Vision Payroll

In Mullally, et al. v. Waste Management of Massachusetts, Inc., SJC-10181 (Mass. 11/6/2008), the Supreme Judicial Court of the Commonwealth of Massachusetts (SJC) ruled that the defendant (Waste Management) violated Massachusetts law by “calculating overtime wages using a regular hourly rate less than the prevailing wage eligible employees must be paid.” The employees who filed suit were required under Massachusetts General Laws (MGL) c. 149, §27F to receive the prevailing wage rate for “waste disposal employees performing under municipal contracts.” Waste Management had devised a formula under which employees always received the prevailing wage or higher when averaging the hourly rate for straight time and overtime. The SJC ruled that Massachusetts law (MGL c. 151, §1A) requires employees to receive at least the prevailing wage in cash and allowed benefits for straight time and one and one half time the prevailing wage in cash and allowed benefits for overtime. Allowing Waste Management’s formula would evade “the economic disincentive to have an employee work more than forty hours a week” since there would be little or no overtime premium paid regardless of the number of hours worked. The SJC remanded the case to Massachusetts Superior Court for further proceedings to determine the amount of damages. Vision Payroll strongly recommends that you review all overtime calculations with your labor attorney to ensure compliance with all applicable federal and state laws.

The US Department of Labor recently issued Administrator signed Opinion Letter FLSA2008-6. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA). This Opinion Letter discusses whether a city that employs workers in a Water Treatment Plant may include on-call compensation received in a two-week pay period with other pay received in a two-week pay period for purposes of computing the overtime rate of pay to be applied to that period. An employee is paid $2.50 per hour for on-call time that is not considered hours worked under the FLSA. The employee may work overtime during only one week of two-week period. The city proposed including the on-call compensation with all other compensation received in the two-week pay period and dividing by the number of hours worked in that pay period to arrive at a regular rate of pay. For example, an employee earns $10 per hour, works forty hours in the first week and forty-five hours in the second week of a two-week pay period and also receives $100 of on-call compensation. The city proposed paying overtime based on a regular rate of $11.18 per hour. (40 hours X $10/hour) + (45 hours X $10/hour) + $100 = $950 total compensation. $950/85 hours = $11.18 per hour regular rate of pay for overtime purposes. The overtime premium under this method would be $27.95 or $11.18/hour X 5 hours X0.5 premium. If a one-week pay period were used, a regular rate of $12.22 would be used for the overtime calculation (45 hours X $10/hour) + $100 = $550 total compensation and $550/45 hours = $12.22 per hour. The overtime premium under this method would be $30.55 or $12.22/hour X 5 hours X0.5 premium. The FLSA uses a standard of a single workweek for calculating the regular rate of pay and does not allow averaging over two weeks even if the employee’s pay period is normally two weeks. Since “the specific hours for which on-call pay was earned are identifiable, the payment for on-call time must be attributed to the workweek in which the on-call hours occurred.” Therefore, the city must use the latter method to calculate the employee’s regular rate of pay and may not use a two-week period. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

Thirty-six delivery men for various Vietnamese restaurants in New York City were awarded more than $4.6 million in back pay and damages in a recent case Ke, et al. v. Saigon Grill, Inc., et al., SDNY, 07cv2329 MHD, 10/21/2008. The court found that the defendants’ testimony was not credible as to hours worked by and wages paid to the plaintiffs. Plaintiffs had testified that they worked hours in excess of forty per week without receiving overtime pay and were not compensated at the minimum wage, both in violation of the Fair Labor Standards Act (FLSA); they stated that unlawful deductions from their pay were made by the defendants as supposed fines for things like late deliveries or failure to complete side work; they claimed entitlement to reimbursement for expenses incurred for bicycles and motorcycles used in the deliveries; they alleged retaliatory terminations for asserting their intention to pursue an FLSA complaint; and they sought additional pay under a New York state law that requires employees whose workday is longer than ten hours to receive “one hour’s pay ‘at the basic minimum hourly wage’”. The court ruled in favor of the plaintiffs on all these arguments and also ruled that the defendants’ failure to post any FLSA notices explaining the provisions of the law and the employees’ rights thereunder resulted in a suspension of the statute of limitations until the plaintiffs received notice of their rights. This equitable tolling doctrine allowed plaintiffs to claim back wages for a period of eight years, not the two or three years ordinarily allowed under the FLSA. Vision Payroll strongly recommends employers consult their labor law attorney to review their minimum wage, overtime, and deduction policies to ensure compliance with all applicable federal and state laws.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. Earlier posts discussed the definition of an administrative employee. The following are examples of specific jobs that generally either qualify or don’t qualify the employee under the administrative exemption:

• Insurance claims adjusters qualify whether they work for an insurance or other type company.
• Financial services employees who analyze information, advise customers, market, service or promote the products qualify, but not those whose primary duty is selling.
• Employees who lead a team of employees “assigned to complete major projects for the employer”, even those without direct supervisory authority should qualify.
• Executive assistant or administrative assistant to a business owner or senior executive will qualify if the assistant has been delegated authority over significant matters.
• Human resources mangers who “formulate, interpret or implement employment policies” do qualify. Personnel clerks who screen applicants for minimum acceptable standards as set by others generally do not qualify.
• Management consultants who propose changes in a business’s operation qualify.
• Purchasing agents with authority to make significant purchases qualify even if the agents need consultation for unusually large commitments.
• Inspectors “along standardized lines involving well-established techniques and procedures” and those doing other ordinary inspection work do not qualify.
• Examiners or graders do not qualify, even if the employee has progressed to a point that reference to written standards is unnecessary because of acquired knowledge.
• Comparison shoppers who report prices to a retail stores buyer do not qualify, but the buyer who evaluates the information to set the prices does qualify.
• Inspectors and investigators in the public sector, including those involved in “fire prevention or safety, building or construction, health or sanitation, environmental or soils specialists” among others do not qualify.

Note that merely giving someone a title does not qualify the employee as exempt unless the duties and responsibilities that the job encumbers are also designated. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

Governor Arnold Schwarzenegger signed AB 10 into law recently. The new law, signed as an urgency statute, took effect immediately upon the signing by the governor. Under the law, certain computer software professionals who make $36 or more per hour, if paid hourly or $75,000 per year (paid at least monthly) if paid a salary, are exempt from the overtime provisions of California state law. Both amounts are scheduled to be adjusted annually in proportion to changes in the California Consumer Price Index. Trainees and other categories of employees are exempted from the overtime law. Contact Vision Payroll if you have questions on the change in California overtime law.

Following an investigation, the US Department of Labor has filed a lawsuit seeking more than $5 million in underpaid overtime. The suit was filed against CEMEX, Inc., a Houston-based provider of cement and concrete products. Employees in Arizona, California, Florida, Georgia, New Mexico, North Carolina, South Carolina, and Texas were allegedly underpaid overtime hours for piece rate and incentive bonus pay. The Fair Labor Standards Act (FLSA) requires that employees eligible for overtime be paid at one and one-half times their regular rate of pay, which should include most commissions, bonuses, and incentive pay. Vision Payroll provides a continuing series on the FLSA, but you should contact your labor attorney with specific questions on overtime hours and pay rates.

A New York City garment contractor was cited by the New York Department of Labor with wage and hour violations that resulted in underpayment of almost $3 million to more than 100 workers. Jin Shun Incorporated, which was reported to have produced women’s garments for several notable retailers, required employees to use two sets of time cards per week. Therefore, even though employees routinely worked six or seven twelve-hour days per week, no set of timecards would show more than forty hours worked per employee. Employees were provided with false answers to memorize and recite to investigators in the event of an audit. “This factory paid sweatshop wages, kept fake records, and coached employees to lie, even though it had signed retailer codes of conduct to comply with the law. The Department of Labor will use all legal tools to stop this mistreatment of workers,” said New York State Labor Commissioner M. Patricia Smith.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. An earlier post discussed that to qualify for the administrative exemption, an employee must “exercise…discretion and independent judgment” in significant matters. Discretion and independent judgment involve “the comparison and the evaluation of possible courses of conduct, and acting or making a decision after” considering various possibilities. Some factors are “whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment of the business; whether the employee has authority to commit the employer in matters that have significant financial impact; whether the employee has authority to waive or deviate from established policies and procedures without prior approval; whether the employee has authority to negotiate and bind the company on significant matters; whether the employee provides consultation or expert advice to management; whether the employee is involved in planning long- or short-term business objectives; whether the employee investigates and resolves matters of significance on behalf of management; and whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances.” The regulations specifically state that other factors may also be considered in making the determination. Discretion and independent judgment generally require an employee to make decisions “free from immediate direction or supervision.” The decisions may, however, be reviewed by upper-level personnel or not followed at all. Neither means that the employee did not exercise discretion and independent judgment. The fact that several employees may perform similar work or work of the same level of importance is not necessarily enough to disqualify the work from requiring discretion and independent judgment. Types of work that do not require discretion and independent judgment “include clerical or secretarial work, recording or tabulating data, or performing other mechanical, repetitive, recurrent or routine work.” The fact that an employer may suffer “financial losses” if an employee fails to properly perform a job does not necessarily mean that an employee who performs that job exercises discretion and independent judgment. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. An earlier post discussed that to qualify for the administrative exemption, an employee’ s primary duty must be “the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.” Therefore “working on a manufacturing production line or selling a product in a retail or service establishment” does not qualify as an exempt administrative function. Examples of work that does qualify include “work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; [and] legal and regulatory compliance.” The regulations specifically state that other duties not listed above may also be included in the duties of an administrative employee and that such duties may also be performed by employees who qualify under other FLSA exemptions. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. Only employees “employed in a bona fide administrative capacity” qualify for the exemption. Any employee who meets all the following tests shall be considered an “administrative employee” for this purpose: 1) The employee must receive a salary of at least $455 per week, not including board, lodging, or other facilities. 2) The employee’s primary duty must be “the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.” 3) The employee must “exercise…discretion and independent judgment” in significant matters. Future posts will provide further clarification of certain terms in the administrative exemption as well as provide other tests that may qualify an employee as an administrative employee. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.