Transcript Hospitality Taxes 2004

Fair Labor Standards Act
Mary Elizabeth Davis
Copyright 2005
FLSA Requirements
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The FLSA requires:
Payment of federal minimum wage for all
hours worked; and
 overtime pay for all hours worked over 40 in
a workweek
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Typically Examples of Noncompliance
in Hospitality Industry
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Failure to maintain records of, or pay overtime
to, non-exempt salaried employees.
Failure to record and pay employees for all
hours suffered or permitted to be worked.
Illegal deductions from pay for items like cash
register shortages, uniforms, errors, bad
checks, etc.
Noncompliance Issues Continued
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Tips not sufficient to make up the difference between the
employer's direct wage obligation and the minimum
wage.
Failure to pay the correct overtime rate to tipped
employees.
Failure to pay overtime for hours worked beyond 40 per
week, or averaging the hours worked over two weeks to
avoid paying overtime.
“Salaried” employees classified as exempt without regard
to the duties performed or the % of time spent on nonexempt duties.
Penalties for Violation of the FLSA
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Department of Labor
 recommend changes in employment practices to
bring the employer into compliance
 payment of any back wages due to employees
Willful violators
 criminal prosecution
 fines up to $10,000
 imprisonment for second conviction
 civil money penalties of up to $1,000 per violation
Penalties Continued
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Civil Suit
 back wages
 liquidated damages in amount equal to back pay
 attorneys’ fees
 injunctions to restrain persons from violating the
Act
Posting Requirements
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Employers must display an official poster
outlining the Act
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Local Wage and Hour Division offices
1-866-4USWage (1-866-487-9243)
http://www.dol.gov/osbp/sbrefa/poster/main.htm
Record Keeping Requirements
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Every covered employer must keep certain records
for each non-exempt worker
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no particular form
require accurate information
requires records include following information:
Record Keeping Requirements
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Full name and SSN
Address
Birth date, if younger than 19
Sex and occupation
Time and day of week when
employee's workweek begins
Daily hours worked
Total hours worked each
workweek
How wages are paid
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Regular hourly pay rate
Total daily or weekly straighttime earnings
Total overtime earnings for
the workweek
All additions to or deductions
from wages
Total wages paid each pay
period; and
Date of payment and the pay
period covered by the
payment
Retaining Records
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3 years:
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payroll records
collective bargaining agreements
sales and purchase records
2 years:
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time cards
piece work tickets
wage rate tables
work and time schedules, and
records of additions to or deductions from wages
Illegal Deductions
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If reduce wages below minimum wage or reduce
earned overtime pay:
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cash shortages
required uniforms
customer walk-outs
errors
bad checks
FLSA Overtime Requirements
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rate of at least one and one-half times
the employee's regular rate of pay
for each hour worked in excess of 40 hours
per workweek
Workweek Defined
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Period of 168 hours during 7 consecutive 24-hour
periods
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May begin on any day of the week
May begin at any hour of the day
Employees may not average hours worked during 2 or
more weeks
Hours Worked
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All time an employee must be on duty, or on the
employer’s premises or at any other prescribed
place of work
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on call time
waiting time
All time an employee is allowed, “suffered,” to
work
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lunch break
working before/after clocked out
Tipped Employees
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Employees who regularly receive more than $30 a
month in tips
Employer may consider tip part of wages, but
must pay at least $2.13 an hour in direct wages
Tipped employees who receive $2.13 per hour in
direct wages are also subject to overtime at one
and one-half times the applicable minimum wage,
$5.15, not one and one-half times $2.13
Uniforms
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If the employer requires the employee to bear the
cost, such cost may not:
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reduce the employee's wages below the minimum
wage
cut into overtime compensation
Exemptions
The FLSA provides an exemption from both minimum
wage and overtime pay for employees who meet the
following tests:
 Executive
 Professional
 Administrative
 Outside Sales
 Computer
 Highly Compensated Employees
Not Based on Job Titles
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Job titles or descriptions do not determine
exempt status
Specific job duties and salary must meet all the
requirements of the DOL’s regulations
Administrative Exemption
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Compensated at least $455 per week on a salary or
fee basis;
Primary duty is performance of office or non-manual
work directly related to the management or general
business operations of the employer; and
Primary duty must include the exercise of discretion
and independent judgment with respect to matters of
significance
Directly Related to Management or
General Business Operations
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Work directly related to assisting with the running
or servicing of the business
Not day to day carrying out of its affairs
Examples: human resources, accounting,
budgeting
Outside Sales People
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Compensated at least $455 per week on a
salary or fee basis;
Primary duty is making sales or obtaining
orders or contracts for services or for the use
of facilities; and
Customarily and regularly engaged away from
the employer’s place or places of business
Away from the Place of Business
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Makes sales at the customer’s place of business, or, if
selling door-to-door, at the customer’s home
Does not include sales made by mail, telephone or the
Internet unless such contact is used merely as an
adjunct to personal calls
Any fixed site, whether home or office, used by a
salesperson as a headquarters or for telephonic
solicitation is considered one of the employer’s places
of business, even though the employer is not owner or
tenant
Amusement/Recreational Exemption
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Any employee employed by an establishment
which is an amusement or recreational
establishment is exempt from overtime and
minimum wage requirements, if:
Amusement Exemptions
the facility does not operate for more than seven
months in any calendar year, or
Amusement Exemptions
during the preceding calendar year, the facility’s
average receipts for any six months of such year
were not more than 33-1/3 per centum of its
average receipts for the other six months of such
year
To Comply with FLSA
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Maintain records of all employees
Record and pay employees for all hours
“suffered”/worked
Do not deduct where the deduction will drop wages
below minimum wage or reduce overtime pay
Pay tipped employees overtime based on the $5.15 per
hour, not $2.13 per hour
Pay overtime for hours worked beyond 40 per work week
Be careful when classifying salaried employees as exempt
Thank You
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If further questions, please call 804-697-2035 or
e-mail me at [email protected]