Archive for the ‘FLSA’ Tag

Are you ready for December 1?   Leave a comment

It’s no secret, by now, that December 1 will usher in the application of the “Final Rule” – the increase of the minimum salary payable to “exempt” employees from $455 per week to $913 per week.

In addition to changing the manner in which employees are managed, compensated and asked to track their time, the impending effectiveness of the Final Rule raises a myriad of other questions related to classification: are the employees who have historically been treated as exempt, really exempt? Even if their salaries are raised to the requisite $47,476, do their duties meet the requirements of an executive, administrative, professional or other exemption?  How does this affect commissioned employees? Does this affect independent contractors in any way?

Certain employees who have never been considered remotely eligible for overtime, now find their status thrown into question – in particular, in our experience, teachers, engineers and administrative employees – and the answers are a lot muddier than employers think.

Employees are more aware of their wage and hour rights under the Fair Labor Standards Act, as modified by the Final Rule, than ever before – thanks to the publicity efforts of the Department of Labor and the media.  Be sure to conduct a legal audit of your employees’ positions and compensation completed in advance of December 1, and correct any compliance issues by that date.  If there is a silver lining to the Final Rule, it is that the change in the law gives great cover for correcting a multitude of ills.

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The Fair Labor Standards Act – a Formidable Opponent to Employers

Recently, a client approached us after losing his job as a cashier at a convenience store.  He contended that he had been terminated over religious differences with his boss and coworkers.  Our client was Hindu and his coworkers Muslim.  As a result, he felt that he was routinely given the worst tasks of all of the staff, and ultimately, that he was fired for complaining about the discriminatory treatment.

This client relied heavily on his steady income and was suffering from its sudden loss. We agreed to pursue a claim of wrongful discharge based on religious discrimination under Title VII of the Civil Rights Act.  In preparing a complaint and computing the damages to the client resulting from the loss of his job, we asked him more about his lost earnings – what was his hourly rate? how many hours did he work in a typical week?  It became Immediately apparent that, not only had the client been unlawfully terminated, but, working 60 – 80 hour weeks at a “straight time” rate of $10.00/hr, he had not been paid overtime (or “time and a half”) for all hours in excess of 40/week in accordance with his rights under the Fair Labor Standards Act (“FLSA”).   Suddenly, this client’s case became focused on the three years of unpaid overtime to which he was entitled – a clear, easily calculated claim which was not dependent upon proving the discriminatory mindset of the employer.

Once an overtime violation is alleged by an employee, the burden shifts to the employer to disprove the entitlement to overtime and/or back pay. For that reason, FLSA allegations are notoriously difficult to disprove, and such wage and hour claims allow the plaintiff to seek back pay, front pay, attorney’s fees and liquidated damages.

In our client’s case, the violations were so blatant (the pay records, of which our client had copies, clearly showed up to 80 hours of work per week paid at a straight time rate) and serious (thousands of hours of underpaid overtime), that the claim was settled within two weeks and before a complaint was even filed.  The resulting settlement to our client was substantial.

Employers provide slam-dunk FLSA cases for disgruntled employees when they

– fail to pay 1.5x the “regular rate of pay” for all hours worked in excess of 40 per week;

– incorrectly calculate of “regular rate of pay” (which is more complicated than it sounds);

– use “comp time” in lieu of overtime;

– incorrectly classify employees as “exempt” (“exempt”  means more than just “salaried and/or responsible”);

– make automatic deductions from pay for meals and breaks;

– permit, or require, “off the clock” work of any description;

– make deductions from pay for the cost of uniforms, damage to property, loss of property, violations of rules/policies;

– retaliate against an employee who complains of FLSA violations.

Employees who feel that their FLSA rights may have been violated should compile good records of their hours worked and pay received for the previous three years, before speaking to an employment lawyer.  Employers should be proactive in consulting an employment lawyer to confirm they are complying with the FLSA.

Jim Joedecke, Liz Clack-Freeman and Eadaoin Waller represent both employees and employers regarding compliance with Title VII, FLSA and in other areas.  By not limiting their practices to “one side,” they have a unique perspective to “both sides” of a claim or potential danger zone.

Cost-Effective FLSA Compliance

Eadaoin Waller

We all know that under the Fair Labor Standards Act (FLSA), non-exempt workers should be paid for all work hours, including time spent on tasks which may be outside of their core employment obligations – such as training, meetings, education and travel between worksites.  A novel question on this topic cropped up in our employment practice recently, and we thought it worth sharing the answer we found.

A service industry client had been conducting in-house training for its non-exempt employees on a quarterly basis for years.  The training was related to the employees’ jobs – keeping their skills up-to-date and fresh.  However, these training sessions had always been unpaid.  Nobody had ever complained; indeed, the work-based training was viewed as a perk by most employees – an investment in their professional development.  However, it was clear that this would have to be corrected going forward, at a not-inconsiderable cost.  The question was how to minimize this new cost to the business.

There are several options for correcting a wage and hour issue like this one.  The first is to simply pay for the training hours going forward at each employee’s regular rate.  This option proved too expensive for our client.  The next option was to reduce each employee’s hourly rate, and compensate them for the training hours (paying them approximately the same amounts overall, on a quarterly basis, but with a reduced hourly rate of pay).  This would be a tough sell to existing employees, however, as it looks like a pay cut on paper.  It would also impact recruitment negatively.  The third option was to compensate all non-exempt employees for training hours at minimum wage.  Although unorthodox, this is permissible under the FLSA.  There is no requirement that all work be compensated at the same rate – less profitable tasks can be compensated at a lower rate, as long as overtime and minimum wage rules are observed and as long as the employee has notice of how each task will be compensated.

The client issued a notice to all non-exempt employees, stating that from that point forward,  all training hours would be compensated at minimum wage.  Although this did not correct the compliance issue entirely (in order to do that, the employer would have to issue two years’ back-pay [at the employees’ regular rate of pay] for training hours).   However, with that that solution being cost prohibitive, the prospective solution chosen by the client was a perfectly reasonable “next best thing”.

Keep in mind, though, that a good knowledge of the applicable regulations is necessary to navigate the facts in any situation, and just because this solution worked for this client, it may not work for you.  If you are facing a situation like this one we urge you to obtain legal counsel to ensure compliance.

Do you want to use this blog article?

You may, as long as you include this complete bio with it:

Eadaoin Waller is a Georgia attorney, focusing her practice in corporate law.

Her firm, Andersen, Tate & Carr, P.C., works with all manner of clients in business and personal matters, providing “big firm” sophistication with suburban law firm attention and service.

Website: www.atclawfirm.com

Blog: www.andersentatecarr.wordpress.com

 Copyright © 2013 Eadaoin Waller & Andersen, Tate & Carr, P.C.

Employment Law 101 – For Georgia Businesses

Eadaoin WallerA client with a new software business approached us recently for some general employment advice. With a startup company, he didn’t have the benefit of a human resources professional, or even a personal assistant, to tell him what need to be filed or registered in the event of a new hire or an employee termination, or any of the myriad ways he needed to manage his employees in order to be in compliance with state and federal law.
As we started to describe basic Fair Labor Standards Act Compliance, the need for Workers’ Compensation coverage and the number of employees a company needs to have before worrying about harassment and discrimination policies, he interrupted. “Do you have a checklist with all of this stuff in one place? I’m a scientist, a list guy. I need to see it all written down.” We didn’t, and we still don’t have a comprehensive list of all the possible issues that will face every employer. However, in an attempt to give this client a “basics” guide to the things he needs to think about as a new employer, we prepared this. It’s a pretty good starting point for employment compliance for small (fewer than 15 employees) businesses.

1. Correct Classification.
a. Is a worker an independent contractor or an employee? (generally speaking, if you set the schedule, provide the tools/materials, provide training and oversight/control, and the person works solely or primarily for you, he/she is an employee)
b. Is the employee exempt or non-exempt from overtime/minimum wage requirements of the FLSA? (assume non-exempt unless the employee is paid in excess of $100k or has very autonomous/creative management or executive role – always seek legal advice where there is doubt)
i. For both exempt and non-exempt employees, understand the law on deductions from paychecks (deductions for lost property, uniforms etc can be problematic);
ii. For non-exempt employees, understand the overtime rules (which can be infinitely more complex than they look)
2. New Employer Checklist
a. Complete DOL form 1-A (to establish company as an employer for payment of unemployment insurance)
b. Obtain Workers Comp (for 3+ employees)
c. Have Employee Manual and Employee Covenant Agreements (confidentiality, non-solicitation and non-competition provisions) prepared
d. If you’ll use independent contractors, have a master form of Independent Contractor Agreement prepared (key provisions are work-for-hire and non-solicitation/non-competition; responsibility for payroll taxes)
3. New Hire Checklist.
a. Background check/reference check
b. I9
c. W-4 and G-4
d. Mandatory new hire reporting (http://newhire-reporting.com/GA-Newhire)
e. Signed Employee Covenant Agreement (or Independent Contractor Agreement)
f. Signed acceptance of Employee Manual
g. Completion of benefits paperwork (if any)
4. Termination
a. Have business-related reasons for termination documented (a written disciplinary history is ideal)
b. Provide employee with Separation Notice (including a truthful reason for termination)
c. If employee is troublesome or may have a claim against the company, consider paying a small severance in order to obtain release of claims (always consult with counsel)

Do you want to use this blog article?

You may, as long as you include this complete bio with it:

 Eadaoin Waller is a Georgia attorney, focusing her practice in corporate law.

Her firm, Andersen, Tate & Carr, P.C., works with all manner of clients in business and personal matters, providing “big firm” sophistication with suburban law firm attention and service.

Website: www.atclawfirm.com

Blog: www.andersentatecarr.wordpress.com

 Copyright © 2013 Eadaoin Waller & Andersen, Tate & Carr, P.C.

Using Your Handbook to Make the Most (or the least) of the Statutory Burdens On Your Business   3 comments

If the first purpose of an Employee Handbook is to reduce risk by taking advantage of the legal safeguards afforded to employers by law, the second is to make sure that one that the employer minimizes its legal obligations through well-drafted employment policies.

The FMLA

Companies with more than fifty employees are subject to the Family Medical Leave Act (FMLA), and it is essential to make sure that FMLA obligations are understood, and minimized to the extent permissible by law. A properly written policy allows for FMLA leave to run concurrently with paid leave, so that an employer is not required to provide vacation or sick leave, or PTO, in addition to the twelve or twenty-four weeks of unpaid leave which are required by the FMLA. Likewise, the FMLA allows employers to choose how the twelve-month FMLA entitlement period is calculated (a failure to make this election in a written policy means that the Employer will be stuck with a very burdensome default calculation method).

Some Other Illustrations

An Employee Handbook can be used to make the best out of the legal obligations imposed on your company in many other circumstances. Here is a random sampling of policies which we advise employers to include in their Handbooks. Without these written policies, you will experience at least one of two things, at some point: you may have to pay unemployment compensation to an employee who has been terminated for cause, or you will be legally required to accommodate employee demands that you could have avoided.

– Employee requests for religious accommodations may have to be met, but not all last-minute or unreasonable requests have to be honored – your policy should minimize the burden of Title VII of the Civil Rights Act on your business;

– Have an exacting absenteeism policy, while complying with the FMLA, the Americans with Disability Act, the FLSA or any other law (there’s nothing worse than being taken advantage of by an employee who won’t show up to work);

– Make it clear that certain behaviors may result in termination (being clear that terminations will always comply with the law) – this will minimize your liability for payment of unemployment compensation;

– make it clear to employees that disparagement of the company, or interference with its good reputation, via a social networking site, is not acceptable;

– include a policy which requires employees to consent to any (legal) deductions from their paychecks which you may need to make;

– include a substance abuse and testing policy which meets the standards required of Georgia’s Certified Drug-Free Workplace program, which allows you a discount on your workers’ compensation premiums;

– make it clear to all employees that they are responsible for recording their work time, and that they are prohibited from working unrecorded and/or unauthorized overtime.

– make sure that your written policies describe an employee’s entitlement to payment of sales commission following termination. This is a contentious and legally gray area, and many arguments can be avoided with a policy which has been written or reviewed by a lawyer.

Take-Away: An employee handbook requires a relatively small investment of time and money at the outset, but it is almost guaranteed to pay for itself in saved productivity, legal defense expenses, and unemployment benefits.

Next and final installment of this article: Some final thoughts on Employee Handbooks

By: Eadaoin Waller, a senior associate in our Corporate Department

Why Your Business Needs an Employee Handbook, and What Should be in it   2 comments

There are a lot of good reasons given to small businesses for adopting an Employee Handbook. Unfortunately, most of the reasons given fall into the “non-urgent” or “unnecessary expense” category. For instance, an Employee Handbook will inform your employees of their obligations so that you and your supervisors don’t have to make policy decisions on the fly (a phonecall to a supervisor is necessary in the event of an unplanned absence – a text message sent from an unknown destination will not do; track suits and flip-flops will not cut it on Casual Fridays; customer phonecalls must be returned within two hours, and so on). A Handbook will apprise employees of the extent of their rights in the workplace (family medical leave may be unpaid; your employment may be terminated at will and for no reason; there is no right to be paid for accrued vacation upon termination of employment). But, you reason, these are issues that can be dealt with as we go, as the need arises. Why the need to write everything down in painstaking detail?

Leaving aside all of the other practical reasons, there are two distinct legal reasons (and countless practical ones) which make an Employee Handbook a necessity for all businesses (apart, perhaps, from those with under five employees). This article will deal with the first of those, and we will post two more articles, in the coming weeks, which discuss the others, and offer some thoughts on implementing and enforcing an Employee Handbook.

Using the Affirmative Defenses that the Law Gave You

The first and greatest advantage of having a well-written employee handbook (at least, from a lawyer’s perspective) is quantifiable risk elimination. Certain affirmative defenses against employment claims exist for employers who have good written employment policies in place. All employers should take advantage of these defenses by making a small investment in an Employee Handbook, prepared by a labor and employment attorney.

An Example – the Fair Labor Standards Act

One prevalent and damaging type of employment liability is that of wage and hour claims arising from the Fair Labor Standards Act (FLSA), the law governing underpayment or miscalculation of overtime, minimum wage, or unlawful deductions from pay. The FLSA contains a “safe harbor” provision, however, which protects employers against liability for certain incidents of improper deductions so long as the employer: (1) has a clearly communicated policy prohibiting improper deductions, which includes a complaint mechanism; (2) reimburses employees for any improper deductions; and (3) makes a good faith commitment to comply in the future. The Federal Department of Labor recommends that this “improper deductions” policy be included in a written handbook, given to each employee upon hiring. With violations of the FLSA creating indescribable burdens, both in terms of time spent on audits, harsh penalties and liability for up to three years of back-pay, the advice of the DOL in this regard should be heeded.

And Another – Sexual Harassment

Similarly, the law on sexual harassment in the workplace has created a safety valve for employers, who are exposed to vicarious liability for the harassment of one employee by another, under Title VII of the Civil Rights Act. If the employer has a written harassment policy in place, giving victims of harassment a procedure for filing a complaint and a choice of managers to whom complaints may be addressed, the employer will have an affirmative defense against claims of sexual harassment if the employee fails to follow the complaint procedure. While not an absolute safeguard, this is a substantial and necessary defense against such claims.

Other Ways in Which Your Handbook Can Come to Your Defense

The presence of certain employment policies in your handbook can make it clear that certain activities are unauthorized in the course of work, and as such, the employer is not responsible or vicariously liable for actions of an employee which are prohibited by the handbook. For example, if an employer were to be sued for copyright violations as a result of internet downloads, it would be helpful to be able to show that employees were under strict instructions not to use the internet for personal reasons. If an employee causes a car accident while driving a company vehicle, because she was talking on the phone, the employer would certainly want to show that the employee was on strict orders to pull in before taking a call. If an employee assaults another employee at work, the employer will need to demonstrate that it had policies and procedures in place for dealing with interpersonal problems and preventing violence at work. And on, and on.

Take-aways:

• There are affirmative defenses against very damaging claims which your employees may make against you.

• Your Handbook can be used to anticipate and deflect liabilities created by your employees – auto accidents, workplace violence, intellectual property infringement, safety violations, etc.

• Take advantage of simple risk-reduction measures by investing in a well-drafted employee manual.

• Use a Labor and Employment Attorney in the State where your business is located. Employment law varies wildly from State to State. Using a form from the internet, or from a national payroll provider, is probably a false economy.

Next installment of this article: Using Your Handbook to Make the Most of the Statutory Burdens On Your Business

By: Eadaoin Waller, a senior associate in our Corporate Department

Paying Employees for Jury Duty   7 comments

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The rumors surrounding employers’ obligations to pay employees for time spent away from work, serving on a jury, abound. Many employers assume that they are responsible for paying employees during such absences. Many assume that they cannot owe employees their salaries or wages for time which is not spent actually working. Many pay employees for jury duty, but deduct the amount of the daily stipend received by the employee from the court. So, which approach is correct? And how should an employer react when an employee arrives back from court with a vague letter, dating back to 1989, from the Attorney General’s office, advising employers that employees are entitled to receive their salaries for time spent on jury duty?

Unfortunately, the answer is not straightforward. To deal, first, with salaried, exempt employees – employers should be aware that the Fair Labor Standards Act (FLSA) prohibits deductions from an employee’s weekly salary for time spent on jury duty. An employer may, however, deduct the amount of any stipend received by the employee, from the salary check. The applicable federal regulation is 29 CFR 541.602(c), which provides that

“While an employer cannot make deductions from pay for absences
of an exempt employee occasioned by jury duty, attendance as a witness or temporary military leave, the employer can offset any amounts received by an employee as jury fees, witness fees or military pay for a particular week against the salary due for that particular week
without loss of the exemption.”

However, the general FLSA rule that exempt employees do not have to be paid their salaries for any week during which they perform no work, still applies. An exempt employee who absent from work from Monday through the following Monday, is not entitled to any pay for the full week of jury duty.

The FLSA does not require employers to pay non-exempt employees for time spent on jury duty or as witnesses at court.

However, the FLSA’s positions on both exempt and non-exempt employees are complicated in Georgia by the existence of a 1989 Attorney General’s Opinion Letter, which is being distributed to jurors in certain counties by the courts. This Opinion Letter provides that “an employee is entitled to be paid his or her salary while missing work to serve on jury duty.” This letter is not law, but it is persuasive authority that employers should compensate all employees (exempt and non-exempt, whether or not they are absent for more than one week) for jury duty. As yet, it appears to have gone unchallenged in court, and certain judges have suggested that employers who do not comply with the directive of the letter may be brought before the court to explain themselves. The point was made, at a recent employment law seminar which I attended, that judges do not have authority to legislate in this manner – but who wants to challenge them?

Until there is some decisive legislative action or litigation on this point, the most conservative position for employers in Georgia, especially those operating in jurisdictions where the Attorney General’s 1989 Opinion Letter is being distributed to jurors, is to pay employees (hourly and salaried) for time spent on jury and witness duty. Statistics indicate that 82% of employers in Georgia are doing this already. If you are in the other 18%, or you have questions about your rights with respect to jury or witness duty (either from an FLSA or a State law perspective), an employment attorney will be able to help.

By Eadaoin Waller, a senior associate in our Corporate Department

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