FLSA Poster imageRegular readers may have noticed that this blog took a bit of a hiatus over the summer while the authors spent some time away from work, and then working to catch up from the time away. Now that summer is winding down, the kids are heading back to school and life is starting to return

lunch9568375.jpgQ. We offer free lunches to our food service employees. Can we count the cost of these lunches as part of our employees’ compensation?

A. The short answer is yes, but as we all know, there’s no such thing as a free lunch, particularly in the world of wage and hour law. To explore the right way to do this, it’s helpful to take a look at some common mistakes that employers make. 

Suppose Jerry works at Bob’s Steak ‘N Beans as a line cook. Bob’s is located in Illinois, so the minimum wage for non-tipped employees is $8.25 per hour. Suppose Jerry works 45 hours over 5 work days in a week. For that week, he would be entitled to straight-time wages of $371.25. However, rather than paying that full amount in cash, Bob provides Jerry with a free Steak ‘N Beans Bonanza platter each day for lunch. The menu cost of the platter is $15, so Bob deducts $15 per day from Jerry’s pay, leaving him with $296.25 in straight-time pay. On Thursday, Jerry brought a salad from home, but Bob still charged him for the platter since it was available to Jerry even if he didn’t eat it. (Bob ended up serving it to a customer.) Bob didn’t just fall of the turnip truck, so he knows that he also has to pay Jerry overtime for 5 hours. So Bob takes Jerry’s total straight-time wages ($296.25), divides by 45, and divides by two to get an overtime premium rate of $3.29 per hour. Multiplied by five hours, he gets $16.46. Adding that amount to Jerry’s straight-time pay, Bob comes up with a total of $312.71. 

Can anyone spot the problems here?


Continue Reading

The Illinois Minimum Wage Law (IMWL) generally provides that non-exempt employees must be paid one-and-one-half times their regular rate of pay for all hours worked over 40 in a workweek. However, on July 10, 2015, Governor Rauner signed legislation amending the IMWL as it pertains to public employees who are members of a bargaining unit

DOL Perez.jpgLast week, Secretary of Labor Thomas Perez testified during a hearing held by the House Education and Workforce Committee to discuss President Obama’s budget proposal for the Department of Labor. Secretary Perez’s testimony touched a wide range of topics, most notably the oft-delayed FLSA regulations rewrite we have discussed in recent months. The DOL

If you read this blog, attend presentations on wage and hour issues, or just shudder every time you read about another overtime or minimum wage lawsuit, you might assume that all employees are covered by the federal Fair Labor Standards Act (FLSA) and its regulations. However, in some rare circumstances, the FLSA may not cover very small and, importantly, local businesses, meaning that those businesses’ employees may not be entitled to the minimum wage or overtime pay under the FLSA. A quick warning before we start: as we have highlighted in the past, though, most states and an increasing number of local governments do not provide exemptions from state and local minimum wage laws, even for small businesses. With a very few exceptions, the fact that the FLSA does not apply only resolves one half of the question; you almost certainly still have to contend (and comply) with state and local laws, that may have different standards and penalties.

Setting aside state and local issues for a moment, the FLSA provides two different ways for coverage to apply: and “enterprise coverage” and “individual coverage.” Setting aside more complex corporate structures that can implicate “joint employer” or similar tests, both coverage tests are straightforward. For most businesses, the FLSA’s enterprise coverage provisions will apply if the business meets two tests. First, the business must be involved in interstate commerce. Second, the business’s gross annual revenue must be at least $500,000. If a business meets both tests, then all employees working for the business are covered, regardless of whether they ever engage in interstate commerce. Notwithstanding these limits, the FLSA also automatically covers some businesses, such as schools, hospitals, nursing homes, or other residential care facilities as well as all governmental entities (regardless of the level of government), no matter how big or small.


Continue Reading

iStock_WageIncrease.XSmall.jpgBack in February, we told you about President Obama’s Executive Order 13658 increasing the minimum wage for federal contractor employees. Late last week, the Department of Labor’s Wage & Hour Division (WHD) submitted its Final Rule implementing EO 13658 to the White House Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA).