In my last post, I mentioned a lawsuit filed by the Department of Labor (DOL) against a group of related NY-area companies. Apparently, one of the things they were supposed to have done was to avoid paying overtime for employees who worked more than 80 hours in a two-week period by splitting the hours up among “related businesses” to make it look as though the employee had worked no overtime for any given individual business.
The problem, of course, is that when the companies are in the same line of work, and share a common management and ownership, and their corporate headquarters share the same address, they’re very likely going to be seen as a single entity for the purpose of calculating overtime hours.
I’ve run across several stories lately of companies getting tripped up by the overtime issue. It’s not always clear whether the company owners were deliberately trying to avoid paying overtime, but in a lot of cases it certainly seems suspicious. For instance, here are a few things I’ve come across recently that made me go “Hmmmm”:
Read more to learn how NOT to pay your workers
From the “Don’t Try This At Home” files comes the story of Alliance Property Services, Inc. and three affiliated companies. The companies, based out of Salina, NY, have been sued by the U.S. Department of Labor (DOL) for — among other things — failing to pay proper overtime to their employees.
According to the lawsuit, the workers were employed to travel to foreclosed properties across New York and neighboring states to mow lawns, winterize homes, change locks and do light construction work.
Reportedly, the employees traveled long distances and often worked more than 60 hours a week, according to Jay Rosenblum, Albany district director for the DOL’s Wage & Hour Division (WHD). But according to the DOL, the company only paid them straight time, by splitting their hours and writing checks from two different sister companies, or by paying in cash “off the books.”
Read the rest of the article
A restaurateur in Santa Fe, NM learned the hard way that it’s a bad idea to try to fool the Wage & Hour Division (WHD) of the Department of Labor (DOL). In this case, it was a bad idea to the tune of over $50,000.
Famous Wok franchisee Lixin Zhang was originally found to have underpaid two workers based on the results of a WHD investigation. According to the WHD press release, his employees worked 72 to 80 hours per week with no overtime pay. (Oh, and he apparently also didn’t keep accurate records of their hours worked. Because, of course, then he’d know they were working all that unpaid overtime, I guess?)
But, you know, investigations happen all the time and barely register as news. It was what Zhang supposedly did next that caught the attention of the Feds.
Most employers will pay the back wages, review their recordkeeping and payroll practices to make sure it doesn’t happen again, and move on with life. Reportedly, Zhang had another idea.
Find out what the bad idea was…
From Hawaii comes the story of the Tsukiji Fish Market and the tip pool that cost them over $57,000.
Reportedly, Paradise Inn Hawaii LLC, doing business as the Tsukiji Fish Market in Honolulu, elected to take the tip credit when paying their wait staff, but then forced their tipped employees to share those tips with other back of the house workers who are not normally tipped.
What is this “tip credit,” anyway?
Learn how a tip pool SHOULD be used
There’s a lot to like about telecommuting. Employees who work from home are often more productive and generally report greater job satisfaction. Organizations who allow employees to telecommute can save money on office space, supplies, utility costs, employee turnover and more.
But there can be issues with telecommuting, as well. Especially when the telecommuters are overtime-eligible employees.
The Fair Labor Standards Act requires employers to keep accurate records of work time for all non-exempt employees. If they work more than 40 hours during any single week, you’re required to pay them overtime at the rate of one-and-a-half times their “regular rate of pay.” In some states, you may be required to pay overtime if they work more than eight hours in a single day.
Some states also require employers to furnish lunch and/or breaks if employees work over a certain number of hours in a day. How do you prove employees have taken the required breaks when those workers aren’t in your office?
Find out how to stay out of trouble with the DOL if you have telecommuting employees
An interesting question: when you you need to count toward “work time” the travel time incurred by non-exempt employees? The answer may not be as simple as you might think.
Obviously, normal commutes to and from the employee’s standard work location at the beginning and end of the work day are usually not compensable. You’re not going to include the time an employee spends sitting in morning rush hour traffic toward her work time.
And most everyone knows that travel between work locations during the day does count. So when an administrative assistant drives from the satellite office where he normally works to set up for a company event at the corporate offices across town, that travel time counts toward his work hours.
But what happens when you need to send an overtime-eligible employee out of town? What (if any) of their travel time counts toward their work hours?
There are a couple of situations to consider:
Wage and hour violations have been big news for a long time now. Almost every day you can read stories of companies that have been assessed fines and penalties for infractions of wage and hour rules. Finding yourself in that situation is not just embarrassing — you could face a huge assessment that might threaten the very viability of your business.
This is not a position you want to find yourself in.
Where do violations happen?
According to a study cited by the Compensation Daily Advisor, some types of employees and employers are more likely to be involved with wage and hour violations than others. For instance, among others:
- Companies with fewer than 100 employees are more likely to experience violations than larger companies. This may be due to these companies not having a full-time HR department to monitor compliance and help ensure they’re up-to-date on current laws and regulations.
- Employees who are paid a flat weekly rate are more likely to experience violations than those who are paid by the hour. Employers might not track their time, thereby missing overtime incurred by these workers.
- Foreign-born workers are more likely to experience violations. Sadly, some unscrupulous business owners and managers take advantage of immigrant workers, sometimes threatening them with deportation if they complain of any wage issues.
A prudent business owner or manager should be on the lookout for any potential wage and hour problems. Even if your business has a dedicated HR department, they can’t be everywhere and see everything. Every manager and supervisor has the responsibility to make sure their department operations comply with the law.
What kinds of violations should we look out for?
According to a Careerbuilder survey released in 2014, 48% of employers expect their workers to be on time every day. Nearly one third of employers (35%) have actually fired an employee for excessive tardiness.
But according to the same survey, 23% of employees admit to being late once a month on average, while 15% say they’re late to work at least once a week. According to the employees, 39% of the time they’re late because of traffic.
Have you been a victim of time theft?
If your company doesn’t track employee work time and simply assumes everyone works a full day unless they say otherwise, it’s possible you have experienced time theft. While most employees are honest and will accurately report when they’re late or if they have to leave early, there’s really little way of telling if one or two bad apples are taking advantage of the situation.
While it may not seem like a big deal, a quick bit of math will show you that even a few minutes of “stolen” time per day can add up rapidly. For instance, if an employee arrives late, leaves early or takes long breaks for a total of 15 minutes per day, by the end of the year you’ve paid that employee for over six days of time they didn’t actually work! It’s like giving them over a week of extra vacation. Multiply that by just a few employees, and you can see the dollars flying out the door.
Even if your company does try to formally track employee work time, there are still ways workers can potentially get away with arriving late, leaving early or taking a long lunch without reporting it:
Last time, we talked about the problems with for-profit organizations trying to make use of volunteers. We learned there are very specific criteria that must be met for an activity to be considered a legitimate volunteer opportunity. As it turns out, while they can organize volunteer efforts for charitable organizations and/or encourage their employees to volunteer their services individually, it’s virtually impossible for a profit-making organization to use volunteer labor directly.
For non-profits, on the other hand, the situation is a bit different. Not necessarily less complicated, but different.
Motivation is key
For non-profits, they can make use of volunteer labor, as long as the volunteering individual is motivated by “personal, civic, charitable, humanitarian, religious, or public service reasons.” According to the Department of Labor, such “ordinary volunteerism” is not compensable.
So how do you know if an activity qualifies as “ordinary volunteerism”? In general, there are no hard-and-fast rules, but by following certain guidelines a non-profit can maximize the chances that the DOL will regard their workers as true volunteers:
When it comes to business expenses, what manager or owner doesn’t want to save money? There are a lot of ways to go about cutting expenses. IF you’re a for-profit company, though, asking employees to volunteer their services generally speaking isn’t one of them.
Does this mean your company can never sponsor volunteer opportunities or participate in volunteer events as a group? Not at all… but the Department of Labor has very strict rules about when and how employees of for-profit enterprises can legitimately be treated as volunteers (as opposed to employees who are entitled to be paid for their work time).
What does a legitimate volunteer opportunity look like?
In order for an event to be considered a real volunteer opportunity, it must meet the following criteria: