As we’ve previously discussed, the Department of Labor Wage and Hour Division (WHD) has stepped up its enforcement initiatives over the past few years to pursue civil money penalties, back wages, and liquidated damages when violations of the Fair Labor Standards Act (FLSA) are found. Specifically, Section 11(a) of the FLSA authorizes the WHD to enter an employer’s premises to investigate the employer’s compliance with the Act’s requirements. Most of these investigations begin after an employee submits a complaint. But the WHD can also initiate investigations by strategically targeting certain industries (like the restaurant industry, for example) or by examining particular geographic areas.
Here are the main steps in an investigation:
1. INITIAL CONFERENCE. The investigator will first contact the employer to set up an initial conference to explain the review process, or they may just show up unannounced.
2. EXAMINE RECORDS. Next, the investigator will examine records to see if any exemptions apply. This includes records relating to the employer’s involvement in interstate commerce, government contracts, and the dollar volume of an employer’s annual business transactions. The investigator will then look for any miscalculations or inaccuracies by examining personnel time records and payroll records dating back at least two years. If willful violations of the FLSA are reported, records for the past three years may be examined.
3. EMPLOYEE INTERVIEWS. The investigator will interview certain employees to verify their payroll records and inquire into the employer’s pay policies.
4. ENFORCEMENT ACTION. If violations are found, the investigator will meet with the employer to discuss corrective actions and request any back wages owed to the employees for minimum wage and overtime violations.Source: DOL Fact Sheet http://www.dol.gov/whd/regs/compliance/whdfs44.htm; BURKE COSTANZA & CARBERRY LLP, Department of Labor Investigations – Basis for an Employer, Jan. 31, 2013 http://www.bcclegal.com/labor-employment-blog/2013/1/31/department-of-labor-investigations-basics-for-an-employer.
Working Off the Clock
The Fair Labor Standards Act (“FLSA”) was effectively a law beginning in 1938. It was the first big success for workers of the industrious country of America and effectively implemented many of the same working standards that are still in place today. Aside from prohibiting the almost incomprehensible child labor that was common at the time, the FLSA also implemented the first mandatory minimum wage and time and a half pay requirements for any employee who goes over a 40-hour workweek. Another key point of the FLSA is that employers must pay their employees for every hour of time worked – in other words, it prohibits employees from working off the clock.
Can I Work Off the Clock?
It can be easy to forget to clock in before starting menial tasks when you get to work but you should try to avoid it at all costs – your time and work are valuable and you need to be fairly compensated for everything you do at work. The same thing goes for the end of the day tasks, once you clock out it is important that you do not do any more work. If your employer asks you to do extra work before or after your shift simply explain that you need to clock in before doing any work. If they give you a hard time or try to pursue disciplinary actions make sure you keep a paper trail and contact us immediately. We here at Barkan Meizlish, LLP have been practicing worker’s compensation and labor law since 1957 and are here to fight for the compensation that you deserve.
For obvious reasons, working off the clock may be praised by your employer and supervisors but you really aren’t doing them any favors. By staying late or working early without being clocked in you put your company at risk of violating FLSA standards. Even if you admit to willingly working off of the clock the company you work for can still be required to pay fines and compensate you for the time worked. To avoid getting your supervisor or employer in trouble for an FLSA violation you should avoid working off the clock at all costs.
Can My Employees Work Off of the Clock?
If you are a business owner and employer then you need to take extra steps in ensuring that none of your employees are working off of the clock. This can lead to legal action being taken against you in the future. To prevent this all together you need to let your employees and supervisors understand that no hourly employee is to ever work off of the clock. You might have employees that tell you they don’t mind performing a simple task without being paid, but you should never trust their word no matter how trustworthy of an employee they are. By allowing employees to work off of the clock you open yourself to receiving lawsuits from current and past employees. If you are a business owner and want to avoid paying your employees overtime then you should explore salary-based pay which protects you from any off-clock work complaints from employees.
In order to best protect you and your company from being required to pay large amounts of back pay, you need to implement a strict work process where your managers closely monitor employees’ work times, lunch, and break times. By closely monitoring the work process you can ensure your employers get the most amount of work done without having to pay overtime wages. If overtime is required then you have to pay it to prevent any unpaid wage complaints in the future.
Labor Law Attorney Columbus
Here at Barkan Meizlish we have been protecting worker’s rights since 1957 and have become one of the most trusted firms when it comes to worker’s compensation and wage issues. If your employer has been requiring you to work off the clock then you are entitled to compensation for every single hour worked. If you don’t take action to recover your missed wages promptly then you might not be able to recover them at all. In order to get the compensation that you deserve you need to contact Barkan Meizlish, LLP today so you don’t miss out on your opportunity to recover your missed wages.
Last week, an Arizona news column reported about a restaurant that requires its employees to donate their tips to charity one day a month. Can employers have this much control over employees’ tips? Under Arizona wage statutes, the answer is no. But aside from violating Arizona state law, this practice could also violate the Fair Labor Standards Act (“FLSA”). It all depends upon whether a “tip credit” system was used.
Here’s a little background information on “tip credits.” Under the FLSA, tips are the sole property of the employee. Covered employees must make at least $7.25 per hour, the federal statutory minimum wage. Provided certain conditions are met, employers may pay “tipped employees” at an hourly rate that is less than the federal minimum wage by crediting a portion of employees’ tips against their minimum wage obligations. The difference between the required cash wage (at least $2.15) and the federal minimum wage is the maximum tip credit an employer may claim. If the employee’s tips and wages combined do not meet at least the hourly federal minimum wage, the employer must make up the difference.
So if an employee’s hourly rate is below $7.25, any income from tips would supplement the hourly rate to raise it to the federal minimum wage requirement. It would be unlawful for an employer to withhold tips in this situation because it would result in the employee being paid less than minimum wage. However, employers may divert an employee’s tips when an employee’s hourly rate is equal to or greater than $7.25.
Some states, like Ohio, have chosen to increase the minimum wage above the federal requirement. Ohio’s current minimum wage is $7.95 per hour for non-tipped employees and $3.98 per hour for tipped employees. This wage rate applies to the employees of businesses with annual gross profits greater than $292,000 per year.Source: Georgann Yara, When boss dips into tips, it raises a red flag (September 6, 2014) http://www.azcentral.com/story/money/business/career/2014/09/06/tips-wages-state-federal-law/15216185 [social_share style=”square” align=”horizontal” heading_align=”inline” facebook=”1″ twitter=”0″ google_plus=”1″ linkedin=”1″ pinterest=”0″ /]
Over the past few years, violations of the Fair Labor Standards Act (“FLSA”) were found in nearly all of the 9,000 restaurants under investigation by the Department of Labor. To address the rampant wage and hour violations in the restaurant industry, the Department of Labor has stepped up its enforcement initiatives to pursue civil money penalties, back wages, and liquidated damages when violations are found.
Here are a few of the recurring violations:
1. Overtime violations: Non-exempt employees are entitled to receive overtime pay at one and one-half times their regular rate for all hours worked over 40 in a workweek. Employers violate this provision by paying employees “straight time” wages for overtime hours, or incorrectly calculating overtime. The overtime requirement applies to both tipped and non-tipped employees.
2. Illegal tip pools: Employers may require tipped employees to contribute tips to a general pool to be shared with non-tipped employees. Employees who do not “customarily and regularly” receive tips (dishwashers and cooks, for example) cannot be participants in a valid tip pool. Nor will the tip pool be valid if management employees are participants. Employers must notify employees of any required tip pooling arrangements.
3. Deductions: Employers may deduct a percentage from employees’ tips to pay charges imposed by credit card companies when a customer’s tip is charged to a credit card. However, this deduction cannot reduce employees’ wages below the minimum wage. Employers many not deduct charges for phone lines or other administrative costs from the employees’ tips.
4. Dual jobs: When employees spend a substantial amount of time (more than 20 percent) performing general preparation work, employers may not take a tip credit for the time spent on those duties. This means that a tipped restaurant employee may be entitled to the full minimum wage rather than the reduced tipped credit rate if a significant amount of time was spent performing duties unrelated to the tipped occupation, such as bathroom cleaning or food preparation.Source: Nathan Pangrace & Anne Prenner Schmidt, Department of Labor targets restaurant industry employers (September 16, 2014), http://www.lexology.com/library/detail.aspx?g=3abf7b31-db9f-4355-9fa2-1967d471169b. [social_share style=”square” align=”horizontal” heading_align=”inline” facebook=”1″ twitter=”0″ google_plus=”1″ linkedin=”1″ pinterest=”0″ /]
Under the Fair Labor Standards Act (“FLSA”), employees must be compensated for actual work performed, whether on or off the job site. But with the many technology advancements in the workplace, employers can now effectively run their businesses around the clock by keeping employees “on-call” after regular business hours, requiring them to work only if needed. Hospital employees, for instance, have to remain in the hospital premises when on-call. Other employees may be able to leave work when on-call, but are still subject to restrictions. For example, on-call firefighters are often not required to remain at the station, but they may have only a 30 minute time frame to respond to a call. Under the FLSA, on-call employees may be eligible for compensation—but only under certain circumstances. Thus, employers have struggled with determining when to pay employees for working on-call. Here are the relevant principles to keep in mind:
Under the general test set forth in Skidmore v. Swift & Co., 323 U.S. 134 (1944), an employee that is “engaged to wait” is entitled to compensation, but an employee “waiting to be engaged” is not. The regulations interpreting the FLSA provide some insight, requiring compensation for on-call time when (1) employees are required to stay on the premises, or (2) when employees must remain so close that they cannot use their time away from the premises for their own purposes.
It’s easy to see how this is a confusing area of wage and hour law. Realistically, it is difficult to apply a simple 2-part test to the countless job positions in today’s workforce. These cases are very fact-specific and are typically decided on a case-by-case basis. Courts have relied on various factors in determining whether on-call time is considered work time. These factors include: whether the employee had actually engaged in personal activities during the on-call time; the flexibility of trading on-call responsibilities with another employee; agreements between the parties that provide some amount of compensation for waiting time; the frequency of calls; and whether the fixed time limit for response was unduly restrictive.Source: Joseph U. Leonoro, On-Call Time – When Is It Compensable? (July 13, 2012), http://www.sjlaboremploymentblog.com/when-is-on-call-time-compensable/. [social_share style=”square” align=”horizontal” heading_align=”inline” facebook=”1″ twitter=”0″ google_plus=”1″ linkedin=”1″ pinterest=”0″ /]
The FLSA requires that employees receive overtime pay at a rate not less than one and one half times their regular rate of pay for all hours worked in excess of 40 in a workweek. But what happens, for instance, when an employee is paid at two or more different rates of pay in a single week? Determining the proper overtime calculation under this scenario can be tricky. For employees perform work at different rates, the FLSA requires overtime to be calculated according to a “blended rate,” or a rate not less than one and one half times the weighted average of all the different rates used during that workweek. In other words, overtime is calculated by adding up employee’s weekly earnings for all of the rates and then dividing that number by the total hours worked in that week for both jobs. Because the overtime rate will increase or decrease depending upon the total weekly hours worked, employers must make this calculation each week for employees that work at multiple rates.
Here’s an example. The overtime calculation for an employee working as a nurses’ aide 40 hours a week at $11 an hour, and also working 16 hours on weekends as a receptionist at $8 an hour, looks like this:
Step 1 (determine straight time compensation): 40 x $11 + 16 x $8 = $568
Step 2 (determine regular rate): $568 ÷ 56 = $10.14
Step 3 (determine overtime rate): $10.14 x 1.5 = $15.21
Step 4 (determine straight time earnings): $10.14 x 40 = $405.60
Step 5 (determine overtime earnings): $15.21 x 16 = $243.36
The FLSA provides one exception to this general rule. Instead using the blended rate as shown above, employers can use a different overtime computation provided that an agreement or understanding is made with the employee before the work is performed. Employers can only take advantage of this exception, however, if (1) the employee performs two or more different kinds of work at different straight time hourly rates, and (2) the determined overtime rate is not less than one and one half times the bona fide rates that apply to the same work when performed during non-overtime hours. See 29 C.F.R. § 778.419. Employers should make sure to keep precise records that break down the specific hours each employee worked at the different rates. This exception cannot be applied to an employee who is paid different hourly rates for the same type of work.Source: Robert G. Brody & Abby M. Warren, Overtime Calculation for Employees Working at Multiple Rates (May 2, 2014), http://www.law.com/sites/robertgbrody/2014/05/02/overtime-calculation-for-employees-working-at-multiple-rates/; Department of Labor Wage and Hour Division, Fact Sheet #54, http://www.dol.gov/whd/regs/compliance/whdfs54.htm. [social_share style=”square” align=”horizontal” heading_align=”inline” facebook=”1″ twitter=”0″ google_plus=”1″ linkedin=”1″ pinterest=”0″ /]
This past August, the National Labor Relations Board’s (NLRB) Office of General Counsel issued an administrative decision that could have a significant effect on joint employer status. Following several complaints submitted by McDonald’s employees, the NLRB named corporate McDonald’s USA, LLC—in addition to the McDonald’s store owners—as a joint employer. This means that as a joint employer, McDonald’s would be liable for each of its franchisees’ unlawful acts. Clearly, if this decision stands, the number of cases alleging joint employer liability against franchisors will escalate.
Some employers even fear that the decision could lead to changes in the area of wage and hour law, where workers have sought to expand the definition of joint employer status under the Fair Labor Standards Act (FLSA). The current regulations interpreting the FLSA provide that an individual may be an employee of more than one employer at the same time. Courts apply various “joint employer” tests, considering the totality of the circumstances surrounding the employment relationship. If a joint employment relationship exists, both employers are responsible, individually and jointly, for FLSA compliance.Source: Bloomberg BNA, Franchisors and the Specter of Joint Employer Liability for Franchisee Misconduct (September 19, 2014), http://www.bna.com/franchisors-specter-joint-n17179895132/. [social_share style=”square” align=”horizontal” heading_align=”inline” facebook=”1″ twitter=”0″ google_plus=”1″ linkedin=”1″ pinterest=”0″ /]
Last month, a New York federal court in Saleem v. Corporate Transp. Grp., Ltd., 2014 WL 4626075 held that drivers for a “black car” business were independent contractors, rather than employees, under both the FLSA and New York Labor Law. The drivers claimed that their employer misclassified them as independent contractors, entitling them unpaid overtime and other wage claims.
We’ve explained the test for determining independent contractor versus employee status in a few of our earlier posts. The “economic realty test,” which is one of the various tests courts apply, considers (1) the degree of control exercised by the employer over the worker; (2) the worker’s opportunity for profit or loss and investment in the business; (3) the degree of skill required to perform the work; (4) the permanency of the working relationship; and (5) whether the worker contributes services that are an integral part of the business. The analysis in Saleem provides a good illustration of how courts will apply these factors to determine employee or independent contractor status. Here is what the Saleem court considered:
(1) Control—this factor weighed in favor of classifying the drivers as independent contractors. The employer only exercised limited control over the drivers. The drivers could set their own schedules, hire other drivers to work on their behalf, and take vacations whenever they wanted—even without notifying the employer. They had no obligation to accept any job, and they could also freely work for other transportation companies. Even though the employer did require the drivers to periodically inform them of the status of their assignments, the court still found that this factor weighs slightly in favor of independent contractor status.
(2) Opportunities for loss or profit—the court found that the drivers had an opportunity for profit or loss. Because they were not guaranteed a set amount of work under their franchise agreements, the drivers could ultimately control their income with the amount of jobs they accepted. The drivers also invested money into the business by buying, renting, or maintaining cars and paying fees associated with their for-hire drivers licenses.
(3) Skill—this factor did not weigh in favor of employee or independent contractor status. While the drivers were not required to have a high degree of skill, they did need to exercise a high degree of independent initiative. Because the drivers were not required to accept any particular job, they had to independently take affirmative steps to secure jobs in order to be successful.
(4) Permanence of the relationship—this factor weighed in favor of independent contractor status. Even though the drivers had franchise agreements with the employer for many years, they could quit working at any time. The fact that the drivers could work for other companies also weighed in favor of independent contractor status.
(5) Integral part of the business—this last factor favored employee status, as the employer could not operate the business without the drivers’ work.
After weighing the factors and looking to the totality of the circumstances, the court determined that the drivers were properly designated as independent contractors and accordingly dismissed the drivers’ FLSA claims.Source: Larry S. Perlman & Tamar N. Dolcourt, FLSA Case Is A Guide To Using Undependent Contractors, LAW360 (Oct. 17, 2014) https://www.law360.com/classaction/articles/586551/flsa-case-is-a-guide-to-using-independent-contractors
In the rapidly growing oil and gas industry, wage and hour violations have become more common as companies seek ways to lower their labor costs. In response, the Wage and Hour division of the Department of Labor (“DOL”) has focused its investigations and enforcement initiatives on oil and gas employers to address one violation in particular: misclassifying workers as independent contractors. This practice is especially pervasive in the oil and gas industry, where much of the work is sub-contracted out to smaller companies.
Under the Fair Labor Standards Act (“FLSA”), nonexempt employees must be paid at least the minimum wage for all hours worked, plus overtime pay at a rate of one and one half times the regular rate for hours worked in excess of 40 in a workweek. Some employers try to sidestep these obligations by classifying workers as independent contractors, rather than employees. Of course, hiring independent contractors, when done correctly, certainly eliminates many costs and workplace restrictions. Independent contractors are not subject to the overtime provisions of the FLSA, and employers can also avoid tax obligations otherwise owed to employees.
But it is the actual employment relationship—not the label—that controls whether an individual is an employee or an independent contractor for the purposes of the FLSA. Although there is no single way to make this determination, the bottom line is that defining employee status can be complex, and simply handing a worker a 1099 rather than a W-2 will not suffice. It all depends on the circumstances surrounding the employment relationship as a whole. Workers are employees if they are economically dependent upon the employer, rather than in the business for himself or herself. One of the various tests applied by the courts, the “economic reality test,” considers the following factors: (1) the permanency of the relationship; (2) the degree of skill required; (3) whether the worker contributes services that are an integral part of the business; (4) the employer’s control over the worker; (5) the worker’s opportunity for profit or loss; and (6) the worker’s investment in materials and equipment.
When undetected, worker misclassification denies individuals crucial benefits and protections such as family and medical leave, unemployment insurance, workers’ compensation, and the minimum wage and overtime pay. Additionally, it exposes employers to serious liability—back wages, liquidated damages, and attorneys fees—when violations are found. For example, an oil and gas equipment manufacturer paid nearly $700,000 in back wages to misclassified employees following an investigation by the DOL’s Wage and Hour Division. Another company, Morco Geological Services, Inc., recently agreed to pay $595,000 in back wages to employees for minimum wage, overtime, and record-keeping violations. Specifically, the investigation reported that the employees, new mud logging technicians, were only paid $75 per day for working 24-hours shifts.
Over the past decade, this industry has faced a 71% increase in employment, leaving much room for wage and hour violations. The DOL has stepped up its enforcement initiatives by signing memoranda of understanding with state government agencies to organize investigations, providing compliance assistance information to employers, and reaching out to employees to increase awareness of worker misclassification.Source: Naveena Sadasivam, Oil and Gas Companies Are Rigging Wages and Cheating Their Workers (September 27, 2014), http://www.truthdig.com/report/item/oil_and_gas_companies_are_rigging_wages_and_cheating_their_workers_20140927.