savings plans
• Benefit plans
• Overtime Pay
• Value/Income from
stock options or
similar plans
Defining Regular Rate of Pay
A Focus on Fringe Benefits
• Per Diem
• Meals
• Parking
• Cell Phone and Other Reimbursements
Regular Rate of Pay – as Applied
Convert form of payment to hourly rate
• Piece rate
• Salary/Flat Rate
• Fixed salary for fluctuating hours (flexible
work week)
• Bonuses
• Commissions
• Two or more different rates
• When payments are other than cash
Misclassifying Employees as
Exempt
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New Managers In Training
Accounting Clerks/ Bookkeepers
Assistant Managers
Case Managers
Paralegals
Computer Technicians
Don’t forget about wage minimum and salary
basis test! It’s not just about duties.
Changes on the Way for
Exempt Employees
• Home Health Workers
• Obama’s Directive
– Minimum Salary Requirements
– “Primary Duty”
How to Lose your Exemption
in Ten Days
Improper Deductions
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Holidays/Partial Personal Days
Credit Card Fees
Lost/Damaged Equipment
Shortages
Furloughs/Closures
Uniforms
The Arsenal of Enforcement
Weapons
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Back Wages plus interest
Executives in Handcuffs
Federal Debarment (federal contractors)
Penalties & Liquidated Damages
Civil Enforcement
Questions?
Christine Cave, Esq., SPHR
(405) 702-9797
[email protected]
@okemployerlaw