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Tip of the Month: Implement a Payroll Deductions Policy to Take Advantage of the FLSA “Safe Harbor”

April 13, 2015 Leave a comment

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.

Immigration Alert: Frequently Asked Questions on the H-1B Cap

April 2, 2015 Leave a comment

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.

 

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Employers Should Maintain and Enforce Overtime Policies

March 25, 2015 Leave a comment

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.

Immigration Alert: Frequently Asked Questions About H-4 EADs

February 26, 2015 Leave a comment

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.

The #1 Type of Employment Claim Filed with the EEOC is Again Retaliation

February 13, 2015 Leave a comment

By: Robert M. SheaEmployment Attorney Bob Shea

The federal Equal Employment Opportunity Commission (“EEOC”) has just released its statistics for fiscal year 2014 and for the fifth straight year charges alleging unlawful retaliation by employers was the leading type of discrimination alleged.  Retaliation claims accounted for 42.8% of the charges filed with the EEOC, up almost two percent from 2013 to the highest percentage ever.  Retaliation was followed by race discrimination (35%), gender, including sexual harassment and pregnancy discrimination (29.3%), disability discrimination (28.6%), and age discrimination (23.2%).  The EEOC’s enforcement and litigation statistics for FY 1997 through 2014 are found here.

For an explanation of why retaliation claims have become so common, and guidance on steps employers should take to avoid claims, please refer to this March 2013 article.

Please contact the Employment Law team for more information.

Immigration Alert: H-1B season has arrived; Act today

February 9, 2015 Leave a comment

The H-1B visa is the standard working visa used by foreign nationals to work in the United States with a U.S. employer. The 2016 H-1B cap will open on April 1st. Given improving economic conditions and increased hiring, we anticipate that demand for the limited number of H-1B visas will vastly exceed supply. As a matter of fact, it’s projected that this year’s cap will reach its limit in the first week. As a result we are advising all employers who expect to sponsor an employee for a new H-1B visa to file within the first five (5) days of April (i.e. so the petition is received no later than April 7, 2015).

For information on H-1B visas and when to consider filing a petition read the full alert from MBBP’s Immigration Department. Please contact a member of the Immigration team, or your MBBP attorney, with questions.

Scott Connolly to Speak at BBA Event

October 1, 2013 Leave a comment

Employment Attorney Scott ConnollyOn Friday, October 11 MBBP Employment Attorney Scott Connolly and Boston Red Sox Senior Manager of Legal Operations Mandy Petrillo will be co-speaking at the Boston Bar Association (BBA) event “Unpaid Internships: Mitigating Risks and Alternatives“.  Entertainment companies traditionally have experienced the most problems related to unpaid internships. Join us for a discussion about avoiding pitfalls when hosting unpaid interns and alternative arrangements.

The event takes place at the BBA and runs from 12:00PM to 1:00PM. Please visit the BBA for more details and to register.