Common wage hour problems
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Common Wage & Hour Problems. Megan Erickson Moritz BrownWinick 666 Grand Avenue, Suite 2000 Des Moines, IA 50309-2510 Telephone: 515-242-2455 Facsimile: 515-323-8555 E-mail: [email protected] Common Wage & Hour Issues.

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Common Wage & Hour Problems

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Common wage hour problems

Common Wage & Hour Problems

Megan Erickson Moritz

BrownWinick

666 Grand Avenue, Suite 2000

Des Moines, IA 50309-2510

Telephone: 515-242-2455

Facsimile: 515-323-8555

E-mail: [email protected]


Common wage hour issues

Common Wage & Hour Issues

  • Many different legal issues can pop up in the context of an employer’s wage and hour practices / payroll administration.

  • Today, focus mostly on:

    • Fair Labor Standards Act

    • Iowa Code Chapter 91A


Wage hour violations

Wage & Hour Violations

  • Bad. Very bad.

  • Aggressive enforcement initiatives.

    • Multiple agencies

    • Now sharing information

  • Severe consequences.


Wage hour violations1

Wage & Hour Violations

  • Litigation Statistics

March 2013 – March 2014

The number of wage and hour lawsuits filed in federal courts nationwide increased nearly 5% (over 8,100 cases).

March 2012 – March 2013

The same timeframe for the prior year showed a 10% increase in FLSA cases filed during that 12-month period. (See Table C-2). http://1.usa.gov/1n1VdHT

Result – nearly 15% increase in FLSA cases filed in federal courts in the last 24 months!!


Wage hour violations2

Wage & Hour Violations

DEPARTMENT OF LABOR ENFORCEMENT

“These resources will support a continued shift to greater percentage of directed enforcement activity in priority industries and will offer an improved customer service approach to complaint handling. WHD will continue to increase its number of compliance actions, but anticipates that continued gains in compliance actions concluded will be incremental as WHD maintains its emphasis on conducting quality case work and concentrates on reducing no-violation cases through effective compliance screening and investigation targeting. WHD data show a higher number of employees affected and greater back wages on average for directed investigations.”

FY 2015 “Congressional Budget Justification,” Wage and Hour Division, (Emphasis added) http://www.dol.gov/dol/budget/2015/PDF/CBJ-2015-V2-09.pdf


Coverage

COVERAGE

  • Chapter 91A

    • Employers with 1 or more employees

  • FLSA

    • Enterprise Coverage: All employees of the enterprise are covered by FLSA

    • Individual Coverage: Even if the enterprise is not covered, individual employees may be covered by FLSA


Flsa enterprise coverage

FLSA ENTERPRISE COVERAGE

  • Enterprise Coverage:

    • At least 2 employees and at least $500k a year in business (i.e., sales), or

    • Hospitals, businesses providing medical or nursing care for residents, schools, and government agencies.


Flsa individual coverage

FLSA INDIVIDUAL COVERAGE

  • Individual Coverage

    • Individual employees are protected by the FLSA if they are regularly engaged in interstate commerce

    • Domestic service workers


Flsa scope

FLSA - SCOPE

  • Generally:

    • Minimum wage

    • Overtime

    • Recordkeeping

    • Child labor

  • Exemptions / Exceptions


Flsa misclassification

FLSA Misclassification

  • Exempt or Non-Exempt?

    • Primary job duties.

    • Salary requirement is often a component.


Flsa misclassification1

FLSA Misclassification

  • Most common FLSA minimum wage & overtime exemption = “White Collar” Exemptions:

    • Executive

    • Administrative

    • Professional

    • Outside Sales

    • Computer


Flsa misclassification2

FLSA Misclassification

  • White Collar Exemptions

  • Generally speaking, look at:

    • Paid on a salary basis

    • Minimum salary amount

    • Primary job duties


Flsa misclassification3

FLSA Misclassification

Common Issue: Paid on Salary Basis?

  • Regular, predetermined amount for each pay period (weekly or less frequent basis)

  • Employers can inadvertently destroy exemptionby making improper deductions from salary


Flsa misclassification4

FLSA Misclassification

Common Issue: Paid on Salary Basis?

  • Full salary for any workweek employee performs any work.

  • Unless no work performed in the workweek, can’t change pay based on variations in quality or quantity of work.


Flsa misclassification5

FLSA Misclassification

Common Issue: Paid on Salary Basis?

  • Exceptions: Allowable Deductions

    • No work performed during entire workweek.

    • Full-day absence due to personal reasons (other than illness or disability).


Flsa misclassification6

FLSA Misclassification

Common Issue: Paid on Salary Basis?

  • Exceptions: Allowable Deductions

    • Full-day absence due to illness or disability if deductions are made under bona fide sick leave policy or practice.


Flsa misclassification7

FLSA Misclassification

Common Issue: Paid on Salary Basis?

  • Exceptions: Allowable Deductions

    • To offset jury fees or witness fees.

    • To offset military pay.

    • Good-faith penalties for violating safety rules of “major significance.”


Flsa misclassification8

FLSA Misclassification

Common Issue: Paid on Salary Basis?

  • Exceptions: Allowable Deductions

    • Full-day, unpaid disciplinary suspensions imposed in good faith for violating written workplace conduct rules.

    • Proportionate reduction for partial workweek in first and last weeks of employment.

    • Unpaid leave taken pursuant to Family and Medical Leave Act.


Flsa misclassification9

FLSA Misclassification

Common Issue: Paid on Salary Basis?

  • Improper salary deductions:

    • Absences caused by employer / employer’s operating requirements.

    • Partial-day (unless first/last week or FMLA)

    • Absence because of illness, but no paid leave policy


Flsa misclassification10

FLSA Misclassification

Common Issue: Paid on Salary Basis?

  • Safe Harbor

    • Clearly communicated policy against improper deductions, including a complaint mechanism

    • Reimburse employee for an improper deduction

    • Good faith commitment to future compliance


Flsa misclassification11

FLSA Misclassification

Common Issue: Salary Amount?

  • For most employees, minimum salary required for exemption is $455/week

    Common Issue: Don’t assume all employees paid a salary are exempt.


Flsa misclassification12

FLSA Misclassification

Common Issue: Primary Job Duties?

  • Each exemption has particular job duty requirements.

  • Actual job duties – not labels.

  • Common problems

    • Relying on job description rather than actual duties.

    • Satisfying some, but not all, of the test.


Flsa misclassification13

FLSA Misclassification

Outside Sales Exemption

  • Common Problems:

    • Promotional work.

    • Drivers who sell.

    • Generally does not include sales by mail, phone, or internet.

    • Spending more time at home office than at customer’s home or place of business.


Flsa misclassification14

FLSA Misclassification

Computer Employee Exemption

  • Computer Employee – Common Problems:

    • Entry level positions not working independently

    • Operation, manufacture, repair, or maintenance of computers

    • Work dependent on computers, but not engaged in computer systems analysis or programming

  • Note: guaranteed salary or fee of $455 or hourly rate of at least $27.63.


Flsa misclassification15

FLSA Misclassification

Agricultural Employee Exemptions

  • Engaged in Agriculture Exemption

    • Does not include work that is not incidental to/in conjunction with the farming operation

    • Overtime only

  • “Small Farm” Exemption

    • Overtime & minimum wage

  • Certain Child Labor Exemptions


Flsa common problems

FLSA – Common Problems

Common Issue: Failing to pay for all hours worked

  • Must pay for all hours employee is “suffered or permitted” to work

    • i.e., work outside normal shift hours

    • i.e., technology – checking email or voicemail after hours?

  • Do not limit number of hours employees may record


Flsa common problems1

FLSA – Common Problems

Common Issue: Not including all pay in calculating regular rate

  • “Regular Rate” = effective hourly rate

    • Total Pay / Total Hours Worked

  • Non-exempt employees’ regular rate must be at least minimum wage.

  • Non-exempt employees must get 1.5 x “regular rate” for overtime.


Flsa common problems2

FLSA – Common Problems

Common Issue: Not including all pay in calculating regular rate

50 hours x $10 = $500

Bonus= + $100

$600

Regular Rate

$600 / 50 hours = $12

Half-time of $6/hour owed on 10 hours for $60 in overtime.

Using just hourly rate ($10/hr) instead of regular rate ($12/hr) shorts him $10/week.

  • Ex: Production Bonus

  • 50 total hours

  • Hourly rate = $10

  • Bonus = $100


Flsa common problems3

FLSA – Common Problems

Common Issue: Not including all pay in calculating regular rate

  • $10/week x 50 workweeks =$500/yr

  • $500 x 2 (liquidated damages) =$1,000/yr

  • $1,000/yr x 2/3 yr look-back =$2,000-3,000

  • $2k/3k x 20 employees =$20,000-30,000

  • Plus your attorney fees=$$$

  • Plus the plaintiff attorney fees=$$$


Other improper deductions

Other Improper Deductions

Common Issue: Other improper deductions under FLSA

  • Deductions from pay are illegal under FLSA if:

    • For item primary for employer’s benefit or convenience, and

    • Reduces pay below required minimum wage or overtime.


Other improper deductions1

Other Improper Deductions

Common Issue: Deductions in violation of Iowa Wage Payment Collection Act

  • Most deductions require employer to obtain employee’s written consent.


Other improper deductions2

Other Improper Deductions

Common Issue: Deductions in violation of Iowa Wage Payment Collection Act

  • Law also prohibits some deductions (with certain limited exceptions):

    • Cash shortages

    • Bad checks, customer default, nonpayment

    • Property damage

    • Customer gratuities

    • Certain PPE

    • Certain relocation expenses


Uniforms

Uniforms

Common Issue: Deductions for uniforms

  • Is the deduction OK under 91A?

  • Does the deduction bring the employee’s wages below the required minimum wage or cut into required overtime pay?


Misclassification contractor employee

Misclassification: Contractor / Employee

Common Issue: Misclassification of Independent Contractor as Employee

  • When workers who should be classified as “employee” are instead classified as “independent contractor.”

  • Uptick in enforcement efforts


Common wage hour problems

Misclassification: Contractor / Employee

Common Issue: Misclassification of Independent Contractor as Employee

  • Test generally boils down to: degree of control and independence.

  • Labels don’t matter much.

  • Review classifications & be proactive about correcting.


Wage hour issues

Wage & Hour Issues

  • Today’s presentation wasn’t exhaustive!

  • By way of illustration . . .

    • On-call time and/or waiting time

    • Piece-rate pay systems

    • Fluctuating workweeks

    • Tipped employees & tip credits

    • Equal pay issues & impact of other anti-discrimination laws


Common wage hour problems

Website: www.brownwinick.com

Toll Free Phone Number: 1-888-282-3515

OFFICE LOCATIONS:

666 Grand Avenue, Suite 2000

Des Moines, Iowa 50309-2510

Telephone: (515) 242-2400

Facsimile: (515) 283-0231

616 Franklin Place

Pella, Iowa 50219

Telephone: (641) 628-4513

Facsimile: (641) 628-8494

DISCLAIMER: No oral or written statement made by BrownWinick attorneys should be interpreted by the recipient as suggesting a need to obtain legal counsel from BrownWinick or any other firm, nor as suggesting a need to take legal action. Do not attempt to solve individual problems upon the basis of general information provided by any BrownWinick attorney, as slight changes in fact situations may cause a material change in legal result.


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