Webinar: Wage & Hour Done Right

Wage & Hour WebinarClassifying employees correctly and then paying them the right way based on that classification can be complicated, and when done incorrectly can be very costly for employers.

In this session, you will learn the basics of exempt versus non-exempt classification, and what you need to know about paying non-exempt employees. We’ll also discuss recordkeeping, overtime calculations, travel time, and more.

Our presenter will cover:

  • The Fair Labor Standards Act
  • Employee Classifications
  • Basic Requirements
  • Non-Exempt Danger Zones


Our Webinar on Hourly Employees

This recorded session was presented live on December 14, 2023.

Presentation Slide Deck

Session Transcript:

Kara Govro:
Hi, everyone. Welcome. We’re here today to talk about Wage & Hour Done Right. My name is Kara Govro. We’ll get started in just about a minute. We’ll delay for just a second here to let a few more people roll in. Hopefully your pre-holidays are going well. [00:00:30] We’re almost there. All right. So let’s roll over to our little bit of housekeeping. We will send you a link to the recording of this webinar as well as a PDF of the slides within about 24 hours to the email that you registered with to watch this.

So you don’t need to take notes, screenshots or anything [00:01:00] like that. We’ll send it all to you. We’ve got a couple polls. We’d love your participation. If you want to ask me questions, use the Q&A box. You might have both chat and Q&A enabled, but Q&A is what I will look at. I can sort of only handle looking at one of those at a time and so feel free to shoot me questions. I’d love to answer them. Hopefully we’ll have time. And then finally, this is eligible for HRCI or SHRM credits.

[00:01:30] We don’t have a pre-approved code for you, but you can definitely submit this on your own and get a credit hour out of it. So just to introduce myself a little bit, my name’s Kara Govro. If you’ve been to our webinars before, you’ve probably, you’ve probably heard me. I’m the Principal Legal Analyst here at Mineral.

I practiced employment law for a number of years before joining the team here and I spend most of my time looking at [00:02:00] the new laws that are passing at the state level, even the local level and the federal level and breaking those down and explaining to employers mostly via email what you all need to know about them and what you need to do about them.

So that’s what I do with my time. When I was practicing law, I did quite a bit of wage and hour. It’s kind of fun for plaintiff’s attorneys, which is one reason you want to make sure you’re doing it right [00:02:30] because there are easy cases to win for a plaintiff or a plaintiff’s attorney. So let’s go ahead and roll in. Our agenda today, we’re going to talk about the Fair Labor Standards Act, which is sort of the crux of wage and hour in the United States.

Then we’ll spend a little time on employee classifications. Then we’ll talk basic FLSA requirements and then we’ll get into some non-exempt danger [00:03:00] zones as we like to call them. So we’ll start with the Fair Labor Standards Act. This is a very old law now, it’s been around for a very long time. It was originally passed because we basically had no laws regulating labor in the United States. And it’s actually a fairly short law by statutory standards.

I printed it out once I’ve got it in a binder. I think it’s about 55 pages long. [00:03:30] So what it regulates is minimum wage. It sets the minimum wage at the federal level. States as many of you know, and localities can go above and beyond, but it does set a minimum bar. It also regulates overtime. So the FLSA is what tells us that we have to be paying overtime of a rate of 1.5 times the employee’s regular rate of pay for hours worked over 40 in a work week.

[00:04:00] Again, states can layer on top of that, but the FLSA gives us the bare minimum there. It also provides us overtime exemptions. So there’s a very long list of some very specific jobs right in the FLSA that are exempt from basically all of the FLSA regulations. So it’ll be home wreath makers, fishermen on American vessels, some [00:04:30] really interesting stuff. As long as, excuse me, as well as the ones you’re familiar with, like the white collar exemptions for executive administrative and professional employees outside sales, inside sales.

The FLSA also regulates the kinds of records that we need to keep for the non-exempt employees who are subject to the FLSA and it provides us our base rules around child labor. Prior to the FLSA, it was not uncommon [00:05:00] to see five and six year olds working in mines because they were very small and they could get into places that adults couldn’t get into and you could work them any number of hours per week, you could get away with and pay them as little as you could get away with. So I dare say the FLSA was necessary when we got it.

It doesn’t however regulate anything else. So if you’re familiar with any regulations related to fringe benefits, [00:05:30] like whether you have to pay out vacation in your state, that’s a state law. Meal and rest breaks, rest breaks are very lightly regulated by the FLSA, but for the most part, if you have to give a ten-minute break or a 15-minute break or whatever, that’s coming from state law. The FLSA doesn’t require that you give any breaks.

It just says if you do give breaks, there’s a thing to keep in mind. But if you have mandatory meal and rest breaks, that’s coming from the state. The FLSA also doesn’t regulate benefits. [00:06:00] It doesn’t really address reimbursement for business expenses or mileage or anything like that in any way, and it doesn’t address equal pay. That’s a whole separate law.

Almost everyone is covered by the FLSA. So in 2016, and maybe again this coming year, people started asking, “Am I covered by the FLSA? Is there any way I could not be covered by the FLSA?” And they were asking [00:06:30] that because the minimum salary for exempt employees was about to go way, way up and they didn’t like the sound of that. So they’re going, “Can I get out of the FLSA? Any chance I’m not covered?” Almost no chance that you’re not covered by the FLSA.

There are two ways to be covered. The first is enterprise coverage. And if that applies then your whole business and everyone in it is covered. And that’s if you’ve got business of at least half a million a year. [00:07:00] If you’re a smaller business than that, then we look at each individual employee and determine whether they’re covered by that FLSA. And if they’re engaged in what’s called interstate commerce, even if your business is tiny, then they’re subject to the FLSA and almost everyone is engaged in interstate commerce at this point with how interconnected the world has become.

Basically if they’re calling other states, if they’re using Amazon Prime to get things delivered to your business from other states, if you’re selling [00:07:30] things to people in other states, accepting checks from banks in other states even can trigger the FLSA requirements. So chances are you’re covered. So we’re going to take our first poll. This is totally anonymous. We’re going to ask, have you ever dealt with a wage and hour claim or threat of the claim. And our options are no or one or more employees threatened, but no [00:08:00] one has followed through yet.

We have dealt with complaints but we settled them out of court or we’ve been through the court system to settle a complaint. Like I said, this is anonymous. I can’t even see who answered what. So we’re just sort of curious how many of you had to deal with these issues in the past. And we won’t let that run too long. In fact, let’s wrap it up. See what everybody said. Oh, [00:08:30] excellent. Wow. Okay, that is excellent news. 68% of you said no, you’ve never dealt with a wage and hour claim.

And then we’ve sort of got a smaller mix. Some employees have threatened is the next most common but not followed through and then it looks like only 17% of you have actually had to deal sort of with attorneys and the court systems. So that is really good. I think when I’ve taken this poll in the past, I’ve gotten more yeses than this. So well done [00:09:00] and hopefully we can learn even a little bit more today to keep you in that no category.

All right, so let’s talk about employee classification. To comply with the FLSA and other wage and hour rules, we really have to understand who they apply to. And classification is an area where we see a lot of problems for employers. So under the Fair Labor Standards Act, we need to be concerned [00:09:30] with who we classify as an employee and then whether an employee is exempt or not exempt from those wage and hour regulations like overtime.

So the FLSA generally doesn’t apply to properly classified unpaid interns or independent contractors or volunteers. So there are some types of workers that will not be subject to the FLSA, but it’s a fairly common problem for [00:10:00] employers to say, “Oh, this person’s not subject to wage and hour. They’re not really an employee,” when they are in fact an employee. So let’s dig in a little on that. Do you have an employee or something else, some other kind of worker?

So like I said, there are specific criteria for these three particular kinds of non-employees. So we’ve got independent contractors. And there are a number of tests. So I’m talking federal here. [00:10:30] We’ve got the IRS test and the DOL test. You might be in a state with a different test like the ABC test. So this whole presentation is about federal law. So if you’re in a state with a lot of employment law regulations, particularly around wage and hour, you need to sort of layer that on top of what we’re discussing today.

We’ve got unpaid interns, that’s a type of non-employee, and for that we use the primary [00:11:00] beneficiary test. And then we’ve got volunteers and they’re generally prohibited at for-profit organizations. So we’re not going to talk about volunteers because we can pretty much write those off for most of you. But let’s take a look at independent contractors and unpaid interns. So for independent contractors, there are actually a couple of tests you want to make sure you pass at the federal level.

The first is the IRS test to make sure [00:11:30] that you don’t have to be paying taxes for that person. Then there’s the DOL Economic Realities Test. The DOL is actually not currently using the Economic Realities Test. For about the last year and a half, there has been a new different test. However, the DOL has re-released the Economic Realities Test as a proposed rule. So I think any minute now the Economic Realities Test [00:12:00] will in fact be officially used again by the Department of Labor.

However, that same Economic Realities Test is used by probably a majority of states and courts. So even though it briefly didn’t apply as far as the DOL was concerned, it probably still applied somewhere in the mix for you. So you want to look at the IRS test and the DOL test to make sure that anyone you have [00:12:30] classified as an independent contractor qualifies under both those tests. The good news is they’re extremely similar.

I’ve always said if you do one, that that’s almost certainly going to be a result on the other test as well. But go ahead and look at both and document that you looked at both just so you have that in your back pocket if necessary. Both of those tests are multi-part balancing tests or factors tests. This is pretty annoying for [00:13:00] all of us employers, especially though you’d like to know that if you checked more than 10 of the 20 boxes that you could say they were an independent contractor, but that’s not how it works.

There’s no definitive answer on any of these and there’s no way to know for sure that the scale is tipped one way or the other. Which is why I always say if you’re torn, if you run these tests on a worker and you feel like it comes down to a coin flip, make [00:13:30] them an employee. That’s going to be the safer approach. Both tests really focus on who has the most control over the work. Even though DOL calls itself an Economic Realities Test, at the end of the day it’s largely about control.

All right, let’s talk about unpaid interns now briefly. So [00:14:00] I feel like there’s a fair bit of confusion around interns and internships and some employers are under the impression that if they call someone an intern and they only hire them for the summer, then they don’t have to treat them like an employee. In fact, most interns are employees. You can call an intern, but it doesn’t change the fact that they are just a regular old employee.

However, some internships really can be unpaid and we can treat those people differently, [00:14:30] but they have to meet all, pretty much all of these criteria. So it’s a seven-part test right now. This was rolled out I want to say by the Department of Labor five years ago maybe. Might be losing track of time. But anyhow, this is what you need to be looking at if you’re thinking you might have an unpaid intern. The crux of it is that they really are in school and they’re [00:15:00] getting credit from working for you and they are not really helping you out that much.

The last bullet, “The intern’s work complements rather than displaces the work of paid employees.” So they really need to be with you for educational purposes and you out of the goodness of your heart, need to be having them in to educate them. So if you’re thinking unpaid intern for the summer or whatever, [00:15:30] do take a look at this test. And if people don’t pass this test, that’s fine. You can still call them an intern, but you need to treat them like an employee.

Okay. So if we’ve dispensed with the non-employee categories and we think we do have an employee, then we can ask, is there a way to make them exempt from the FLSA or are they just sort of naturally exempt from the FLSA? And the FLSA [00:16:00] does provide exemptions from minimum wage overtime or both for specific kinds of employees. However, most of those employees, or I should say many of those employees are going to be classified that way because they are doing quote-unquote “White collar” work or executive administrative and professional work.

And in order to be exempt [00:16:30] that way, these employees need to pass basically a three-part test, salary-level test, the salary-basis test, and a duties test. I’ve got a whole hour-long presentation on just basically white collar classifications. So one could spend a lot of time on this. We won’t spend a lot of time on it today because we’re covering many other things, but let’s take a look at each of those briefly.

So we’ve got the minimum salary-level [00:17:00] tests. Again, this is for our white collar exemptions, sometimes called EAP, although there’s a little bit more than just the EAP. So for executive administrative professional or salaried professional computer employees, the current minimum is $684 per week. We do have a proposed rule from the Department of Labor that’s out.

We’ve reported on it a couple months ago when it was released and we’re expecting to hear more relatively [00:17:30] soon, but they’re proposing to increase that minimum weekly salary to $1059 per week. Hourly computer employees, and this is for people who do stuff like computer programming, software engineers. This is not for IT people who fix things when they’re broken or install your software or whatever. Pretty much think coders [00:18:00] and that sort of level of professional.

They can be exempt and paid on an hourly basis as opposed to paid on a salary basis, but they need to make 27.63 per hour and the new rule doesn’t have a proposed increase for that. There’s also a category called the highly compensated employee, and that’s not anyone who you think of as being highly compensated. It’s got a very specific set of criteria. It’s actually generally for employees who have slightly less responsibility [00:18:30] than your typical executive administrative or professional employee, but they’re paid so well that we stop worrying about making sure that they get overtime.

So that number right now is around $107,000 per year and they’re looking to increase that to about $145,000 per year. And then for outside sales, there hasn’t been a minimum and there’s not a minimum proposed. So in addition to making these minimums, we also [00:19:00] need to be paying these employees on a salary basis, which means they’re paid a fixed amount no more frequently than once per week. We can’t pay them daily, we can’t pay them twice a week.

It has to be weekly or more often, or sorry, less often. So usually you’re going to be on a two-week cycle or a twice a month cycle and that’s fine. And the amount can’t be subject to reduction because of variations in the quality or quantity of the work performed. So [00:19:30] in general, if you’ve got an exempt employee and they’re only there 38 hours that week instead of 40 because they had a dentist appointment and they got a tiny bit less done because they were there for two hours, less than usual, you’re going to pay them the same.

Similarly, if they’re only there for 20 hours that week, you’re going to pay them the same. Or if they’re there for 60 hours that week, you’re going to pay them the same. There are of course some exceptions to that if they’re using PTO, [00:20:00] et cetera. Well, actually PTO would fill it in. So it’s not exactly an exception, but that’s the gist of it. We’re going to pay them the same amount every pay cycle no matter what with some exceptions.

And then we’ve got the duties tests. So for these white collar exemptions, there are specific tests related to the role that each worker needs to pass in order to [00:20:30] be properly classified as exempt. And these certainly trip employers up. A lot of employers think, “Oh, if I classify someone as…” Sorry, “If I call someone a manager because they are a manager, then I can make them exempt as an executive.” That’s not necessarily the case.

We have some very specific criteria for that such as they manage the work of two or more full-time employees regularly [00:21:00] or the equivalent of two or more full-time employees, so. And administrative employees. Often you’re thinking, “Oh, administrative assistant, great.’ It’s not about the title. Just because they have administrative in their title doesn’t mean they can be exempt. That person is going to have independent judgment over matters of significance for instance.

And professional employees need to have usually an advanced degree, not [00:21:30] specific training like CAD training or something, but a four-year degree plus a two-year degree. So these are very specific. If you’ve never taken a look at them, I would strongly recommend it. All right. I’ve got a couple of questions here. Someone said, “Bi-weekly pay cycle based on a weekly salary, does that work?” Yep, sure does.

Weekly [00:22:00] or less frequent is fine. And then someone else asked, “So for salaried people, is it a case of wage theft? Is there a case of wage theft if anything can be withheld from their paycheck?” I’m going to take that as is it wage theft if we withhold things from their paycheck and potentially. Yes. Yes, absolutely. There are certain things that you can take deductions for which we’re not going to get into today because we’re focused on the FLSA [00:22:30] and technically the FLSA doesn’t even apply to those salaried exempt employees.

But there are things you can take deductions for. If you’re taking deductions when you shouldn’t be taking deductions, then absolutely they have the ability to bring a wage claim. Okay, let’s take another poll. So how confident are you that your employee classifications are correct? Very confident. I understand the tests and I know our workforce is [00:23:00] properly classified.

Moderately confident, we might need to check a few of them. Not confident, not sure we’ve ever checked classifications before or I didn’t know there were tests for independent contractors or exempt employees. Again, these are anonymous. I tend to see a lot of people in moderately. Not a ton of people generally say they’re very confident, although this crowd was feeling pretty good on that last question. So let’s [00:23:30] go ahead and take a look and see what we got.

Okay. Yeah, that’s sort of what I expected. So about a third of you said you’re very confident and then exactly half of you said you’re moderately confident, which is great. I mean, I like the sound of that, not confident and I didn’t even know there were tests only accounts for 14% of you. I’m glad that you 14% are here. We will send a copy of the slide deck and we have a ton of resources on the platform [00:24:00] to help you figure this out too.

Like guides that I personally have written to help you sort through some of this. So thank you for participating. And I do apologize about my voice, which is rapidly declining. I’ve had a cold all week. Okay. Let’s talk the basics of the FLSA. We won’t spend much time here because this is, as advertised, quite basic. So we talked about how the FLSA doesn’t actually regulate very much. [00:24:30] Pretty much these four things, plus child labor, which we won’t get into.

So minimum wage. Most of you are probably subject to a state minimum wage or even a local minimum wage on top of a state minimum wage. But if you’re not, then the federal minimum wage is still 7.25 per hour. It has been that way for quite some time since July of 2009. So we’re pushing 15 years on that and 2. [00:25:00] 13 with a tip credit. So right now the highest minimum wages in the country, I checked right before the webinar, are in C-TAC. Certain employees in C-TAC, their minimum wage is $19 and 6 cents an hour.

Seattle has a minimum wage of $18 and 69 cents per hour. And Mountain View California, which was the big winner for many years is $18 and 15 cents per hour. That’s just [00:25:30] some fun trivia. Maybe only fun for me. All right, so it also regulates record keeping. So we need to keep quite a bit of information for about three years, well, for exactly three years from the date of the creation of the record. So that may or may not be the day it actually happened, but from whenever the record got created, you need to hold onto it for three years.

So we’ve got personal information from the W-4. [00:26:00] We need to track total hours in each work week, dates of payment, total wages broken down by day, weeks, straight time and overtime, regular hourly pay rate for weeks when overtime has worked and deductions or additions to wages. So chances are your payroll system is in fact keeping track of all of this. If you’re running your own payroll, [00:26:30] you’re probably covering this pretty well. This is not new, but doesn’t hurt to review the information once in a while.

Overtime seems pretty straightforward, but I’ve stopped being surprised when there’s confusion because employers do somewhat frequently think that as long as an employee is working less than [00:27:00] 80 hours or 80 hours or fewer in a payroll cycle that they don’t have to pay overtime. So hours worked over 40 in a work week have to be paid at one and a half times an employee’s regular rate of pay even if they worked fewer hours the week before or the week after in a single payroll cycle.

So a work week is exactly seven days long. It’s exactly 168 [00:27:30] hours and that’s where you’re going to track an employee’s time to see if they do more than 40 hours of work. So for instance, Sunday at 12 a.m. through Saturday at midnight would be a work week. So we have an example here of the sort of problem that I see some employers run into. So week one the employee works 50 hours and let’s say you’ve got a two-week payroll cycle and you’re thinking, “Okay, well next week I’ll just have them do [00:28:00] 30. Payroll cycle will be at 80, we’re square.”

That’s not the case. What you really need to do is give them 70 hours of straight time and 10 hours of overtime because they did 40 plus 10 that first week and we only look at weeks. All right. One more bit of basic stuff here. There is [00:28:30] a mandatory poster. The poster refers to itself, which always cracks me up. It’s self-referential. It’s like, “I’m a poster and I must be posted.” I’m sure you have this of all the posters that someone has. This is probably at the top.

So yeah, keep track of this. And it hasn’t changed for a very long time. So that’s the good news. This is not a poster you’ve had to change out probably anytime recently. Okay. Now [00:29:00] we’ll get into wage and hour danger zones. I do want to remind you if you have a question for me specifically, please put it in the Q&A rather than the chat. All right, let’s look at some of the most common issues and questions we get from employers on wage and hour practices. Calculating the regular rate.

So we’ve talked about this term already just a little bit. If an employee works for more [00:29:30] than 40 hours in a week, we have to pay them one and a half times their regular rate of pay for those extra hours. So what is their regular rate of pay? That needs to be figured out before you determine what their overtime rate is. And it can be affected by things like commission or piece rate pay or on-call pay or even non-discretionary bonuses.

So non-discretionary bonuses are any bonuses that are earned by doing something [00:30:00] specific. So if you’ve got people earning commissions or non-discretionary bonuses, that needs to factor into their regular rate of pay before you figure out their overtime. You also might have people working two different at two different rates either for shift differentials or because you’ve got them actually doing different jobs.

So let’s take a look at one of those examples. So let’s say you’ve got an [00:30:30] employee, her name is Anna, she earns $10 an hour. We’re clearly in a state that doesn’t have a very high minimum wage. Anna earns $10 an hour for doing inside sales and $15 an hour for doing bookkeeping work. Let’s say this week she did 24 hours of inside sales and 20 hours as a bookkeeper and she received $50 in commissions attributable to this work week.

So how do we figure out her regular rate? Basically [00:31:00] we take all the money she earned and we divide it by the number of hours she worked. So her regular rate is 13.41, it’s not 10, it’s not 15. We have to blend that and we have to throw the $50 of commissions into the bucket and then we divide the whole thing by 44. So her overtime rate will be 2011 per hour. I just wanted to give you a visual on that in case that’s a concept you haven’t seen before.

[00:31:30] All right. Someone asked, “How do you factor non-discretionary bonuses into overtime pay? [inaudible 00:31:42] employees paid a commission based on something that changes every time they receive commission?” I’m not totally sure I follow the question, but you can basically correct overtime pay later. If you need more information before payday, you can [00:32:00] do retroactive updates to overtime pay. But it’s also possible that you’re going to have to be figuring out their regular rate every single week.

Someone’s regular rate could certainly vary from week to week to week. So that can definitely be a little bit of a hassle. All right, late or incomplete timesheets, this is a fairly common problem. You can’t withhold pay. We frequently get asked, “Well, can I hold their money until [00:32:30] they fill in their timesheet because that seems reasonable, right? They haven’t reported that they worked any hours, therefore I’m going to pretend that they didn’t work any hours.”

You can’t do that. The Fair Labor Standards Act says it is the employer’s responsibility to track employee time. I understand that that doesn’t really seem fair or reasonable. You might have many hundreds of employees and you cannot walk around watching when every single one of them clocks in and out. But the Fair Labor Standards [00:33:00] Act does say that that’s your responsibility.

So in theory, even if they don’t report their time on their time card, you should know how much they worked and you need to pay them for it. So take your best guess and cut the check. And if you need to change it later, that can be addressed later. Obviously discipline employees for doing this because this is a pain for you and document that. And then be detailed with them about your expectations [00:33:30] in the future. It’s possible there’s some confusion about what they’re supposed to be doing.

So make sure you clear that up if you can. Unauthorized work is another issue we’ve run into sometimes. So all hours work need to be paid whether you wanted it done or not. Often we’ll see policies that say unauthorized overtime [00:34:00] will not be paid. You can’t do that. That’s saying, “We are out of compliance with the Fair Labor Standards Act.” If somebody works the hours, you have to pay for the hours whether you wanted them or not. And if it was overtime, you do have to pay time and a half.

So you can’t say unauthorized overtime will be paid at straight time. That doesn’t work either. So again, we want to discipline and document and try to prevent this going forward in the [00:34:30] future, but we do have to pay those hours. Everybody having everything on their phone all of the time has created sort of a new wage and hour problem. Granted it’s been many years now, it’s not going away that they are working on their phones here and there, minutes here, minutes there.

They might not have a problem with that right now. And you might think, ” [00:35:00] Oh, we’re all friends here. If they want to work a few hours here and there who might have stopped them or a few minutes here and there who might have stopped them?” But at the end of the day they really need to be tracking that time and reporting it. We are talking again about non-exempt employees here.

So if they’re doing five minutes here, five minutes there, they really need to be adding it up and getting it onto their timesheet at some point so you can pay for that. Because you might be friends [00:35:30] now but you might not be friends two years from now. And if they go to their State Department of Labor or their Federal Department of Labor and they say, “Look, I was working this time, my employer knew I was working this time, they never paid me, they never made me record it.”

You will be on the hook. Wage and hour statutes are, it doesn’t matter about intent, it doesn’t matter about whether you knew what was going on. [00:36:00] And employees can’t sign away their rights either. So by willingly doing extra time without recording it, that’s not a defense. There basically are no defenses other than the employee didn’t work the time. So if you think that’s happening, the people are using their phone here and there, you want to have a really clear policy that they need to either not be doing that or they need to be recording that time.

[00:36:30] All right, meal and rest breaks. So I mentioned early on that the Fair Labor Standards Act does not require meal or rest breaks, but if you do provide breaks or if an employee takes a break, then the Fair Labor Standards Act has some things to say. So specifically breaks under 20 minutes should be paid unless [00:37:00] you offer a specific amount of paid break time, probably by state law and you make it extremely clear in your policy that any amount of time taken over that amount will be unpaid and will lead to discipline.

So you have to have a really sort of specific Draconian policy about break time if you want to make that the absolute maximum. So if you offer 10-minute breaks, [00:37:30] maybe that’s required by state law, twice a day or every four hours, your policy should say breaks longer than 10 minutes will be disciplined basically. If you do that in your policy, then you cannot count those extra minutes.

You can take a deduction for those extra minutes. Otherwise, breaks under 20 minutes just need to outright be paid. [00:38:00] All right, let’s move on to travel time. Travel time is one of the stickier topics. And again, we are talking federal here. So California has some different views on travel. If you’re in California, you’ll want to check into state law. It’s always a good time to check. It’s always good to check into state law even if you’re not in California.

But California is guaranteed to be special on most topics. So for most of us we can follow the [00:38:30] federal rules and those tell us that travel during the workday should be paid. So if an employee usually works eight to five and you’ve got them traveling across the country for a conference and they spend most of the day on a plane, you need to pay them between eight and five.

Oh, I’m sorry, we’re on the extended commute slide. This is cold brain talking. What I said was true, it just applies to the next slide. So [00:39:00] travel time during the workday, we’re talking about extended commutes now like by train perhaps or more likely by car. So again, if you have an employee who usually works eight to five and you’re sending them to let’s say a client’s location across town during the workday to go have a lunch meeting with that client, you’re going to pay for that travel because it’s during the workday.

If there’s extra commuting time, that should be paid as [00:39:30] well. Or special out of the ordinary commuting time. So if an employee’s usual commute to work in the morning is half an hour and you ask them again to go across town, maybe it’s a very big town and it’s rush hour and it takes 90 minutes. So they have to leave an hour earlier to get there.

You’re going to pay them for that extra commuting time because that is functionally work and it’s not part of their regular commute. Regular commutes, the to and from the office or the workplace every morning, [00:40:00] that doesn’t have to be paid, it’s never had to be paid. But if you’re going to send them somewhere else and it’s extra, that does need to be covered.

All right. Now we’ll get to travel time issues when you’re away for a weekend. So time spent in transit during the workday does need to be paid. So if they’re on a plane between eight and five, we’re going to pay for that. Time after their normal work hours though doesn’t [00:40:30] have to be paid if they’re not working. So if they are on a plane still after five p.m. and they’re not doing any work like making a PowerPoint on their laptop, that time doesn’t need to be paid because they are a passenger and that time is their own.

Additionally, let’s say they’re not on a plane, they’ve arrived in Las Vegas [00:41:00] where the conference is and you want them to go schmooze clients, that you need to pay for because it is work-related and you have asked them to do it. If they want to go play Craps, that’s their own time, that’s after hours, that’s not travel time. You don’t need to pay for it. There’s also waiting time.

So the Department of Labor has come up with these two different phrases [00:41:30] engaged to wait and waiting to engage, which sound really clever, but I think they could have done better because them being so similar I think is confusing. But here’s what they mean. If someone’s engaged to wait, we need to pay them for that waiting time. So a receptionist reading a book or playing FarmVille as I did as a receptionist way back in the day between customers or phone calls, that person is engaged to wait.

[00:42:00] They need to wait, they need to be there, they need to be ready. We’re going to pay them. If the employee on the other hand is waiting to engage, we don’t have to pay. So this is when they know when work will restart and basically they can goof off or do what they want before that time. So the example the DOL likes to give is of a trucker who arrives at their destination in the evening and they’re not going [00:42:30] to be going anywhere again until the morning at eight a.m. They are waiting to engage.

They know how much time they have. They don’t need to be sort of on the ball like the receptionist, ready to pick up the phone or ready to drive the truck. They know how much time they have until that obligation comes around again. We also need to look at on-call time for our non-exempt employees. And this [00:43:00] area can be a little bit fuzzy.

And it is fuzzy, it just is. Even the Department of Labor, this is a balancing test again, basically. We determine how much freedom the employee has and that dictates whether we’re going to pay them for this time or not. So is the employee required to stay on the premises or very nearby?

Then we absolutely need to pay them. If we don’t require them to stay on the premises, then [00:43:30] we’re going to look at how effectively they can engage in personal activities. Can they grocery shop? Can they go see a movie? Are they close to home? Are they being frequently interrupted with phone calls that they need to answer from work? If that’s the case, they can’t grocery shop, they can’t see a movie, you’re constantly calling them, that time probably does need to be paid.

But unfortunately [00:44:00] we’ve got a balancing test there. All right, let’s talk pay deductions now. So again, we’re on non-exempt employees here, although most of these things are true for exempt employees as well. We can take government-mandated deductions without employee approval. Voluntary deductions for the benefit of the employee usually require written authorization.

This is something like health insurance, [00:44:30] right? Deductions for the benefit of the employer however, are often illegal. And this sometimes surprises employers. So for instance, uniform costs, you might not be able to deduct that. And interestingly, you might not even be able to sell an employee a uniform. So you’re like, “Okay, well I won’t take the deduction but I’ll still make them purchase it on the side.”

That [00:45:00] might not work if it would bring their income below minimum wage based on the number of hours worked for them to buy that uniform from you, that would actually be a violation of the Fair Labor Standards Act. This is not perfectly clear in the statute, although the DOL has said it in a number of places. So we want to be thoughtful and careful about what we’re making employees buy for the job. And it’s always worth checking state law on these [00:45:30] because a lot of states are a fair bit stricter about what you can take a deduction for.

All right, final thoughts here. Don’t forget the Federal Equal Pay Act and many of the second wave state pay equity laws. I know this feels like a big shift, but on the topic of wage and hour pitfalls and problems and issues, equal pay is certainly [00:46:00] way up there and getting more and more up there as more and more laws pass. So if you’re in a state with a pay equity law, particularly a pay transparency law, you need to be thinking harder and harder about this.

So when I say pay transparency law, right now, I’m specifically thinking about laws that require that you post the pay range in job ads. And those states currently are Colorado, [00:46:30] Washington, California, New York, and in the New Year, Hawaii. So if you’re in any of those states, you need to start posting how much you pay for jobs in the job ad and obviously doing that will likely cause some conversation amongst your current employees.

So prepare yourself for that. We do have talk [00:47:00] about this, I think articles and certainly law alerts for those specific states on the platform. So if that’s news to you, but you are located in one of those states, come on over to the platform to learn more. All right, we have actually arrived at the Q&A little bit earlier than expected. So I will scroll through what you guys have asked here. [00:47:30] Give me just a minute to read through some of these.

All right, someone said, “What if a salaried employee goes on leave and doesn’t work the entire 40-hour work week and doesn’t want to use vacation? Do we pay for 40 hours?” So you’ll want to look specifically at the allowable deductions. You can generally take a deduction for an employee who’s gone for a full day for personal reasons. So there’s a decent [00:48:00] chance maybe that that leave they’re going on is for personal reasons, in which case you can take a deduction for the full days that they’re absent.

However, if they were only absent for a half day on one of those days during the work week, on that day, you’d need to pay them regular. However, you can generally force the use of PTO. So you could maybe give them an option there to use their PTO or not [00:48:30] take the day or take the whole day. There might be some negotiation you’d want to do with them to figure out how to make that work. Also, I’ll say that’s the kind of question that our Mineral experts can help you with.

If you do have access to them, we can help you figure out the best approach to that. All right, someone else says, “Do we have to treat all employees in the same job description as either salary or hourly? Can we have three salaried and one hourly in the same job?” You [00:49:00] can. You certainly can. I wouldn’t recommend it. It’s kind of odd. I would want to have a pretty good reason to separate out that one person from the other three.

Also, for what it’s worth, the Department of Labor considers non-exempt to be the preferable classification because then you’re entitled to overtime and they consider overtime a good thing [00:49:30] for employees. So if you’ve got three that are salaried and one who’s not, the one who’s not might actually look to be getting the extra advantages there. And so then we’d want to look at that employee and say, “Well, why are they treated differently?”

And if there’s any chance at all that their different treatment could be associated with their inclusion in a protected class, we’d want to think even harder about having [00:50:00] them separated out. However, if you’ve got some really good reason for that, for having one person in a different classification, then go for it. I mean, there’s no law that says you can’t do this. You just do want to have some legitimate business reason for that if you get pushed on it or challenged on it in the future.

What if we have a new hire who quickly terminates and forgot to clock into the system and wasn’t onboarded? [00:50:30] Take your best guess as to how many hours they paid and get them paid for that. Okay. Someone says, “Can you require exempt employees to log a minimum of 40 hours per week, including PTO or eight hours per day under the pretense that they need to get their work done and that that will take 40 hours per week?”

Yes, you can require exempt employees to work a set schedule. You can require [00:51:00] them to clock in and clock out. However, if they don’t, if they only work 38 hours that week, you can’t take a deduction. So you can make it a requirement, but your recourse is to discipline them, write them up, talk to them about it. But legally, yes, you can track their time.

Can you allow certain exempt employees to work during their normal commute, [00:51:30] like write a PowerPoint, but tell other non-exempt employees that they cannot work during their commute? Yeah, sure. Why not? Yeah. I mean, you can treat employees differently. There’s often a misconception that it’s illegal to treat employees differently for any reason, and that’s not the case. It’s illegal to treat employees differently based on their inclusion in a protected class like race, gender, [00:52:00] sexual orientation.

States have pretty long lists these days, so you should check your state list of protected characteristics. However, even if it’s not illegal, treating two different employees differently, like allowing one to work during their commute while the other one gets to goof off during their commute, that can create morale issues and fairness issues.

And I would definitely want to have a legitimate business reason [00:52:30] for treating those people differently and I’d want to write it down somewhere. Because one of those people might be in a protected class that you don’t even know about and they might decide that the reason they’re being treated differently is because of that protected class, particularly if obviously they don’t think their treatment is as good as your treatment of another employee.

Can an exempt employee work a non-exempt job in the same company on top of their exempt role? [00:53:00] And will they need to be paid overtime? Generally, no. That’s a pretty hard no on that. So the exempt employee duties tests focus on the primary duty of an employee. So if their primary duty is an exempt role, then they can do a little bit of some things that don’t necessarily usually qualify as non-exempt.

However, you’re making [00:53:30] it sound like they have two totally different roles in the organization. It’s not like a little piece of their regular role, but it’s a whole different job and that’s not going to work because that non-exempt role will need to be paid, will need to be paid over time. So that’s kind of a hinky situation. We’ve certainly been asked that question before. And yeah, almost certainly you’re not going to be able to get away with [00:54:00] having them do two separate roles and just say that the non-exempt role just layers into the first.

However, if a little bit of the work they do is non-exempt type work, that’s probably okay. Granted, don’t take that as legal advice. You’d need a whole fact pattern to answer that clearly. And again, if you do have access to our experts, that’s the kind of thing that they can help you sort out in detail if you can give them more specifics.

[00:54:30] Someone said, “Massachusetts is in discussion for pay transparency, correct?” Probably. I looked a little while ago. A lot of states are talking about pay transparency. I think Oregon and Alaska. I was checking the West Coast because I was giving a presentation to West Coast HR practitioners, they’re on the list. I do think Massachusetts and… I don’t remember, there are probably [00:55:00] a bunch. I think this is going to be the new thing across the country is to require pay in job postings.

So yeah, I’d bet at least $10 that Massachusetts is on the short list of states that will do that next. They tend to be on the cutting edge of quite a few things. So I expect they won’t be too far behind. [00:55:30] If an employer needs to be careful about deducting for uniform expenses, does this apply to deducting for lost uniforms? The employee doesn’t usually pay for them, but when they quit and don’t return the company paid for uniform, we take a deduction, do we need to be concerned about that impact on their final wage?

Yes, absolutely. So any deduction from a final paycheck, you need to be extra careful about because if it takes them below [00:56:00] minimum wage, that’s a violation of the Fair Labor Standards Act. So even if you have something in writing signed by the employee and it’s legal in your state to do this, if you take that final deduction from their final paycheck and it brings them below minimum wage, you’ve violated the FLSA and quite possibly state law.

So let’s say you give them a laptop and you say, “If you don’t return this at the end of employment, you owe us $500.” The [00:56:30] state you’re in allows that, the employee signs in blood, if that $500 deduction at the end takes them below minimum wage, you can’t do it. You can do the part of it that doesn’t take them below minimum wage, but the rest of it, you’re just sort of out of luck.

If an employee owes you a significant amount of money, of course you could try to take them to small claims for it, but that’s not usually going to be worth an employer’s time. [00:57:00] We’re using time clocks and I wanted to know if time can be deducted when people are just lingering around the office. No, probably not. That’s probably going to count as a less than 20 minute break under the Fair Labor Standards Act that needs to be paid.

Again, if you’ve got set paid breaks and you’ve got a crystal clear policy that time above that amount won’t be paid and will be disciplined, then you could theoretically take a deduction [00:57:30] for when people are just wandering around the office not working. But that’s going to be really hard to prove in the future if they decide to bring a wage claim against you. So I would try to deal with that behavior rather than take a deduction.

I think deductions are the nuclear option there and relatively likely to get you in trouble. So I would crack down by walking around and telling [00:58:00] people to get back to their workspace or back to their desk or whatever. And also think about whether they’re actually getting the job done. Maybe you don’t like that they’re wandering around, just chit-chatting, but if the work you need done is getting done, then you don’t really have a problem.

So if the work’s not getting done, then obviously crack down and get those people back to their workstations. But if the work is getting [00:58:30] done and this is just them chilling, then that’s probably good for their mental health and morale in general. So maybe don’t crack down just for the sake of cracking down. Does it matter where headquarters is or based on where employees live? So I assume we’re talking about wage and hour in general.

Really almost any employment law, it applies based on where the [00:59:00] employee works. So it’s not actually related to your headquarters or where the employee lives. It’s related to where the employee works almost all of the time. So if they are working in a place with a higher minimum wage, you need to pay the higher minimum wage. If they’re working in a state that has specific deduction rules that are different from where headquarters is, you need to follow the deduction rules in the state where the employee works.

[00:59:30] Okay, I’ll answer one last question. Somebody’s saying, “What do we do if an employee’s done for the day but they’re sticking around to get extra time?” Well, that would go back to our unauthorized work slide and you need to crack the whip. You can’t take a deduction, you can’t refuse to pay them, but you need to get them to clock out. You need to write them up. You need to sit them down.

As my best friend likes to say, ” [01:00:00] Don’t delay, manage today.” Haul them in, talk to them about it. Tell them what your expectations are, that they need to punch at and get out of the building. So that is our recourse with a lot of this. All right, thank you all so much for joining me today. I hope you learned some things. I hope I got to your question. There were quite a few. I couldn’t get to all of them. And we look forward to seeing you at a webinar in the near future.


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