Wage and Hour Concerns

Transcription

1 WAGE & HOUR COMPLIANCE THE DOL IS COMING. ARE YOU READY? LeadingAge New York HR Summit Mark A. Moldenhauer, Esq. April 8, 2014 Wage and Hour Concerns Independent Contractors Frequency of Pay Deductions From Wages One Day Rest in Seven Compensable Time Recordkeeping Obligations Accrued But Unused Time Off Retaliation Biometric Timekeeping Systems Rounding Travel Time Breaks Minimum Wage Commissions Overpayment of Wages Meal Periods Regular Rate of Pay Exempt Status Compensatory Time Salary Basis Salary Level On Call Pay Spread of Hours Wage Theft Prevention Act Audits Training Time Pre/Postliminary Work Waiting Time Overtime Bonuses 2 1. Misclassification of Workers 2. Misclassified Nonexempt Employees 3. Compensable Time 4. Regular Rate of Pay 5. Meal Periods 6. Deductions from Wages 7. Payment for Accrued But Unused Time 8. Recordkeeping Obligations Concern #1 Misclassification of Workers The FLSA does not apply in the absence of an employer-employee relationship. o Independent contractors are not covered by the FLSA. o BUT classifying a worker as an independent contractor does not make him/her an independent contractor. (cont d) Bond, Schoeneck & King, PLLC

2 Concern #1 Misclassification of Workers Second Circuit considers the following factors: o the degree of control exercised by the alleged employer over the worker; o the worker s opportunity for profit or loss; o the worker s investment in the business; o the degree of skill and independent initiative required to perform the work; o the permanence of duration of the working relationship; and o the extent to which the work is an integral part of the alleged employer s business. 5 6 How to Tackle the Problem: o Step 1 Find them. Determine if your organization has classified anyone performing work for your organization as an independent contractor. o Step 2 Determine if individuals classified as independent contractors are correctly classified. Method of payment/reporting Actual duties and functions Degree of day-to-day control (cont d) o Step 3 Prepare/review agreements memorializing relationship with independent contractors and have agreements reviewed by counsel. o Step 4 Reclassify misclassified workers. If you face pushback, determine why avoiding an employment relationship is so important and look for other approaches that achieve objective. Concern #2 Misclassified Nonexempt Employees Three tests must be applied and satisfied before an employee is considered exempt (1) Duties Test (2) Salary Basis Test (3) Salary Level Test Note: Specialized standards applicable to computer employees and outside sales positions Bond, Schoeneck & King, PLLC

3 Duties Tests In a Nutshell Executive o Do they customarily and regularly direct the work of two or more full-time employees? o Do they have the authority to hire or fire other employees, or their recommendations regarding hiring, firing promotion, etc. are given particular weight? Administrative o Is their primary duty office or non-manual work directly related to the management or general business operation? o Does this work require the exercise of discretion and independent judgment with respect to matters of significance. Duties Tests In a Nutshell Professional o Does their primary duty involve work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction? 9 10 How to Tackle the Problem: o Step 1 - Look at total number of employees classified as exempt vs. those classified as nonexempt. o Step 2 - Examine positions classified as exempt. o Step 3 - Apply basic principles to all positions classified as exempt. o Step 4 - Review close or difficult calls with counsel If necessary, modify duties to strengthen argument for exempt status. Salary Basis Test An employee paid on a salary basis must be paid his/her fixed salary regardless of variations in the quality or quantity of the work performed. o If the employee is ready, willing, and able to work, his/her salary may not be reduced except in limited circumstances Bond, Schoeneck & King, PLLC

4 o Step 5 - Review your payroll practices regarding payment of salary to exempt employees. No deductions for: Partial day (non-fmla) absences* Leaving early Taking long lunches Absences caused by jury duty, attendance in court as a witness, or temporary military leave Permissible Deductions Full-day absences for personal reasons other than sickness or injury or for sickness or injury, as long as you have a bona fide plan, policy or practice providing for such a deduction. Partial day FMLA-protected absences o Disciplinary full day suspensions for infractions of workplace conduct rules and imposed pursuant to a written policy. *Note: Deductions from accrued time do not jeopardize the salary basis. (cont d) And because mistakes happen o Step 6 Adopt and act in accordance with a safe harbor policy. Clearly communicate your policy prohibiting improper deductions and establishing a complaint mechanism. When errors are reported/discovered: Reimburse employees for improper deduction. Take steps to insure such errors do not occur in the future. Concern #3 Compensable Time Employees must be paid for all time they are suffered or permitted to work. If you require or allow an employee to work, the time spent is generally hours worked. Even if you do not require or request work to be performed, but you allow (e.g., you know or have reason to know) such work to be performed, that time is compensable Bond, Schoeneck & King, PLLC

5 Preliminary and Postliminary Work Employees must be paid for work performed before or after their scheduled shift if: o they do so at the request of the employer, or o they perform work the employer has actual or constructive knowledge of How to Tackle the Problem: o Step 1 Insure supervisors know that employees must be paid for all hours they require, request or allow employees to work. o Step 2 - Insure employees/supervisors accurately record and are paid for all hours worked even if unauthorized. o Step 3 If employees perform unauthorized work, counsel and, if necessary, discipline them Off-Site Work Off-site work is compensable if management requires such or knows of the practice and allows it to continue, i.e., actual or constructive knowledge. De minimis work performed at home (generally less than 10 minutes per workweek) may be disregarded. o The de minimis argument, as a practical matter, is difficult to make successfully to the Department of Labor and should be examined closely. o Step 4 Address off-site work concerns. Determine if nonexempt employees have employer-issued mobile devices or can otherwise remotely access employer s system/network. If so, develop a policy concerning off-site work. Require employees to notify employer of any such work performed. Consider requiring advanced approval and/or imposing limits on the amount of such work that may be performed. Counsel and then discipline non-exempt employees who violate employer policies on off-site work. Existence of a policy, standing alone, will not control the analysis the employer must enforce the policy Bond, Schoeneck & King, PLLC

6 Concern #4 Regular Rate of Pay The FLSA & NY Labor Law require employers to pay employees at a rate of one and one-half times their regular rate for hours worked in excess of 40 in a workweek. What is the regular rate? o all remuneration for employment paid to, or on behalf of, the employee. How to Tackle the Problem o Step 1 Determine what rate is currently being used for the payment of overtime. o Step 2 Insure that all the rate used includes: Wage and salary Non-cash payments Commissions (apportioned over the week(s) earned) Non-discretionary bonuses (cont d) Nondiscretionary Bonuses A non-discretionary bonus is one paid pursuant to a contract, agreement, plan or promise (e.g., longevity, attendance and production bonuses). Where a bonus is paid for a period covering more than a workweek, the bonus amount must be apportioned over all the workweeks in that period, which may require recalculation of the employee s overtime compensation. Discretionary Bonuses A discretionary bonus is excluded from the regular rate. To be a discretionary bonus: o the employer must retain discretion over the availability of the bonus, and its amount. o must not be paid pursuant to any prior contract, agreement or promise causing the employee to expect such payment regularly Bond, Schoeneck & King, PLLC

7 Gifts Gifts paid as a reward for service with the employer are excluded from the regular rate, if: o the amounts given are not measured by or dependent on hours worked, production, or efficiency; and o employees have no legally enforceable contractual right to the gift. Holiday gifts/bonuses will generally be excluded, even though it may be paid so regularly that employees come to expect it. o Step 3 Consider preparing a policy that clearly delineates what is and is not included in regular rate and have the policy reviewed by labor and employment counsel Concern #5 Meal Periods Employees working a shift of more than 6 hours must be provided a meal period of at least 30 minutes. Employees on shifts beginning before 11 AM and ending later than 7 PM are allowed an additional 20-minute break between 5 PM and 7 PM. Employees working one-employee shifts are permitted to eat on the job without being relieved so long as they consent to this arrangement. How to Tackle the Problem o Step 1 Determine if all employees are receiving required meal periods. o Step 2 Determine if organization is relying on oneemployee shift exception and, if so, insure it applies. o Step 3 Develop/review meal period policy. Require employees to report if meal period not provided Bond, Schoeneck & King, PLLC

8 29 o Step 4 Educate supervisors on meal period obligations. When meal periods are required Employees cannot waive meal periods. Employees must be relieved from all duties during meal periods. When an employee is frequently interrupted during his/her meal period, he/she must be paid for their entire meal period. o Step 5 Hold supervisors who do not comply with meal period obligations accountable. 30 o Step 6 If you automatically deduct for meal periods, take steps to insure time records accurately reflect working time. Develop and promulgate policy. Advise employees of automatic deduction. Require employees to take action to correct time records if automatically deducted meal period is not accurate. Counsel and, if necessary, discipline employees who fail to do so. Direct supervisors to insure time records accurately reflect meal periods taken by employees. Counsel and, if necessary, discipline supervisors if they fail to do so. Concern #6 Deductions from Wages In NY, deductions are impermissible, except: o those made in accordance with law (taxes, Social Security, garnishments, etc.); or o those authorized by the employee, in writing, for the benefit of the employee Deductions from Wages o Formerly limited to: Payments for insurance premiums; Pension or health and welfare benefits; Contributions to charitable organizations; Payments for United States bonds; Payments for dues or assessments to a labor organization; and Similar payments* * Note : The amount of similar payment deductions which may be made for the benefit of the employee is capped at no more than, in the aggregate, 10% of the employee s gross wages for the pay period Bond, Schoeneck & King, PLLC

9 Amendment to Section 193 Effective November 6, 2012 Expands list of permissible deductions Imposes other deduction-related requirements Permits deductions for advances and for overpayments due to a mathematical or other clerical error by the employer 34 NYSDOL Final Regulations Key Provisions* o Employee Authorization o Interpretation of Similar Payments For the Benefit of the Employee o Prohibited Deductions o Requirements for Permissible Advance and Overpayment Deductions o Other Authorization & Notification Requirements *There are more provisions! Permissible Similar Payments Must fall within one of the enumerated permissible categories (non-exclusive examples included) o Health & Welfare Benefits o Pension & Savings Benefits o Charitable Benefits o Representational Benefits o Transportation Benefits o Food & Lodging Benefits Prohibited Deductions Repayment of loans, advances, and overpayments not in accordance with Final Regulations Purchases of tools, equipment and attire required for work Recoupment of unauthorized expenses Repayment of employer losses (spoilage, breakage, cash shortages, etc.) Contributions to PACs, campaigns and similar payments Fees, interest or employer s administrative costs Bond, Schoeneck & King, PLLC

10 How to Tackle the Problem: o Step 1 Determine what deductions you are currently making from employees wages. o Step 2 Immediately discontinue making unlawful deductions. o Step 3 Develop policy concerning deductions from wages that conforms to DOL regulation and secure necessary authorizations. Concern # 7 Payment for Accrued but Unused Time Employer policy dictates the employer s responsibility to pay an employee for accrued vacation, such as upon termination of employment. An employer may have a policy whereby employees forfeit accrued vacation, but employees must have written notice of the policy. In the absence of a forfeiture policy, NY DOL takes the position that an employer must pay out accrued, unused vacation upon termination from employment How to Tackle the Problem o Step 1 Review your policies concerning PTO, sick, personal and vacation time, as well as termination of employment. Insure they address payment of accrued but unused time at termination. If you do not desire to pay employees for accrued but unused time at termination or wish to condition such payment, insure forfeiture is clearly laid out. o Step 2 Act in accordance with policy. Concern #8 Recordkeeping Obligations Employer s time and payroll records are at the center of any DOL audit or wage and hour litigation. FLSA does not specify the form in which records must be kept (e.g., paper, computer data, microfilm), but employer must be able to convert the data into a form that can be viewed and inspected within 72 hours Bond, Schoeneck & King, PLLC

11 Accurate recordkeeping is not only required, it s a good idea An employer must be able to demonstrate that its time records are accurate and reliable. The DOL might find time records unreliable where: o Supervisors direct employees to falsify time records o Supervisors alter time records without defensible, legitimate business reason o Employer knows or has reason to know time records are inaccurate And if the employer s records are inaccurate or unreliable Bond, Schoeneck & King, PLLC

12 45 How to Tackle the Problem o Step 1 Review/draft timekeeping policy that requires employees to accurately record their working time (not their scheduled hours of work). o Step 2 If rounding is utilized, review practice to insure it s defensible. o Step 3 Educate supervisors: Not to alter time records without explanation Not to instruct, direct or ratify the falsification of time records o Step 4 Insure time and payroll records are preserved (state law requires six years, consider retaining forever) WAGE & HOUR COMPLIANCE THE DOL IS COMING. ARE YOU READY? LeadingAge New York HR Summit Mark A. Moldenhauer, Esq. April 8, Bond, Schoeneck & King, PLLC