President Seeks Increase to Salary Threshold for Exempt Status

By Brian Steinbach

True to its word, the Obama administration is continuing its effort to do administratively what it cannot achieve legislatively.

While efforts to increase the minimum wage to $10.10 per hour are mired in the Congress, the administration on March 13 announced that it has instructed the Secretary of Labor to “update” and “simplify” the regulations defining who is considered an exempt employee not entitled to overtime pay. These regulations were most recently overhauled in 2004.

“Regulations regarding exemptions … for executive, administrative, and professional employees (often referred to as "white collar" exemptions) have not kept up with our modern economy.”  - Barack Obama

Regulations "for executive, administrative, and professional employees (often referred to as 'white collar' exemptions) have not kept up with our modern economy.”                Barack Obama

The announcement makes it clear that the goal is to significantly narrow the number of individuals who qualify as exempt. A major target of the proposed revisions is the current $455-per-week salary threshold for executive, administrative and professional employees. That threshold is roughly equivalent to $11.38 per hour for a forty-hour week – not much more than the $10.10 minimum wage that the administration seeks, and which it claims is the equivalent of $561 in today’s dollars.

While many exempt employees already make far more than this amount, in some industries – particularly retail and restaurants – front-line managers who currently qualify as executive or administrative employees may not earn much more than this amount, so even a relatively modest increase could cause them to no longer be exempt.

Another likely target may be changing the portion of the definition of an executive employee that currently requires only that the “primary duty” be managing, to a requirement that a fixed percentage of work be devoted to managerial tasks. Again, this is particularly likely to affect the retail and restaurant industry, where managers frequently step in and handle nonexempt tasks when needed.

Fortunately, the regulatory process likely will last at least 18 months, if not longer, and there will be ample opportunity to comment on whatever specific proposed changes the Department of Labor makes, as well as for the Congress to weigh in. In the meantime, this is a good opportunity for employers to review their classifications to make sure exempt individuals are properly classified, and in particular look at how much time they are spending on exempt activities.

Texas Health Care Provider's Miscalculation of Overtime Pay Proves Costly

By: Kara Maciel and Jordan Schwartz

On September 16, 2013, the U.S. Department of Labor (DOL) announced that Harris Health System (“Harris”), a Houston health care provider of emergency, outpatient and inpatient medical services, has agreed to pay more than $4 million in back wages and damages to approximately 4,500 current and former employees for violations of the Fair Labor Standards Act’s overtime and recordkeeping provisions. The DOL made this announcement after its Wage and Hour Division (“WHD”) completed a more than two-year investigation into the company’s payment system prompted by claims that employees were not being fully compensated.   

Under the Fair Labor Standards Act (“FLSA”), employers typically must pay their non-exempt employees an overtime premium of time-and-one-half their regular rate of pay for all hours worked in excess of 40 hours in a workweek.  Employers within the health care industry have special overtime rules.  Notably, an employee’s “regular rate of pay” is not necessarily the same as his hourly rate of pay. Rather, an employee’s “regular rate of pay” includes an employee’s “total remuneration” for that week, which consists of both the employee’s hourly rate, as well as any non-discretionary forms of payment, such as commissions, bonuses and incentive pay. The FLSA dictates that an employee’s “regular rate” of pay is then determined by dividing the employee’s total remuneration for the week by the number of hours worked that week. The FLSA also requires employers to maintain accurate time and payroll records for each of its employees. Should an employer violate these provisions, the FLSA allows employees to recover back wages and an equal amount of liquidated damages.

The DOL’s investigation into Harris’s payment practices found that the company (i) had failed to include incentive pay when determining its employees’ regular rate of pay for overtime purposes, and thus had failed to property compensate its nurses, lab technicians, respiratory health care practitioners and other workers for overtime; and (ii) had failed to maintain proper overtime records. As a result, Harris owed its employees a total of $2.06 million in back wages and another $2.06 million in liquidated damages. Further, Harris has now taken steps to ensure compliance with the requirements of the FLSA by instituting changes in its payroll system and setting up a compliance program to ensure that its employees are properly compensated.

Because an employee’s “total remuneration” for a workweek may consist of various forms of compensation, employers must consistently evaluate and assess their payment structures and payroll systems to determine the payments that must be included in an employee’s overtime calculations beyond just hourly wage. Additionally, employers should conduct periodic audits to ensure that it is maintaining full and accurate records of all hours worked by every employee. Our Firm’s WHD Investigation Checklist could help employers ensure that they have thought through these and other essential wage and hour issues prior to becoming the target of a DOL investigation or private lawsuit. These simple steps could significantly reduce an employer’s exposure under the FLSA and similar state wage and hour laws.  

With No Guaranteed Minimum, Employee That Received Unvarying Base Pay Was Not Exempt Under California Law

By Andrew J. Sommer

There has been a lack of clarity in California wage and hour law on how compensation must be structured to meet the “salary basis test,” particularly where an exempt employee is paid based on hours worked. However, in Negri v. Koning & Associates, the California Court of Appeal addressed this very issue and concluded that a compensation scheme based solely upon the number of hours worked, with no guaranteed minimum, is not considered a “salary” for the purpose of state overtime laws. 

Under California law, an employee exempt from overtime laws must regularly receive “a monthly salary of no less than two (2) times the state minimum wage for full time employment” that cannot be reduced except in enumerated exceptions. Most of the litigation over the so-called salary basis test has addressed when deductions may be made from the exempt employee’s compensation without undermining the exemption. 

In Koning & Associates, the plaintiff/employee was paid an hourly wage for 40 hours per week so that, in effect, he received an unvarying minimum amount of pay. Nevertheless, the Court found that, based on the employer’s admission that it never paid the employee a “guaranteed salary,” the employee did not meet the administrative exemption. 

Although the Court acknowledged based on precedent that the employer may calculate a salary based upon hours worked, it emphasized that this must be a “predetermined amount” that is not subject to reduction because of variations in the quality or quantity of work performed. 

The Court recognized that an employee may otherwise be compensated beyond the predetermined amount for extra work without losing the exemption. The key fact that the Court relied upon in concluding that the salary basis test was not met was the employer’s concession that it never paid a “guaranteed salary.”   

This case highlights the importance of California employers properly characterizing compensation paid to exempt employees to reflect that it is a predetermined amount, no matter how the “salary” is ultimately calculated.   

Work at Home Overtime Claim Blocked by Employer's Timekeeping Systems

By Evan J. Spelfogel

In recent years employees have asserted claims for time allegedly worked away from their normal worksites, on their Blackberries, iPhones or personal home computers.  Until now, employers have been faced with the nearly impossible task of proving that their employees did not perform the alleged work.  The US Department of Labor and plaintiffs’ attorneys have taken advantage of the well-established obligation of employers to make and maintain accurate records of the hours worked by their non-exempt employees, and to pay for all work “suffered or permitted” to be performed.

Now, the United States Court of Appeals for the Tenth Circuit has issued a decision holding that an employer is shielded from an employee’s FLSA overtime claim where it has an automated time keeping system that the employee failed to utilize, to report the hours allegedly worked at home.  Frank Brown v. ScriptPro LLC, Case No. 11-3293 (10th Cir. Nov. 27, 2012).

The three judge panel held that a plaintiff has the burden of proving that he performed work for which he was not properly compensated, citing earlier Tenth Circuit and US Supreme Court precedent:  Baker v. Barnard Construction Co., Inc., 146 F 3d. 214, 220 (10th Cir. 1998); Anderson v. Mt. Clements Pottery Co., 328 US 680, 687 (1946).  It was plaintiff’s burden, the Tenth Circuit held, to produce evidence to show the actual amount and extent of his work.

Here, the Court held, plaintiff had failed to set forth the specific facts showing there was a genuine issue for trial, and granted the company’s summary judgment motion. 

In so doing, the Tenth Circuit acknowledged that plaintiff had produced to the district court in opposition to the company’s motion for summary judgment, “uncontroverted evidence that he actually worked overtime.”  This evidence, the Appeals Court said, included plaintiffs own testimony, his wife’s testimony and certain discussions between plaintiff and one of his supervisors concerning plaintiff’s work at home. 

However, plaintiff failed to show the actual amount of overtime by any justifiable or reasonable inference. 

The key to the Tenth Circuit’s decision was that ScriptPro kept accurate records of employees’ time worked, and had installed an automated recordkeeping system that allowed employees to access the timekeeping system from home and enter their daily time onto that system.  The burden on individual employees to show the amount of overtime worked is only relaxed, the Tenth Circuit held, where an employer fails to keep accurate records. 

In this case, the Court held, there was no failure by ScriptPro to keep accurate records, only a failure by plaintiff to comply with ScriptPro’s timekeeping system.  In summary, the Court concluded, where the employee fails to report time to the employer through the established overtime recordkeeping system, the failure by an employer to pay overtime is not an FLSA violation. 

In view of the Tenth Circuit’s ScriptPro decision, employers should review their recordkeeping and timekeeping systems, and may be well advised to implement systems that allow employees to enter asserted home work time into the systems directly.  Of course, this will require monitoring by employers to ensure employee accuracy and honesty in time reporting. 

Many employers utilize employee time recording systems for employees who spend significant amounts of their workdays away from a centralized jobsite.  Such a system could be easily be adapted to include time reporting for employees who legitimately spend time working from home or at other remote jobsite locations. 

The remedy historically available to employers where employees assert they are working unauthorized overtime hours (against company policy or in direct and flagrant disregard of orders from supervisors) has been to discipline the employee and, if necessary, terminate the employment relationship – but the employer has always been required to pay for the asserted overtime work. 

The Tenth Circuit’s ScriptPro decision is a wakeup call to employers to review their timekeeping systems and, where appropriate, to implement new techniques that would apply to employees allegedly working at home.

Modifying Workweeks to Avoid Overtime: Employers Should Still Proceed With Caution

By:  Elizabeth Bradley

The U.S. Court of Appeals for the Eighth Circuit recently confirmed that the Fair Labor Standards Act (“FLSA”) does not prohibit an employer from modifying its workweek in order to avoid overtime costs. The Court’s ruling in Redline Energy confirms that employers are permitted to modify their workweeks as long as the change is intended to be permanent. Employers are not required to set forth a legitimate business reason for making the change and are permitted to do so solely for the purpose of reducing their overtime costs. The only requirement on employers is that the change must be intended to be permanent.

While the ruling appears to provide employers with the green light to go forward unrestrained in changing the definition of their workweek to avoid overtime costs, employers should proceed with caution by taking the following steps to best protect against potential claims:

·         Provide Written Notice to Employees – The change will not go unnoticed by employees, especially if it impacts their compensation. Employers should provide employees with advanced written notice of the change so that no employees are “surprised” when their paychecks arrive. Open communications between employers and employees is the first defense to potential wage claims. The written notice should provide an explanation of the reason for the change, when it will go into effect and how employee compensation may be impacted. 

·         Comply with FLSA Regulations FLSA regulations provide direction on how employee compensation is to be calculated when a permanent change in the defined workweek results in “overlapping” hours that fall within both the old and new workweeks. Employers should ensure that they comply with these rules and, when in doubt, pay the higher of the two rates for that pay period.

·         Internally Document the Business Reasons – While employers are not required to establish a legitimate business reason for making the change, having contemporaneous documentation of the rationale will provide employers with defenses against potential retaliation claims and can establish that the change was intended to be permanent.

·         Review State and Local Requirements – Employers outside the Eighth Circuit can rely on this decision because there are no conflicting decisions in the federal circuit or district courts; however, this decision is applicable only to changing workweeks under the FLSA. Many states and local municipalities have enacted laws that provide employees with greater protections.  Employers must ensure that there are no state or local wage and hour provisions that restrict the ability to modify the defined workweek. 

Navigating the Murky Waters of FLSA Compliance

On September 19, 2012, several members of EBG’s Wage and Hour practice group will be presenting a briefing and webinar on FLSA compliance.  In 2012, a record number of federal wage and hour lawsuits were filed under the Fair Labor Standards Act (FLSA), demonstrating that there is no end in sight to the number of class and collective actions filed against employers. Claims continue to be filed, raising issues of misclassification of employees, alleged uncompensated "work" performed off the clock, and miscalculation of overtime pay for non-exempt workers.

In this interactive briefing and live webinar, we will discuss the recent trend in enforcement and class action lawsuits, as well as highlight several common mistakes that managers make when trying comply with the ever-changing and confusing area of the FLSA. Specifically, this briefing will teach you how to:  

  • Determine overtime eligibility
  • Determine whether an employee is exempt
  • Calculate overtime compensation correctly
  • Avoid unauthorized overtime
  • Navigate tip credits, tip pooling, and overtime calculation for wait staff
  • Understand what constitutes off-the-clock work and other traps
  • Develop strategies for avoiding additional wage and hour risks 

You can register for the complimentary briefing here.

Massachusetts Bans Mandatory Overtime for Nurses: Nurses Association Applauds

By Amy J. Traub and Ian Nanos

A new law in Massachusetts prohibits hospitals from requiring nursing staff to work mandatory overtime under most circumstances. The law, which will go into effect in 90 days, has strong support from the Massachusetts Nurses Association/National Nurses United. Citing increased chances for costly mistakes and the dangers to patients associated with mandatory overtime, representatives of the Nurses Association applauded the measure, stating that it will protect patients and ensure safe, quality patient care, while saving money.

Employers should be aware that this may be something of a growing trend. Indeed, Massachusetts was not the first state to consider a law of this nature. New York State, for example, enacted a similar measure. Though less burdensome than its Massachusetts counterpart, the New York Law prohibits health care employers from mandating that a nurse work hours over and above the predetermined and regularly scheduled work hours the nurse has agreed to work, absent the existence of several exceptions, including a “health care disaster,” “declaration of emergency,” where the hospital determines there is a “patient care” emergency, or an “ongoing medical or surgical procedure” that requires the nurse’s continued presence.

What Employers Need to Know Regarding the New Massachusetts Law:

  • Under the law, regularly scheduled hours cannot exceed more than 12 hours in any 24-hour period.
  • While the law generally prohibits mandatory overtime, it creates an exception for emergency situations “where the safety of the patient requires its use and when there is no reasonable alternative.” The health policy commission will be developing guidelines to determine what might constitute an emergency, and they will be soliciting comments through public hearing on that process.
  • In the event that emergency situations create a need for overtime, the facility is required to first make a good faith effort to provide overtime coverage on a voluntary basis before instituting mandatory overtime.
  • Nurses will not be allowed, however, to exceed 16 consecutive hours worked in a 24-hour period, and, if working 16 consecutive hours, that nurse must be given at least 8 consecutive hours of off-duty time to complete that 24 hour period.
  • Hospitals are to report all instances of mandatory overtime, along with the circumstances requiring that overtime, to the Department of Public Health, and the reports will be public documents.

Employers should be aware that the statute provides an anti-retaliation measure, making it unlawful for an employer to treat a nurse’s refusal to accept work in excess of the limitations set forth in the statute as a basis for discriminating again, dismissing, or taking any other employment action against that nurse.

Existing collective bargaining agreements will remain in effect, and the statute provides that it shall not be construed to limit, alter, or modify the terms of any such collective bargaining agreements or to diminish or waive other existing rights for nurses.

The law also specifically indicates that mandatory overtime shall not be used to provide appropriate staffing for the level of patient care required, which presumably would include meeting staffing needs that result from nurses calling in sick from their regularly scheduled shift. Thus, facilities need to be sure to accurately assess their needs and develop appropriate measures to address various contingencies.

Employers should review their overtime and scheduling practices accordingly.

Compensating Non-Exempt Employees for Completing Web-Based Training

By:  Kara M. Maciel and Casey Cosentino

We were recently asked by a client to provide guidance on the wage and hour issues associated with company-provided on-line training programs for non-exempt employees.  Questions were raised as to when the training is "voluntary" and whether the time must be compensated if the training is completed at home using a personal computer.  The answer stems from federal wage and hour law, which provides that such time is likely compensable for non-exempt employees.     

The Fair Labor Standards Act requires employers to compensate employees for all hours worked regardless if the work performed is on or off the job site. Consequently, most time employees spend in training programs is compensable hours worked. Attending training is not compensable, however, if all of the following four criteria are met:

1. Attendance is outside of the employee’s regular working hours;

2. Attendance is in fact voluntary;

3. The training is not directly related to the employee’s job; and

4. The employee does not perform any productive work during such attendance.

Typically, it is the second and third factors that generate most of the wage and hour issues associated with employee training.      

First, training is not voluntary when it is required by the employer, or the employee understands or is led to believe that non-attendance would negatively affect his/her present working conditions or the continuance of his/her employment. Therefore, for attendance to be voluntary, employers must not directly or indirectly pressure employees to attend training programs, or impose employment-related consequences for non-attendance.  

Second, training is not directly related to an employee’s job when the training is designed to prepare the employee for advancement or promotion.  Conversely, training intended to improve employees’ efficiency and/or effectiveness in their current jobs is directly related to the employees’ job.

If an employer offers online training outside paid working hours and do not want to pay non-exempt employees for their time spent on the training, employers should do the following:  

·         Restrict employees’ participation in the training to non-working hours only;

·         Do not mandate employees’ participate, explicitly or implicitly;

·         Do not impose adverse consequences for employees non-participation;

·          Do not condition employees’ continued employment on completing the training;

·         Analyze the training to ensure it is designed to qualify employees for a new job or promotion (and is not intended to enhance employees’ current job skills); and

·         Ensure the employees do not perform other work during the training.

If all of the above factors are not satisfied, then employers must compensate their employees for any time spent completing the online training.  Because the requirements for providing non-compensable training are particular and precise, and the cost of non-compliance can be costly under the FSLA for unpaid time and/or missed overtime, the conservative wage and hour approach is to offer online training during paid working hours.    

 

 

Nurses Held Exempt Under New Jersey Wage and Hour Law

By Daniel R. Levy

On November 16, 2011, the New Jersey Appellate Division held that registered nurses are exempt from overtime compensation under the New Jersey Wage and Hour Law (“NJWHL”), N.J.S.A. 34:11-56a1 to 56a30, even if paid on an hourly basis, because they fall within the “professional” exemption. Anderson v. Phoenix Health Care, Inc., A-2607-10T2 (N.J. App. Div. Nov. 16, 2011). The Court further held that, even if registered nurses were not exempt, a claim for overtime compensation may nevertheless fail under the NJWHL’s good faith exception, N.J.S.A. 34:11-56a25.2, if the employer establishes that it conformed to the Division of Wage and Hour Compliance’s (“Division”) “longstanding interpretation that registered nurses are not entitled to overtime so long as they are compensated in excess of the weekly minimum” salary required for exemption.

The NJWHL requires that employees pay one-and-one-half times an employee’s hourly wage for each hour worked in excess of forty hours per week. Excepted from this general rule are individuals employed in a bona fide executive, administrative, professional or outside sales capacity. N.J.A.C. 12:56-7.1. Under N.J.A.C. 12:56-7.3(a), which was in effect until mid- 2011, a professional was defined as an employee whose primary duties consisted of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education, and who is compensated not less than $400.00 per week. The regulation, however, has since been superseded by regulations adopted on August 15, 2011 that adopted the federal regulations under the federal Fair Labor Standards Act (“FLSA”). N.J.A.C. 12:56-7.2(a); 43 N.J.R. 2353.

In Anderson, plaintiffs, registered nurses formerly employed by Phoenix Health Care, Inc., filed a putative class action seeking relief for overtime compensation under the NJWHL. Plaintiffs moved for class certification and defendants cross-moved for summary judgment, arguing that registered nurses are exempt from the NJWHL’s overtime requirements and asserting that plaintiffs’ claims were otherwise barred by the NJWHL’s good faith defense. The trial judge granted defendants’ cross-motion, and plaintiffs appealed.

On appeal, the Court affirmed dismissal of plaintiffs’ NJWHL claim despite plaintiffs’ argument that they were not exempt because they were paid on an hourly, not salaried, basis. The Court reasoned that although the applicable regulation did not expressly exempt professionals paid on an hourly basis, such as a majority of registered nurses, “the NJWHL was not intended to permit overtime to such employees when they are compensated at least as much as the weekly minimum referred to in N.J.A.C. 12:56-7.3(a)(5).” The Court also held that summary judgment was appropriate based upon the NJWHL’s good faith exception because defendants conformed to the Division’s “longstanding interpretation that registered nurses are not entitled to overtime so long as they are compensated in excess of the weekly minimum.”

In a footnote, the Court recognized that N.J.A.C. 12:56-7.3 was superseded by regulations adopting the federal regulations under the FLSA. Those federal regulations state, in pertinent part, that “[r]egistered nurses who are registered by the appropriate State examining board generally meet the duties requirements for the learned professional exemption but licensed practical nurses generally do not qualify as exempt learned professionals.” 29 C.F.R. 541.301(e)(2). The Court stated that it was not opining as to whether the result would be the same under the newly adopted regulations. 

Employers should proceed with caution as a result of the Court’s decision in Anderson, specifically because it construed regulations that have been superseded.  If New Jersey courts continue to follow this ruling under the newly promulgated regulations, it may lead to inconsistent results under the NJWHL and FLSA. It is clear that registered nurses paid on a salary basis will likely qualify under the professional exemption under both the NJWHL and the FLSA. 

It remains unclear, however, whether registered nurses paid on an hourly basis will be found exempt under the NJWHL. In order for a registered nurse to be exempt under the FLSA, the registered nurse must be paid on a salary basis. See 29 C.F.R. 541.600(e) (stating that the salary requirement applies to nurses); Anani v. CVS Rx Servs., 788 F.Supp.2d 55 (E.D.N.Y. 2011) (registered nurses perform exempt duties and question of whether they are, in fact, exempt turns on whether they are paid on a salary basis). If New Jersey courts follow the FLSA regulations, as the newly promulgated New Jersey regulations state they will, registered nurses paid on an hourly basis will not be found exempt under the NJWHL. If, however, the decision in Anderson is followed under the new regulations, then registered nurses paid on an hourly basis will likely be found to be exempt under the NJWHL.         

Sullivan v. Oracle Corporation: Non-Residents Who Perform Work in California Are Governed By California Wage Hour Laws - Including Daily Overtime Rules

By Michael Kun and Betsy Johnson

In a much-anticipated decision, the California Supreme Court has expanded the scope of California’s complex wage-hour laws to non-resident employees who perform work in California.  While the decision leaves more than a few questions unanswered, it will require a great many employers to review their overtime and other payroll practices.  Perhaps just as importantly, it will likely open the door to lawsuits, including class actions, regarding  prior overtime and payroll practices.

The case, Sullivan v. Oracle, has had a tortured history.  In the case, several Arizona and Colorado residents who were employed as instructors by Oracle, which is headquartered in California, filed suit alleging that they were entitled to overtime under California law on those occasions when they performed services in California.   Oracle had treated the instructors as exempt employees and did not pay them overtime.  Because the issue was a novel one involving interpretation of California state laws, the federal Ninth Circuit Court of Appeal certified issues for the California State Supreme Court to decide.

As employers with operations in the state know, California law differs from the federal Fair Labor Standards Act (“FLSA”) in many ways.  Overtime exemptions under California law are analyzed differently than under the FLSA, turning not on what an individual’s “primary” duties are, but on the duties in which they are “primarily” engaged (i.e., spending more than 50% of their time).  In addition, California law provides for daily overtime for work performed by non-exempt employees beyond 8 hours in a day, and for double time for work performed beyond 12 hours in a day.  California law also requires employers to provide meal and rest breaks to non-exempt employees.

Addressing this issue for the first time, the California Supreme Court concluded that California’s overtime laws in fact apply to those non-resident employees who travel to and perform services in California.  The Court concluded that the state overtime laws make no distinctions between residents and non-residents, and explained that it would defeat the purpose of those laws if employers could simply “import unprotected workers from other states.”

The decision is limited to “California-based” employers. However, the Court did not provide a definition for this term. As such, employers based outside California should not ignore Sullivan.  There is every reason to believe that non-resident workers of employers based outside California will contend that they, too, should be covered by California’s wage-hour laws when working in the state.  And, based on the broad language in Sullivan, there is every reason to believe the California Supreme Court might agree.

What Employers Should Do Now:

Employers should review their payroll practices for exempt and non-exempt employees, to avoid running afoul of Sullivan and California wage-hour laws when sending employees to work in California.  Among other things:

  • When sending employees classified as “exempt” to California, employers will want to determine whether those individuals are properly classified as “exempt” under California law and, if not, treat them as non-exempt employees during those periods of time when they are working in California 
  • When sending “non-exempt” employees to California, employers will want to ensure that they treat those employees in compliance with California wage-hour laws, including providing daily overtime and complying with California meal and rest break laws
  • When sending “non-exempt” employees to California, employers will also want to ensure that they are complying with California law requiring payment for travel time.  Indeed, the Sullivan decision would suggest that while “non-exempt” employees traveling to California for work will need to be compensated for their travel time in accordance with California law as soon as they reach the California border – a tricky issue, to say the least, particularly for employees traveling by air. 

Wage & Hour Division Continues Enforcement Actions against Virginia Hotels

By:  Kara M. Maciel

The Department of Labor’s Wage and Hour Division in Norfolk, Virginia has announced that it will be stepping up its compliance audits and enforcement efforts against area hotels. In the past few years, the DOL stated it found violations at about 60% of local hotels. According to the DOL, the agency recently made spot checks at 10 area hotels since April. This is just one part of the agency’s nationwide enforcement program and its “Plan/Prevent/Protect” initiative against the hospitality industry. Common violations assessed by the DOL include:

·         Payment of overtime. Under the FLSA, employees are entitled to overtime for any hours worked over 40 per week. For employers who have multiple hotels or facilities, when employees work at different locations in a work week, it is imperative that the employer coordinate its payroll systems to aggregate the employee’s time worked at both jobs in order to ensure that proper overtime is being paid. The DOL is finding that when an employee works at one hotel 20 hours per week, and 25 hours at another hotel, the employee is not paid overtime.   

·         Unlawful deductions. Many hospitality employers require employees to reimburse the hotel for a uniform through payroll deductions. However, an employer may not lawfully deduct from an employee’s wages for the cost of a uniform if it reduces the employee’s hourly wage below the minimum wage. Thus, for employees who are paid the minimum wage or tipped employees for whom the employer takes the tip credit, the hotel cannot deduct for a uniform if it drops the employee below the minimum wage.     

·         Working through meal breaks. Another common violation in the hospitality industry relates to workplaces in which the employer voluntarily provides a meal break. Under the FLSA, an employee, who is provided with a bona fide meal break, must be completely relieved of duty.  If an employee clocks out for lunch, and then is asked to clock back in to perform some work, the employee must be paid for the entire meal break, and not just for the time back on the clock. For many employers who automatically deduct for meal breaks or who fail to pay for the full meal period when it is interrupted, this could represent a significant liability. 

Now, more than ever, employers in the hospitality industry should be vigilant in their wage and hour compliance with federal and state law. Especially in light of the DOL’s recent roll-out of its Smartphone “app,” which allows workers to track their hours and evaluate the amount of overtime earned, workers are being armed with ample resources to bring claims of unpaid wage against the employers. 

DOL's Failures Leave Workers with Nowhere to Turn? Not in Florida

A report by the Government Accountability Office found that the Department of Labor's Wage and Hour Division, the federal agency charged with enforcing minimum wage, overtime and other labor laws, "is failing in that role, leaving millions of workers vulnerable," according to an article in today's New York Times.

One of the reports concerned the Division's office in Miami:

When an undercover agent posing as a dishwasher called four times to complain about not being paid overtime for 19 weeks, the division’s office in Miami failed to return his calls for four months, and when it did, the report said, an official told him it would take 8 to 10 months to begin investigating his case.

The report concludes that "Labor has left thousands of actual victims of wage theft who sought federal government assistance with nowhere to turn." 

Nowhere to turn? In Florida that's simply not true.  As anyone who pays attention to court filings can tell you, dozens of workers each week, many on the low end of the pay scale, file claims for overtime and minimum wage violations in Florida state and federal courts.  Indeed, as previously reported here, according to the Administrative Office of the United States Courts, for the past five years the Southern District of Florida alone has averaged 28.7% of all Fair Labor Standards Act cases filed in the United States.  The notion that workers have "nowhere to turn" is absurd.  They need only turn to one of Florida's many wage-hour lawyers, who have turned wage-hour litigation into a cottage industry in the sunshine state.  Does the GAO not realize that the FLSA permits private lawsuits, and in fact encourages them through its fee-shifting provisions? Why would an employee need the Wage and Hour Division when he has the Shavitz Law Firm or The Celler Legal Group in his corner?