5 Common Wage and Hour Compliance Questions
By Michael Henckel
The New Year rang in loud and clear, but after an eleventh-hour court-ordered injunction, the fate of the Department of Labor’s Overtime Exemption rules (which were slated to go into effect on December 1) was less than certain even as January rolled in. Though the fate of that rule remains to be seen, the beat goes on, as they say, and wage and hour compliance continues to be an audit focus for federal and state agencies.
Whether employers are trying to decipher employee exemptions, what counts and hours worked, or how to properly pay overtime, the answers may not always be clear or easy to find. To help shed some light into these dark corners, below are answers to five commonly asked questions regarding wage and hour compliance situations.
Q. What are the requirements for paying nonexempt employees who travel out of town for business?
As a general rule, all travel time to another city for an overnight trip (including any time spent waiting in an airport and any work performed at the destination) would count toward paid working time. The Wage and Hour Division, however, does have an enforcement policy under the federal Fair Labor Standards Act (FLSA) that allows excluding travel time when an employee is a passenger (such as on a plane or riding in an automobile) outside of the employee’s normal working hours. Bear in mind that if an employee is working during the time as a passenger (reading emails, preparing for a presentation, etc.), then he or she would have to be paid for that working time.
Note, that some state laws may not recognize the passenger exclusion. For example, California and Wisconsin require paying for time spent as a passenger outside of working hours, even if the employee is not performing work.
Q. May an employee who works full time for us take another part-time (lower paying) job with our company?
Yes, an employee may work more than one job and be paid at different rates. All of the hours, however, would have to be combined for overtime calculations. For example, if an employee works 40 hours at $12 per hour, and another 15 hours at $10 per hour, the employee worked 55 hours for the week. His base compensation would be $630, but this number does not yet account for overtime. Half of the regular rate (which is half of $630/55, or $5.73) would be added to the wages for the 15 overtime hours ($85.95). This results in a total of $715.95 ($630 + $85.95) for the week.
Q. May an exempt employee be expected to work a specific number of hours each day or a specific schedule? What if the exempt employee won’t work the expected schedule?
Yes, exempt employees may be required to work both a certain number of hours and a specific schedule. Being exempt doesn’t mean employees aren’t subject to schedules, even if that schedule exceeds 40 hours per week at times. It is really no different than if the employees were nonexempt and required to work mandatory overtime.
Exempt or not, refusal to work is refusal to work. An employee wouldn’t necessarily have to be fired for it, but an employer may impose discipline. Options could include giving written warnings, reducing salary, or not giving a raise or promotion at annual review time.
Q. What is the maximum number of hours an employee may be required to work in a day?
The FLSA does not limit the number of hours per day or per week that employees (aged 16 and older) may be required to work. Employees could be expected or required to work any number of hours an employer deems appropriate. Essentially, how employers schedule employees may be determined by company policy or through considerations of employee safety and productivity. Certain occupations, however, may have limited hours under state or federal laws. For example, interstate truck drivers may be subject to hours of service rules, and some states limit overtime for nurses.
Overtime pay of at least 1.5 times the regular rate of pay is required for any hours worked over 40 in a workweek. Note that some states (including Alaska, California, Colorado, and Nevada) require employers to pay overtime when employees work more than a certain number of hours in a workday
Furthermore, some states have what are commonly called “one day’s rest in seven” laws, which, as the name implies, require that employees have at least one day off in a span of seven days.
Q. When an employee’s rate of pay will be reduced, how much notice must be given prior to the change?
The FLSA does not require a specific amount of notice when an employee’s rate of pay is being reduced, however, the employee must be made aware of the reduction prior to any work being completed at the lower rate. State laws do vary and may require a certain amount of notice to employees whose wage rates decrease. Employees may need to be given notice of a certain number or days or pay periods before the decrease in wages is to take place.