Review pay practices to avoid missteps and be compliant

Although the final federal overtime rule was halted from taking effect on Dec. 1, 2016 this might still be a good time for employers to take action.  The Fair Labor Standards Act (FLSA) changes were designed to address salaried employees’ pay threshold and overtime.  Although the future of the overtime rule is uncertain, employers may still want to review their pay practices, particularly in the areas listed below.

Hourly employees

Travel time – Hourly employees that spend time traveling for work (other than normal home-to-work travel) must be compensated for these hours as regular hours worked and should be counted as such when determining overtime.  Travel to a distant location and/or overnight travel becomes more complicated and a policy should be in place to address this.

Breaks – Company provided breaks for employees are not required by law (there are exceptions in some states for minor employees).  If provided, breaks of 5 to 20 minutes are considered compensable, and an employee’s pay should not be reduced.  Bona fide meal periods (typically lasting at least 30 minutes), serve a different purpose than coffee or snack breaks and, thus, are not work time and are not compensable.

Salaried employees

Misclassification –  To qualify for overtime exemption, employees must meet certain tests regarding their job duties and be paid a salary basis of not less than $455 per week (at the current time.)  Job titles do not determine exempt status.  For an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the Department of Labor’s regulations.  Many employers run into trouble when the job duties test is applied.  Details of these exemption tests can be found here: http://www.flsa.com/coverage.html.

Docking – There are very limited situations in which a salaried employee’s pay may be docked or reduced.  Pay may not be docked or reduced for a partial-day absence.  Additionally, full-day absences of one or more days must be paid unless the absence is for personal reasons other than illness or disability.

Neither an hourly or salaried employee’s pay can be reduced for company property damage or loss unless the employee has authorized such a deduction in writing.

 

Common pay practice missteps are often made in these areas.  There are many non-compliant practices that are widely followed, particularly some that appear to be industry specific.  However, this rationale will not protect an employer from being responsible for back pay and penalties when a wage-and-hour claim is filed or a Department of Labor investigator shows up at the door.

Concerns?  The professional staff at BCN can review your current practices, make recommendations, and help you to plan and communicate any changes in pay practices to employees.

 

SueKester_6669

Sue Kester, HR Manager