Tag Archives: Exempt employee

WAGE AND HOUR LAWS TO KEEP IN MIND IN THE AFTERMATH OF HURRICANE IRMA

In the aftermath of Hurricane Irma, employers in impacted areas in Florida are working to try to get their businesses back up and running as quickly as possible.  When engaging in these efforts, employers need to remember that there are certain legal protections for employees when faced by this type of natural disaster.

  • Wage and Hour Requirements
    • Exempt Employees: If the business closed for less than a full workweek and your exempt employees performed any work during that workweek, then under the Fair Labor Standards Act, employers are required to paid their exempt employees for the days that the business is closed (i.e. for the entire workweek).If, however, the business remains open and an exempt employee does not come into work, then the exempt employee does not have to be paid for the day.  Instead, it is treated as an absence for personal reasons.  But, if the exempt employee arrives late or leaves early, then he must be paid for the full day of work.

      Finally, if the exempt employee works from home in lieu of coming into work, then he must be paid for the entire workweek.

    • Non-Exempt Employees: Under the FLSA, employers are not required to pay non-exempt employees who do not report to work as the result of a natural disaster.The only exceptions to this rule are (1) if employees are paid under a fluctuating workweek or (2) if there is a collective bargaining agreement in place that requires payment under these circumstances.

      Finally, if a non-exempt employee works from home in lieu of coming into work, then he must be paid for all hours worked.

Employment Laws to Keep In Mind In The Aftermath of Hurricane Harvey

In the aftermath of Hurricane Harvey, employers in impacted areas in Texas are working to try to get their businesses back up and running as quickly as possible.  When engaging in these efforts, employers need to remember that there are certain legal protections for employees when faced by this type of natural disaster.

  • Wage and Hour Requirements
    • Exempt Employees: If the business closed for less than a full workweek and your exempt employees performed any work during that workweek, then under the Fair Labor Standards Act, employers are required to paid their exempt employees for the days that the business is closed (i.e. for the entire workweek).

      If, however, the business remains open and an exempt employee does not come into work, then the exempt employee does not have to be paid for the day.  Instead, it is treated as an absence for personal reasons.  But, if the exempt employee arrives late or leaves early, then he must be paid for the full day of work.

      Finally, if the exempt employee works from home in lieu of coming into work, then he must be paid for the entire workweek.

    • Non-Exempt Employees: Under the FLSA, employers are not required to pay non-exempt employees who do not report to work as the result of a natural disaster.

      The only exceptions to this rule are (1) if employees are paid under a fluctuating workweek or (2) if there is a collective bargaining agreement in place that requires payment under these circumstances.

      Finally, if a non-exempt employee works from home in lieu of coming into work, then he must be paid for all hours worked.

 

  • Emergency Evacuation Discrimination law
    • Under Texas Labor Code Chapter 22, employers are prohibited from discharging or in any other manner discriminating against an employee who leaves the employee’s place of employment to participate in a general public evacuation ordered under an emergency evacuation order.

      Under this law, a disaster is the occurrence or imminent threat of widespread or severe damage, injury, or loss of life or property that results from a natural or man-made cause, including fire, flood, earthquake, wind, storm, wave action, oil spill or other water contamination, volcanic activity, epidemic, air contamination, blight, drought, infestation, explosion, riot, hostile military or paramilitary action, or other public calamity requiring emergency action, or an energy emergency.

      Employers who violate this provision are liable for any loss of wages or employer-provided benefits and must reinstate the employee to the same or equivalent position.

New DLSE Opinion Letter Regarding California paid sick leave

On October 11, 2016, the California Department of Labor Standards Enforcement issued a new Opinion Letter interpreting California’s paid sick leave requirement. In this letter, the DLSE provided guidance on how to calculate paid sick leave for employees who are paid by commissions and for exempt employees who are given an annual, non-discretionary bonus.

Under the California paid sick leave law, there are 3 methods an employer can use to calculate paid sick time:

  1. Calculate paid sick time for nonexempt employees in the same manner as the “regular rate of pay” for the workweek in which the employee uses paid sick time, regardless of whether the employee actually works overtime in that workweek (Labor Code sec. 246(k)(1));
  2. Calculate paid sick time for nonexempt employees by “dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment” (Labor Code sec. 246(k)(2)); or
  3. Calculate paid sick time for exempt employees in the same manner as wages are calculated for other forms of paid leave time (Labor Code sec. 246(k)(3)).

According to the DLSE opinion letter, when calculating paid sick time for an employee who is paid on a commission basis, the employee must be paid according to options (1) or (2) above – even if the employee is exempt under the inside sales or outside sales exemption. The third option applies only to employees exempt under the professional, executive or administrative exemptions and not to a commissioned employee.

With respect to calculating paid sick leave time for exempt employees, the letter states that the non-discretionary bonus is not factored into the payment of paid sick leave. Instead, the employee “would be paid for an amount of pay which equals his or her regular salary for the sick day.”

While DLSE Opinion letters are not legally binding, they do provide employers with guidance on how the DLSE will interpret the issue in an administrative setting. Therefore, it is important for employers to review their practices and verify that they are in compliance with those outlined in this opinion letter.

Clarifying “Incentive Payments” Under the New FLSA Regulations

The new FLSA regulations went into effect on May 18, 2016. (see our previous article on the new regulations “It’s Here … The DOL’s New Overtime Rule is (Finally) Published”)

The new regulations increased the minimum salary threshold for the FLSA overtime exemption from $23,660 per year to $47,476 per year (or $913 per week).

Also, under the new regulations, employers will be permitted to use an employee’s non-discretionary bonuses and “incentive payments” (including commissions) to satisfy up to 10% of the new standard salary level — subject to certain restrictions.

While the term “incentive payment” is not defined in the new regulations, there are certain aspects of compensation that are clearly not considered “incentive pay”. Those items are those which the US Department of Labor has historically not allowed to be included in the calculation of the minimum salary amount, namely:

  • The value of medical, disability or life insurance or contributions to retirement plans or other fringe benefits, or
  • The value of board and lodging paid by an employer.

When determining whether an exempt employee’s salary is in compliance with the new overtime rules, employers may not consider the value of incidental benefits provided to the employee by the employer.

Misclassification of Employees Equals One Costly Mistake

In a recent settlement with the US Department of Labor, oil and gas service provider, Halliburton, has agreed to pay $18,293,557 in unpaid overtime to 1,016 employees nationwide. This settlement is the result of a multi-year Department of Labor investigation wherein the Department of Labor concluded that Halliburton had incorrectly categorized 28 different job positions as exempt. Because Halliburton considered these job positions exempt, the affected employees were not paid overtime when they worked more than 40 hours in a work week, which was found to be a violation of the Fair Labor Standards Act.

There are several lessons that can be learned from Halliburton’s mistake. Most importantly, as evidenced by the Halliburton settlement, wage and hour mistakes can be incredibly costly.

Second, employers must be certain to properly categorize their employees as exempt. This is more than just simply paying an employee a salary. Instead, employers must insure that their exempt employees meet the qualifications for being an exempt employee, which requires that employees pass certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week (under the FLSA, state laws may have a more stringent salary requirement).

Third, employers must be aware that the Department of Labor is more actively investigating employers for potential violations of the FLSA – specifically with respect to misclassification of employees. The Department of Labor’s investigation into Halliburton was part of an ongoing, multi-year compliance initiative in the oil and gas industry where the Department of Labor has been independently (i.e. in the absence of employee complaints) investigating oil and gas industry employers. The oil and gas industry is just one of the many industries the Department of Labor is targeting with its Misclassification Initiative. Other targeted industries include, but are not limited to the food service industry (i.e. restaurants), the hospitality industry (i.e. hotels), and the construction industry.