The Department of Labor is reporting that it collected $322 million in back wages for workers in fiscal year 2019, which is a record. The amount collected in fiscal year 2018 was also a record at that time. This should put to rest any concerns about DOL enforcement policies under a Republican administration.
Most of the cases involved overtime compensation ($186 million), and about $40 million involved failure to pay minimum wage. In any event, record collections two years in a row highlight the need to audit your wage and hour policies regularly to insure compliance with federal, state, and local wage and hour laws.
Two of the biggest areas of contention in the wage and hour arena involve (1) hours worked and (2) exemptions. With respect to the hours-worked issue, employees must be paid for such things as:
- Interrupted lunch hours.
- Time worked both before and after a shift.
- Time worked at home.
- Time spent laundering uniforms.
- Travel (though not usually commuting time).
- On-call time, except under certain circumstances.
Ironically, an employer can fire an employee for punching in early or punching out late, but he cannot refuse to pay the employee if work was performed.
As to the exemptions from overtime and minimum wage, there are regulations of the Department of Labor that are just as complex as the Internal Revenue Code. First, the exemptions vary as to their coverage: some employees are exempt from minimum wage and overtime, some only overtime. Second, there are various tests that employees have to meet to be exempt. Third, exempt employees can lose the exemption, either temporarily or permanently, depending how they are actually compensated. Fourth, the exemptions are based on what the employee does, not how much he or she is paid, or how he or she is paid.
One thing about exemptions is relatively clear: hourly employees are rarely, if ever, exempt, unless they are computer programmers making nearly 30 bucks an hour. Exemptions are for salaried employees. As one might imagine, salary issues arise all the time:
- Can I dock a salaried employee without losing the exemption?
- Where do commissions come in?
- How much must the salary be?
Hourly employees making 200 thousand dollars a year may be entitled to overtime while salaried employees making 50 thousand may not.
Employers are well advised to stay on top of the wage and hour laws for a variety of reasons. Employees and former employees can sue for back pay up to three years, an equal amount in liquidated damages, and attorneys’ fees. Further, employees cannot agree to accept less than the amount to which they are entitled under the Fair Labor Standards Act, even if the wage arrangement was the employee’s idea. And employees cannot settle wage and hour claims for less than the amount they are entitled to receive, even if they settled with the advice of an attorney. In other words, an employer can settle a wage and hour case, then be sued again because the settlement amount was insufficient.
Employers would be prudent to have their wage payment practices reviewed periodically to insure compliance with the FLSA. The cost to the company of a Department of Labor audit or an FLSA lawsuit can be devastating. Don’t be part of next year’s record collections.