The number one question topic in HR is still FMLA, but wage and hour is now a close second, says Attorney Christine Walters, SPHR. You might think that people would have wage and hour down by now, but no.
First, wage and hour lawsuits are coming hard and fast. Walters offered a few examples of the results of recent suits:
- January 29, 2010—DOL announces “Workers to recover more than $1 million in overtime back wages for 789 former and current employees” ($1,267 per plaintiff).
- January 14, 2010—DOL will recover more than $1.8 million in back wages for more than 500 employees ($3,600 per plaintiff).
- December 15, 2009—DOL recovers nearly $1 million in back wages for 206 security company workers ($4,854 per plaintiff).
- December 9, 2009—DOL recovers more than $1.7 million in back wages for about 4,000 healthcare workers ($425 per plaintiff).
Walters is an independent consultant with FiveL Company in Westminster, Maryland. Her remarks came at the recent Society for Human Resources Management Legal and legislative Conference in Washington, DC.
The Feds Are Coming on Stronger
In addition to bringing and winning the high-dollar lawsuits, says Walters, the federal government has beefed up its enforcement operations:
- WHD has a 28 percent increase in its 2010 budget for 1,558 full-time employees versus 1,283 in 2009.
- OFCCP has increased its full-time staff almost 26 percent to 740 in 2010, an increase from 585 full-time employees in 2009.
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Fewer Cases, but …
The Division concluded approximately 26 percent fewer cases in FY 2008 as compared with FY 2001, Walters notes, but the amount of back wages collected for the same periods increased approximately 40 percent.
Misclassifications are also on the rise. We don’t know for sure why, says Walters, but it may be that with the pressures of the economy and the substantial amount of rightsizing, many people just aren’t doing the same job they were doing or even the same type of work, although the organization charts and titles haven’t changed. Is a "manager" who has fewer employees and is no longer managing, but is doing the same job the other employees do, still exempt?
Walters points out that the industries with the greatest number of cases were:
- Restaurants
- Agriculture
- Health care
Classification as Employee Is First Question
Walters suggests that the first question HR managers need to ask is this: Is the person an employee? Independent contractor issues continue to plague employers, she says.
She also warns that employers should be aware that they may run into conflicting definitions between federal and state law. Furthermore, to up the ante, some states are working to make misclassification a crime.
There’s no simple answer to these challenges; however, it’s better for employers to find out for themselves, rather than to wait for the feds to find out.
Employer’s Burden to Demonstrate Qualification for Exempt Status
Remember, says Walters, it is the employer’s job to show that employees qualify for exempt status. There are three tests:
1. Minimum Salary of $455/week
2. Paid on a Salary Basis
3. Duties Test
Employer Can Easily Defeat Exemptions
If employers are not careful, they may defeat the exemption. The most common problem she sees is in making deductions from exempt pay. There are six permissible deductions from exempt pay:
- Full-day absences (personal reasons)
- Full-day absences (sickness or disability in accordance with a bona fide plan, policy, or practice that covers sickness)
- Intermittent FMLA leave
- Safety penalties (suspensions imposed in good faith for infractions of significant safety rules)
- First and last week of employment (Payment of a proportional amount of the employee’s salary for the time actually worked is allowed.)
- Disciplinary suspensions (disciplinary suspensions of 1 or more full days imposed in good faith for infractions of workplace conduct rules, such as sexual harassment or workplace violence–the employer must have a written policy applicable to all employees in order to do this)
Walters also notes that deductions may not be made for absences for jury duty, attendance as a witness, or temporary military leave. The employer may, however, offset any fees the employee receives as a juror or witness or military pay for a particular week against the salary due for that particular week without loss of the exemption.
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Deducting for Lost Property
What about deducting for lost or damaged company property? No, says Walters. First, that’s not one of the six permissible deductions. Second, in an opinion letter, DOL has said that such a deduction would be deducting on the basis of the quality of the work performed, and thus would violate the salary basis requirement.
Watch out for state variants, Walters warns. She noted that 17 states currently have their own “White Collar” regulations that are different from the federal regulations.
In tomorrow’s Advisor, more of Walters’ tips on wage and hour, plus an introduction to a special audit program that should help you catch problems before the feds do.
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