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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.

Employers Face Wage & Hour Risks When Terminating Employees

September 5, 2014 Leave a comment

This summer, the family-owned grocery store chain Market Basket has been engaged in a contentious and public dispute over ownership and control of the chain. As a result, thousands of jobs have hung in the balance. In a joint letter, the Attorneys General of Massachusetts and New Hampshire recently used the dispute to remind Market Basket of its legal obligations to employees. The joint letter applies to employers generally, and provides a helpful synopsis of some of the obligations and risks involved in employee terminations.

For further information or questions about employee terminations, contact a member of our Employment Law Group.

Massachusetts’ Minimum Wage Set to Increase

July 23, 2014 Leave a comment

The minimum wage in Massachusetts is set to increase on January 1, 2015 for the first time since 2008.  On June 26, 2014, Governor Deval Patrick signed a bill into law which will raise the hourly minimum wage for non-tipped employees from $8.00 an hour as follows:

  • Beginning January 1, 2015, to $9.00.
  • Beginning January 1, 2016, to $10.00.
  • Beginning January 1, 2017, to $11.00.

The hourly minimum cash wage for tipped workers will increase from $2.63 to $3.00 an hour on January 1, 2015, and again to $3.75 an hour on January 1, 2017.  As a result of these increases, Massachusetts’ minimum wage will be amongst the highest in the country.

Compliance with Massachusetts’ minimum wage laws is important since the failure to do so will result in a violation of the Massachusetts “Payment of Wages” statute, M.G.L. c.149, §148 (the “Wage Act”).  Violations of the Wage Act carry a high price and are subject to mandatory treble (triple) damages and attorney’s fees, even if an employer has acted in good faith.  Wage Act violations can also result in criminal penalties and civil liability for the employer as well for as the president, treasurer, and individual “officers and agents” of the employer.

For more information on the Massachusetts minimum wage increase or wage and hour compliance generally, contact a member of the Employment Law Group.

Will Your Interns Sue You for Unpaid Wages?

April 8, 2014 Leave a comment

The end of last summer’s internship season was marked by a wave of class-action lawsuits filed by interns against entertainment, sports, and publishing companies. The interns sued for unpaid wages and overtime claiming that they in reality were employees of these companies. These much publicized lawsuits, including those against Condé Nast Publications, Fox Searchlight Pictures, Inc., Hearst Corporation, and Sean “Diddy” Combs’s Bad Boy Entertainment, led many businesses to end their internship programs altogether. Here is what you must know before allowing an unpaid intern to “work” for your for-profit business.

An intern for a for-profit business must be paid unless the internship meets the requirements of the narrow “learner/trainee” exemption under the federal Fair Labor Standards Act (“FLSA”), the law governing payment of minimum wages and overtime. Failure to meet this narrow exemption could result in costly litigation and possibly significant liability; some of the businesses recently sued have had thousands of interns in the purported “class” of plaintiffs.

The U.S. Department of Labor (the “DOL”) applies a six-criteria test to unpaid interns at private-sector, for-profit businesses to determine whether the “learner/trainee” exemption is met. The DOL’s six criteria are:

  1. 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;
  4. 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; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

This test may be hard for a for-profit business to pass if it receives an advantage from the services of the intern, for example if the intern performs low-level administrative and clerical tasks. Although most courts have applied a more flexible test, a number of courts have deferred to the DOL’s more stringent test, which in turn has prompted the wave of recent lawsuits. To avoid claims, companies in doubt about whether they will pass the DOL’s test should pay their interns at least minimum wage (and overtime unless they restrict interns from “working” for more than 40 hours per week) and keep accurate records of the interns’ time “worked.”

For more information on this topic, and other information about having an internship program, please contact a member of the Employment Practice Group.

Are Your Commissioned Sales Employees Entitled to Minimum Wage and Overtime?

March 31, 2014 Leave a comment

Many employers use commission payments to increase the productivity of their sales force.  Commissioned sales people can earn significant compensation.  But, are commissioned sales people also entitled to minimum wage and overtime?

The federal Fair Labor Standards Act(FLSA) establishes a minimum wage and requires that employers pay overtime, or 1.5 times the employee’s regular rate of pay, to employees who work more than 40 hours in a workweek.  The FLSA’s minimum wage and overtime requirements apply to all employees, including commissioned employees, unless the employee comes within one of the statutory exemptions to the FLSA.

Many commissioned sales employees come within one of two statutory exemptions to the FLSA, the “outside sales exemption” or the “inside/retail sales exemption.”  An employee is exempt under the outside sales exemption if the employee’s primary duty is making sales or obtaining orders or contracts for services or the use of facilities from paying clients or customers, and the employee is customarily and regularly engaged away from the employer’s place of business.  Qualified outside sales people are exempt from both minimum wage and overtime requirements.

Commissioned sales people employed by a retail or service establishment are exempt from overtime (but not minimum wage) under the inside/retail sales exemption if (1) the employee’s regular rate of pay (including commissions) exceeds one and one-half times minimum wage and (2) more than half the employee’s total earnings are in the form of commissions.

If a commissioned sales employee does not come within one of these two narrowly defined exemptions (sales people will usuallynotqualify for other FLSA exemptions) the sales employee is not exempt and is entitled to overtime on top of commissions.

For help determining whether your sales force is exempt, or for more information on this topic, please contact a member of our Employment Law Group.

Can you deduct from an Employee’s Pay for a Snow Day?

February 6, 2014 Leave a comment

This winter’s polar vortex and its seemingly unending supply of snow and cold raise the question of how to pay exempt and non-exempt employees when an office closes due to inclement weather, and whether deductions from pay for those closures are permitted.

Can you deduct when the office is closed due to weather?

When an employer is forced to close its business for a full day due to weather conditions, the federal Fair Labor Standards Act (“FLSA”) does not require that the employer pay non-exempt employees for that day, even if they were scheduled to work, since the employees are unable to provide any work for that day.

The employer may not, however, take a deduction from an exempt employee’s salary for an inclement weather closure without risking the loss of the employee’s exempt status. (N.B., though, that if the closure lasts for one week or more, then the employer does not need to pay the exempt employees for that week).

Can you deduct when the office is partially closed due to weather?

Although federal law does not require that employers pay non-exempt workers during a partial closure, in some circumstances Massachusetts law may. If a Massachusetts non-exempt employee reports to work but there is no work to be performed, or there is less work than the employee was scheduled to perform, the employee is entitled to “reporting pay” of at least three hours pay at the minimum wage. For example, if the office is closed but an employee wasn’t aware of the closure and reports to work, or if the office closes early because of inclement weather, then a Massachusetts non-exempt employee is entitled to reporting pay.

If the employer’s office is closed for only part of the day due to inclement weather, the employer cannot make a deduction from an exempt employee’s salary without losing the employee’s exemption.

Can you deduct when the office is open but the employee is absent due to weather?

The rules shift slightly when the employer remains open for business but an exempt employee is unable to make it into work due to inclement weather.

Nothing changes in this situation for a non-exempt employee; a non-exempt employee does not need be paid for hours not worked, and so an employer may make a deduction for a weather-related absence.

However, the usual rule that an employer cannot deduct from an exempt employee’s wages without risking the loss of the employee’s exemption changes in this situation. The U.S. Department of Labor (“DOL”) has advised that when an office is open, but an exempt employee is absent due to inclement weather, the Department of Labor will treat the absence as one for “personal reasons” and the employer may deduct that day’s wages from the employee’s salary without losing the employee’s exemption.

Note, however, that this loophole only applies if the exempt employee takes the entire day off for weather-related reasons. An exempt employee who chooses to leave an hour or two early to get a jump on weather-related traffic should not have a deduction taken – to do so would risk the loss of the exemption.

For more information on how to pay exempt and non-exempt employees when an office closes due to inclement weather, please contact a member of the Employment Law Group.

Where and For How Long Should Employers Keep Wage Records?

November 20, 2013 Leave a comment

October’s Tip of the Month discussed the obligation employers have under the federal regulations interpreting the Fair Labor Standards Act (FLSA) and under Massachusetts law to keep and retain certain time and wage records. This month we address: where should employers keep those records, and for how long must the records be retained?

Where? Employers should keep time and wage records at the employee’s place of employment or in the employer’s central records office. Wherever they are kept, though, the records must be available for inspection by the U.S. Department of Labor’s Wage and Hour Division.

How Long? Under federal law, employers are required to maintain payroll records and records of any collective bargaining agreements for three years. Employers are required to maintain records which are related to wage computations, including time cards, wage rate tables, work schedules, time records, and records of additions or deductions from wages for two years. Keep in mind, though, that the FLSA has a three year statute of limitations for willful violations and that, as a result, wage computation records should be kept for federal purposes for at least three years.

Moreover, Massachusetts law, specifically M.G.L. c.151A, §45 and 430 CMR §5.01(1), requires employers to keep work records including payroll records, worksheets and any record which the employer uses to prepare submissions to the Massachusetts Department of Unemployment Assistance, for four years.

M.G.L. c. 151, §15 and M.G.L. c. 149, §52 impose a separate obligation to retain payroll records for at least two years. However, employers who comply with the federal requirements and M.G.L. c.151A, §45 and 430 CMR §5.01(1)’s longer four year retention requirement will have complied with the two year requirement.

For more information on recordkeeping requirements or the prevention of wage and hour lawsuits, please contact a member of the Employment Law Group.