- 1. WAGEOLOGY: COMPENSATION LAW MYTHBUSTERS (AND OTHER TRENDS IN
WAGE AND HOUR LAW)Mark BakkerSarah Sloan BatsonWyche,
P.A.www.wyche.com; 864-242-8200October 28, 2014
2. WYCHE MYTHBUSTERS 3. ORIGIN STORY: FAIR LABOR STANDARDS ACT
(FLSA)FLSA established in 1938Minimum wageOvertimeChild
laborEstablishment of workweekRecord keepingNew Deal response to
abuse in factory-based jobs 4. ARCHAIC LAW APPLIED TO MODERN
WORKFLSA not well equipped to address:TelecommutingFlexible
hoursTechnology/communication advances 5. POTENTIAL FOR MASSIVE
DAMAGESClass and collective actions: groups of employees treated
similarly*Penalties on back pay (100% liquidated damages)Recovery
of attorneys fees*Small $ amount x # of employees x period of time
= big compensatory award 6. INCREASE IN LITIGATIONBetween 2001 and
2011 FLSA lawsuits increased 500%90% class actions are wage and
hour class/collective actions 7. INCREASED INVESTIGATION AND
ENFORCEMENT BY DOLIncrease investigative workforce by over 40%
since 2008 8. IM FROM THE GOVERNMENT AND IM HERE TO HELP 9.
SIGNIFICANT SETTLEMENTS WITH DOL 10. PERFECT STORMFearing Law Suits
Always 11. MYTH # 1: MY SMALL BUSINESS DOES NOT HAVE TO WORRY ABOUT
LIABILITYEnterprise coverage: all employees of enterprise covered
if> 1 employee and> $500K in businessIndividual coverage:
workers engaged ininterstate commerce orproduction of goods for
commerceSouth Carolina Wage Payment Act exceptions:Domestic
employeesFewer than five employeesReality: almost every employee
covered 12. MYTH #2: MY SALARIED EMPLOYEES ARE NOT ENTITLED TO
OVERTIME (EXEMPT)Change the labels:Two tests to be exempt: salaried
basis test/duties testExempt / NonexemptSalaried / Hourly 13.
DUTIES TEST FOR EXEMPTIONExecutiveBusiness
OwnersAdministrativeProfessionalCreative
ProfessionalComputerOutside SalesRetail Commissioned Sales
Employees (OT exception)Highly compensated > $100K/yearMUST
APPLY FACTS AND CIRCUMSTANCES TO EACH SITUATION 14. REPRESENTATIVE
EXEMPTION CLASSIFICATIONSCould Be ExemptRegistered
NursesChefsAccountantsEngineersSales ManagersComputer Systems
AnalystLikely Not ExemptLicensed practical
nursesCooksBookkeepersEngineering techniciansInside sales
positionsIT Help Desk 15. BEST PRACTICES: EXEMPT
CLASSIFICATIONReview and analyze job descriptions regularlyHow job
is done v. what is described?Job modifications = change in
status?Follow up on reorganization or restructuringWatch increase
in hours for positions not clearly exemptBe attentive to employee
complaints about misclassificationSelf-audit (include exemption
analysis) 16. MYTH #3: I CAN DOCK COMPENSATION FOR EXEMPT
EMPLOYEEStandard to Meet Salaried Basis test:(1)Minimum
$455/week(2)No reduction for variations in quality or quantity of
work(3)Pay full salary for any week in which any work performed
regardless of number of days or hours workedImproper deductions
from salary can imperil exempt status! 17. PERMITTED
DEDUCTIONS*(1)Full day absences for personal reasons(2)If sick or
disabled, deduction made under PTO plan(3)Offset by jury, witness,
or military leave pay(4)Violating safety rules of major
significance(5)Suspension due to violation of workplace conduct
rules(6)Pro-rata pay for first and last week of employment(7)FMLA
absence (full/partial day)* Remember -- analysis is for exempt
employees 18. EXAMPLES OF UNPERMITTED DEDUCTIONSAbsences due to
operating requirements of the businessPartial day absence to attend
parent-teacher conferenceCompany closed due to inclement weather
for 2 daysAbsence of 3 days for jury duty 19. SAFE HARBORExemption
will not be lost if employerClearly communicated policy
thatprohibits improper deductionsincludes complaint
mechanismImmediately reimburses employees for improper
deductionsMakes good faith commitment to comply in the future 20.
BEST PRACTICES TO AVOID IMPROPER DEDUCTIONSReview policies and
handbook provisionCreate safe harbor policy regarding deductionsDo
not apply pay docking penalties to exempt employeesTrain managers
on deductions and threats to dock payEstablish and follow formal
employee grievance programTake appropriate corrective action 21.
MYTH # 4: HOURS WORKED IS ONLY ACTUAL, AUTHORIZED HOURS WORKED
(NONEXEMPT)What counts as Hours Worked? 22. HOURS WORKED:
ADJUSTMENTS AND ROUNDINGPerforming tasks prior to start or after
end of work dayWork done before and after clocking outTime Clock
IssuesAvoid excessive long punching (early and late punching)If you
round: hour increments acceptable only if administer fairly 23.
WORKING HOURS: UNAUTHORIZED TIME OR OFF THE CLOCKUnassigned
activities by self-motivated employeeUnauthorized overtimeWorking
longer than scheduled shiftWorking from home/mobile deviceMust
compensate for time suffered or permitted:If employer knows or
should have known that the employee is working or has worked, the
time is compensable, even if employer did not authorize the work
24. WORKING HOURS: BREAKS AND MEALSBreaks < 20 minutes :
compensableBreaks > 20 minutes noncompensable
ifUninterruptedRelieved of dutyBeware : auto-deductions for meal
periods if work being done 25. WORKING HOURS: TRAININGClasses not
compensable if:Attendance outside employees normal work
hoursAttendance voluntaryNot directly related to employees current
jobNo productive work is performed by employee during training 26.
WORKING HOURS: OTHEROn-Call timeTravel 27. BEST PRACTICES FOR
DOCUMENTING HOURS WORKEDReview time-keeping systemsDevelop detailed
understanding of daily practicesUnderstand work habits and customs
28. MYTH # 5: WE AGREE THAT YOUR SALARY COVERS ALL THE HOURS WORKED
(NONEXEMPT)Corollary: We agree to pay a premium on straight time
and pay for all hours workedThink you can contract your way around
this problem?Employees cannot waive claimsSettlements and releases
particularly challengingN COVER ANY ERRORS WITH PAYMENT OR A
RELEASE 29. MYTH # 6: YOU CANNOT CONTROL OR CONTAIN OVERTIME
LIABILITYFluctuating Work WeekRequirementsMust receive full salary
each weekHours must fluctuateMust have clear agreement with
employeeMust be sufficient to meet minimum wagePro: Overtime
liability significantly less in heavy work weeksCon: Must pay full
salary in light work week 30. FWW EXAMPLEEmployee is Paid $400/week
or $10/hrWorks 40 HoursWorks 50 HoursWorks 60 HoursWorks 30
HoursFWW$400 (No OT worked)$400/50 x .5 x 10 hrs. (OT) = $40
($440)$400/60 x .5 x 20 hrs. (OT) = $66.67
($466.67)$400Traditional$400 (No OT worked)$400/40 x 1.5 x 10 hrs.
(OT) = $150 ($550)$400/40 x 1.5 x 20 hrs. (OT) = $300 ($700)$300
31. MYTH # 7: THE INTERN AND VOLUNTEER SOLUTION: THERE IS NO SUCH
THING AS A FREE LUNCH 32. FLSA INTERNS 6 CRITERIA1.The internship,
even though it includes actual operation of the facilities of the
employer, is similar to training which would be given in an
educational environment.2.The internship experience is for the
benefit of the intern.3.The intern does not displace regular
employees, but works under close supervision of existing staff. 33.
FLSA INTERNS 6 CRITERIA4. The employer that provides the training
derives no immediate advantage from the activities of the intern;
and on occasion its operations may actually be impeded.5. The
intern is not necessarily entitled to a job at the conclusion of
the internship.6. The employer and the intern understand that the
intern is not entitled to wages for the time spent in the
internship. 34. CLASS CREDIT SUPPORTS INTERN CLASSIFICATIONIn
general, the more an internship program is structured around a
classroom or academic experience as opposed to the employers actual
operations, the more likely the internship will be viewed as an
extension of the individuals educational experience (this often
occurs where a college or university exercises oversight over the
internship program and provides educational credit). 35. GLATT V.
FOX SEARCHLIGHT PICTURES, INC.Unpaid interns brought class action
lawsuit under FLSA against Fox alleging they were misclassified as
unpaid interns.Interns were employees under the FLSA:No formal
training or education,Routine tasks of employees, andImmediate
advantage to Fox. 36. RED FLAGSIt would be really good to get some
help from an unpaid intern this summer.We have a lot that needs to
be done; lets hire an intern.The program is supposed to benefit the
intern, not the employer. 37. MYTH # 8: AVOID OVERTIME ISSUES BY
PROVIDING COMP TIMEComp time is not a legal option for private
sector businessesFlex time:same work weeksame payroll periodCOMP
TIME 38. MYTH # 9: HIRING INDEPENDENT CONTRACTORS SOLVES MY
PROBLEMBenefits of IC relationship: No overtime liabilityBUT:
Scrutinized by DOL and othersCrackdown on IC
misclassificationEnforcement priorityDOL Secretary: workplace fraud
39. DOL TEST: ECONOMIC REALITIES TEST(1) Degree of control(2)
Investment in facilities/equipment(3) Opportunity for profit and
loss(4) Permanency of the relationship(5) Required skill to perform
the work 40. PRIMARY ISSUE: CONTROLMore control and oversightLess
likely worker is an IC 41. BEST PRACTICES FOR IC CLASSIFICATIONHave
written agreementsLimit exclusivityEncourage economic
independenceEnhance flexibilityEstablish conclusion of the
workDisavow employment relationship and benefitsRequire worker to
set up LLC/corporationConsider alternative (temp
staffing)Periodically audit and evaluate defensibility of IC status
42. MYTH # 10: THIS IS THE COMPANYS PROBLEMSCWPA: very broad
definitions of Employer and Wages"Employer" means every person,
firm, partnership, corporation and any agent or officer of the
above classes employing any person in this State"Wages" includes
salary, commission, vacation, holiday, and sick leave payments and
other compensation due to an employee under employer policy or
contractCases: agents and officers who knowingly permit company to
violate ActTreble damages and recovery of attorneys fees 43. FLSA
CASE STUDY: GROCERY STORE CEO LEFT HOLDING THE BAG2014 case
involves OT claims of employees of supermarket chainCEO also named
as defendantSupermarket defaulted on settlement 44. FLSA CASE
STUDY: CEO OF GRISTEDESCourt said CEO personally liable for $3.5
million:Worked in corporate office almost dailyDealt regularly with
banking and financeMade hiring & firing decisions for high
level employeesPersonally promoted employeesApplied economic
reality test and determined that CEO sufficient control to be held
individually liableINCENTIVE TO PAY WAGES FIRST 45. REGULATORY
CHANGES?March 2014 announcementDecrease OT exceptionsIncrease
salaried minimumsRegulatory, not legislative 46. MYTHBUSTING
TAKEAWAYSCheck for compliance in high risk areas:Exempt employee
classificationsIndependent contractor classificationsTimekeeping
and break practicesStay aware of work practices, job descriptions,
work habitsSelf-audit for red flagsAddress compliance issues as
they ariseWatch for regulatory changes! 47. WAGEOLOGY: COMPENSATION
LAW MYTHBUSTERS (AND OTHER TRENDS IN WAGE AND HOUR LAW)Mark
BakkerSarah Sloan BatsonWyche, P.A.www.wyche.com;
864-242-8200October 28, 2014
