Last month’s Tip of the Month reminded employers that communicating and maintaining an overtime policy can minimize liability for unauthorized overtime hours. This month, we focus on a second way employers can protect against wage and hour liability: the inclusion of a payroll deductions policy to take advantage of the “safe harbor” protection against liability for misclassification of employees based on the failure to pay employees on a salary basis.
As you recall, to be exempt from overtime, an employee must be performing duties recognized as exempt under the Fair Labor Standards Act (“FLSA”) and must be paid on a “salary basis.” To be paid on a “salary basis” the employee must receive a predetermined amount of compensation each pay period (at least $455/week) which cannot be reduced due to variations in the quality or quantity of the employee’s work. An exempt employee must receive the full salary for any week in which the employee performs any work, subject only to certain limited deductions.
Employers jeopardize employees’ exempt status by making improper deductions from salaries. A payroll deductions policy which meets certain requirements provides employers with the opportunity to reduce overtime liability which might otherwise accrue under the FLSA if improper deductions are made and employees are therefore found to be inappropriately treated as exempt.
A payroll deduction policy only provides a safe harbor if the employer: (1) has a “clearly communicated” policy prohibiting improper deductions, including a complaint mechanism; (2) reimburses employees for any improper deductions; and (3) makes a good faith commitment to comply in the future. The safe harbor is not effective where the employer willfully violates the policy by continuing to make improper deductions after receiving employee complaints.
A good payroll deduction policy should include an explanation of how exempt employees will be paid on a salary basis, with only limited deductions for certain reasons permitted by law, including for social security, taxes, participation in company-sponsored benefit and retirement plans, absence from work for one or more full days taken in compliance with the company’s sickness or disability policy, absence from work which is covered by the Family and Medical Leave Act, absence due to certain types of suspensions, and full or partial days not worked during the initial or terminal week of employment.
For more information on implementing or reviewing a payroll deductions policy, contact a member of the Employment Group.
The 2016 H-1B Cap season is opened as of April 1st. The U.S. Citizenship & Immigration Service (“CIS”) issued a press release that it anticipates the H-1B Cap will be reached after the first five business days of April. MBBP has assembled a list of FAQs to help employers, and their employees, understand the implications if the H-1B Cap is reached quickly.
To learn about the frequently asked questions regarding the H-1B Cap, please read our full alert from MBBP’s Immigration Department. Please contact a member of the Immigration team, or your MBBP attorney, with any questions.
Shouldn’t Employers Be Permitted to Prohibit Defamatory or Inappropriate Comments by Employees? New NLRB Report Says No.
It may come as a surprise to many private employers, who often don’t realize that the requirements of the National Labor Relations Act (“NLRA”) apply to non-unionized workplaces. However, in a recently released report the National Labor Relations Board (“NLRB”) addresses the decisions invalidating a variety of handbooks rules found in many employer handbooks.
For more information on how this applies to you read the full alert.
Both Federal and Massachusetts law require that employers pay their non-exempt employees overtime wages whenever employees work more than 40 hours in a workweek. The law requires that employers pay overtime when they knew or should have known that the employee worked more than 40 hours. As a result, employers can be liable for overtime hours which they did not specifically authorize. Employers can minimize this liability by establishing an overtime policy and a mechanism for requesting and reporting overtime.
Overtime policies should include: who is eligible for overtime; what, if any conditions apply to the authorization of overtime; a specific mechanism for employees to request authorization to work overtime; and a specific mechanism for employees to report overtime hours which have been worked. Any policy should be clearly and conspicuously communicated to employees, and consistently enforced. Managers should not, under any circumstances, instruct employees to falsely record time or avoid reporting overtime hours worked.
Maintaining an overtime policy will not only result in transparent workplace expectations but it could also help an employer defend against an expensive wage and hour claim. In Vitali v. Reit Management and Research, LLC, SUCV2012-00588-BLS1 (Mass Super. June 2, 2014), a Massachusetts employee claimed she had worked through her lunch regularly and as a result often worked more than 40 hours in a workweek, entitling her to overtime. However, her employer had an overtime policy in place which required advanced approval for working overtime, as well as mechanisms for reporting overtime hours, which the employee had not followed despite her familiarity with the policy. The employee presented no evidence that management knew that the employee was working through lunch. Because the employer had clearly communicated rules and policies in place, and because the employee had failed to follow them, the employee was not able to maintain her claim for unpaid wages and the employer escaped a potentially expensive claim.
For more information on overtime policies, please contact a member of our Employment Law Group.
By: Robert M. Shea
In March 2014, one year ago, President Obama signed a Presidential Memorandum directing the U.S. Secretary of Labor to make changes to the federal overtime regulations concerning the “white collar” exemptions to the overtime requirements. The President directed the Secretary to “restore the common sense principles” to the overtime exemptions.
In May 2014, the U.S. Department of Labor announced a target date of November 2014 for publishing the proposed changes. The Department subsequently engaged in meetings with businesses and employees in which it solicited input and ideas, including on raising the minimum required salary level from its current level of $23,660 and adjusting the primary duties test. The Department did not meet its November 2014 target date and, instead, set a new target date of February 2015. The February date has come and gone without publication of the proposed regulations.
Last week, on March 18, the U.S. Secretary of Labor stated that the Department was “working overtime” on the proposed changes and that he “hoped” they would be published this Spring. Once published, the proposed changes will be subject to public comment and, most likely, substantial modification. Consequently, the final revised regulations will most likely not go into effect until sometime in 2016.
We will keep clients updated on the proposed changes. In the meantime, please feel free to contact the Employment Law team with any questions.
By: Scott Connolly
A physician’s employment agreement with a group practice or hospital is an important document. It may set expectations regarding clinical duties, working conditions, the resources the physician needs to treat patients, service locations, and evaluation for ownership (for group practices). These factors will greatly affect the physician’s professional and personal life. A physician’s employment agreement also will establish key contractual obligations for both the physician and the group practice or hospital concerning compensation and benefits, the term of employment, early termination and its consequences, professional liability coverage, patient records, post-termination restrictions, indemnification, and mediation and dispute resolution.
Here are 10 important points that should be carefully reviewed in a physician’s employment agreement.
For more information on this topic, please contact Scott Connolly.
On February 25, 2015, the U.S. Department of Homeland Security published a final rule allowing H-4 spouses of certain H-1B workers to apply for employment authorization documents (“EADs”). This recent development stems from President Obama’s executive order that he signed on November 21, 2014 to modernize and streamline the U.S. immigrant visa system for the 21st century. In light of this new development, we have assembled the following FAQ to help employers, and their employees, understand the implications of this new regulation.
To learn about the frequently asked questions regarding H-4 EADs, please read our full alert from MBBP’s Immigration Department. Please contact a member of the Immigration team, or your MBBP attorney, with any questions.