Call center operatorLast week, the U.S. Department of Labor announced a settlement with Hilton Reservations Worldwide, LLC, in which the company agreed to pay $715,507 in minimum wages and overtime pay to 2,645 current and former customer service employees in Texas, Florida, Illinois and Pennsylvania. The DOL determined after an audit that the company failed to pay workers for pre-shift activities such as booting up their computers, launching necessary programs, and reading work-related e-mails.

This settlement reflects what appears to be an ongoing focus by the DOL on call center operations, aimed specifically at the issue of pre- and post-shift activities by call center employees. However, the issue of pre- and post-shift activities is by no means limited to call centers. While activities such as booting up a computer may represent only a few minutes of an employee’s day, over time they can add up to a significant amount of additional work time. Particularly if an employee has an older machine and is required to start multiple, slow-launching applications before starting work, these minutes can add up.

Note that the situation at issue in the DOL’s recent settlement may be different than the common scenario in which an employee routinely comes into the office, turns on the computer, grabs some coffee, hits the restroom and then clocks in and begins working. If the only “work” the employee performs before clocking in is hitting the power button on the computer, the time involved may be so minimal that the regulations would not require it to be tracked. However, even here, the best practice may be to require employees to complete their personal business (bathroom, coffee, etc.), and then clock in and start their computers.

Insights for Employers

How can employers avoid overtime and minimum wage liability for office employees’ pre and post-shift activities? 

  • If there are tasks that employees must perform before they can log onto or after they log out of the system used to track their work hours, identify and list those tasks, and determine how long they should typically take. If the time at issue is more than de minimus, set your timekeeping system to add that amount of time to each employee’s total work time for the day, and also provide a mechanism for employees to report any necessary adjustments if pre- or post-shift activities take longer than the allotted time. 
  • Alternatively, provide a separate timekeeping system that employees can use to “clock in” before beginning any pre-shift activities.
  • To minimize extra paid time, work with your IT staff to streamline computer login and startup procedures. If employees are just sitting around waiting for their computers, see if there are other useful tasks they could perform so that paid time is not wasted. 
  • Whatever your procedure, ensure that employees understand that they are not to perform any work activities that are not accounted for in your timekeeping system, and that supervisors monitor and take appropriate action with respect to employees who fail to comply with this policy.

 

janitorial - maid cart.jpgCheck out my article in the October 2011 issue of Cleaning & Maintenance Management.  While focused on the cleaning and maintenance industry, the issues highlighted in the article are generally applicable to a wide range employers. 

Here’s the link: Are You Due for a Wage and Hour Checkup?

The U.S. Department of Labor has specifically identified the janitorial industry as a target for enforcement actions, so employers in the industry are strongly advised to assess their vulnerability to wage and hour claims before the investigator or process server comes knocking. 

 

iStock_ManHeadHands.XSmall.jpgMy last blog entry on travel time only touched on one issue that may arise as we see more employees being asked to take on additional responsibilities and assignments in lieu of hiring new personnel.  Indeed, consolidation of jobs or responsibilities can lead to a number of other potential wage and hour issues that can have a significant impact on employers.  One such issue arises when an exempt employee takes on additional jobs or duties that are non-exempt.  How should an employee be treated for overtime purposes if working both exempt and non-exempt positions? 

When an employee performs work in more than one capacity for the same employer – e.g. as a clerical worker (non-exempt) and manager (exempt) – employers must consider the character of the employee’s job as a whole.  The standard for determining whether the combined job duties are exempt is the primary duty test.  In other words, if the exempt managerial duties are the primary duty, the employee will be exempt.  If the clerical duties are the primary duty, the employee will be non-exempt, and normal regular rate principles apply in calculating overtime for all hours worked for both jobs in the workweek. 

Factors to consider when determining the primary duty of an employee include, but are not limited to:

  • the relative importance of the major or most important duty as compared with other types of duties;
  • the amount of time spent performing the major or most important duty;
  • the employee’s relative freedom from direct supervision; and
  • the relationship between the employee’s salary and the wages paid to other employees for performance of similar work.

http://www.dol.gov/elaws/esa/flsa/overtime/glossary.htm?wd=primary_duty.  The amount of time spent performing the specific duty can be a useful guide in determining whether such work is the primary duty of an employee.  Under the FLSA, employees who spend more than 50 percent of their time performing a specific duty will generally satisfy the primary duty requirement. However, employers must remember to check to see if their State law is different than the FLSA.  For example, in Illinois, if employees spend more than 20 percent of their time on non-exempt work, they will generally be considered non-exempt.  However, it is important to note that time alone is not the sole test; employees may nonetheless meet the primary duty requirement if the other factors (listed above) support such a conclusion.

Misclassification of employees has the potential to cause significant problems for employers.  As employers are looking for ways to cut costs, they need to keep these factors in mind to avoid losing the benefits of an employee’s exempt status.  Because there is no bright line test, if going down this road, check with an experienced employment attorney before making any such decisions on job consolidation. 

Thumbnail image for Q&AChalkboardAnother in our series of answers to questions from our September 28 webinar on wage and hour law in higher education:

Q. If an exempt employee only works a half day, i.e. they go home sick at noon, and they have both sick and vacation leave available, can we require that they use four hours of leave time to “make up” the lost four hours? Or, since they are exempt and there can be no variance for hours, must they be paid their full regular pay and not use leave time? 

A. Yes, if an exempt employee has a bank of available paid leave time and misses a half day, you can deduct a half day of available paid leave time from the employee’s “bank”, so long as the end result is that the employee receives his or her full salary for the workweek. If you allow use of leave time in smaller increments, you could also deduct smaller increments of time from the employee’s leave bank for shorter absences. What you cannot do is take a partial-day deduction from the employee’s salary once the employee has exhausted all available paid leave, unless the absence counts as FMLA leave.

For greater detail, see the DOL’s opinion letters on this issue here and here.

Q&AChalkboardAnother in our series of answers to questions from our September 28 webinar on wage and hour law in higher education:

Q. What if a non-exempt employee truly volunteers his/her time on a weekend to participate in a campus clean-up program (non-exempt duties) or a ticket taker at homecoming? Are these hours non-compensable? Similar, situation, a weekend event and a storage room was locked. The only employee with a key was non-exempt and she was called on a Saturday night to drive in and open the door then leave. Was any of the time (incling travel time) compensable?

A. In both cases, it depends. Employee civic and charitable work may be non-compensable if all of the following factors are present:

  • The employee offers his or her services freely, with no pressure or coercion, direct or implied.
  • The work is conducted completely outside of the employee’s regular working hours.
  • The work is performed with no promise or expectation of compensation.
  • The work is of a different type than the employee’s paid work. 

So, to take the example of the campus cleanup program, suppose the program takes place on a Saturday afternoon and employee participation is completely voluntary. Bob normally works as an administrative assistant in the Dean’s office Monday through Friday. So long as he clearly understands that he won’t be paid and is not being pressured to participate, his work for the campus clean-up program could likely be treated as unpaid. However, Sally, who works as a groundskeeper, would likely have to be paid if the campus clean-up work is comparable to her usual job duties. Likewise, James, who works in food service on Saturday afternoons, would likely have to be paid because the program occurs during his regular working hours. 

In the second scenario, the primary issue is not whether the employee’s time at work is compensable, but whether she is entitled to pay for her travel time. Normally an employee’s time commuting from home to work and back is not compensable. However, when an employee is called out after hours to return to their regular worksite, the DOL’s regulations say that it “takes no position” as to whether the travel time must be paid:

There may be instances when travel from home to work is overtime. For example, if an employee who has gone home after completing his day’s work is subsequently called out at night to travel a substantial distance to perform an emergency job for one of his employer’s customers all time spent on such travel is working time. The Divisions are taking no position on whether travel to the job and back home by an employee who receives an emergency call outside of his regular hours to report back to his regular place of business to do a job is working time.

As a practical matter, if this is really a one-off scenario the amount of money at issue is likely minimal. If the employee has to commute a substantial distance, it might be worth paying her as a sign of appreciation for disrupting her weekend. However, if the employee lives five minutes from campus or if offering pay in this situation would lead to abuse (like friends frequently forgetting their keys), there seems to be little legal risk in taking the position that the time is not compensable.

 

TV cablesA couple of weeks ago, I wrote about an initiative by the U.S. Department of Labor, IRS and various state agencies to launch a coordinated crack-down on employers who misclassify employees as independent contractors. Recently, a U.S. District Court in Ohio issued a ruling that nicely illustrates the problem of misclassifcation and the potential liabilities that employers can face as a result. Solis v Cascom, Inc – .pdf

In 2009, the U.S. Department of Labor filed a lawsuit against Cascom, Inc., a business that contracted with Time-Warner Cable to install residential cable services in Southwestern Ohio. Cascom’s installation work was performed by cable installers, whom the company classified as independent contractors. The installers were paid by the job rather than by the hour, and did not receive overtime pay. The DOL alleged that the workers were in fact employees, and that Cascom violated the Fair Labor Standards Act by failing to pay required overtime and failing to maintain records of the installers’ hours. 

After a bench trial, the court ruled in favor of the DOL, holding that the installers were in fact employees entitled to overtime pay. The court noted that the following factors all supported its finding:

  • The installers were employed for an indefinite period of time. 
  • They were not allowed to hire assistants without approval from Cascom.
  • Before beginning work with the company, installers were required to complete an employment application. 
  • The installers were substantially controlled by Cascom throughout they day. Among other things, they were required to report in during a specified window of time to receive assignments, check with a dispatcher after each job, remain on the job until dismissed by Cascom, complete Cascom paperwork, follow Cascom’s detailed instructions for installation methods and work practices; follow routes dictated by Cascom; and follow written orders an dinstructions from Cascom. Additionally, the workers’ performance was subject to Cascom’s quality review process, and their pay was subject to “back charges” for errors. 
  • While the work performed by the installers was Cascom’s core business, cable installation, Cascom had no admitted employees who performed this work. 
  • Cascom retained authority to cancel contracts with its installers without notice.
  • The installers had no opportunity for profit or loss depending upon their managerial skill. 
  • Although the installers were required to purchase tools costing $2,000 to $5,000 and provide their own vehicle or lease one from Cascom, the court found that these investments were “at the low end” of what one would expect for someone starting an independent business.
  • No special skills were required – some installers “went from jobs as simple as sales clerks to Cascom technicians with six weeks of Cascom training.” 

In a news release, the DOL stated that it is seeking back wages in excess of $800,000 plus an equal amount in liquidated damages. The court will hold a hearing on damages on November 22. 

Employers can expect to see more of these lawsuits by both the DOL and private plaintiffs in the months and years to come. If your organization classifies workers as independent contractors, don’t wait to get sued to find out if you are in compliance. Review your workers’ status and take steps to either make sure that your independent contractor classifications are defensible or that your workers are reclassified as employees and paid in accordance with state and federal law. 

University signLast Wednesday, my partner Ed Druck and I hosted a webinar on wage and hour law for colleges and universities. (For those who missed it, you can check out the recording.) We had a great turnout and a wonderfully responsive audience. We were thrilled to receive nearly 50 questions, but could only get to a handful of them during the webinar. Over the next several weeks, we will try to answer a number of them here on the blog. If we don’t get to yours, please feel free to contact me or Ed. 

For those of you outside the realm of higher education, worry not: this will be worthwhile reading for you too, as the issues raised by our webinar audience apply to a wide range of employers. 

To kick off the Q&A, let’s start with a question we got from several of you about on-call time:

Q. Our Resident Advisors are treated as employees and paid through the payroll. During certain hours they are required to be accessible by phone, but not necessarily in their rooms. From midnight to 8:00 a.m., they are required to be in the dorm and available to maintain order or respond to calls from students. However, most of this time is spent on personal activities or sleeping. Do we have to pay for this time? If so, can we pay a lower “on call” rate of say $1 per hour?

Continue Reading Wage & Hour Law On Campus – Your Webinar Questions Answered

airplane15895164.jpgIn this economy, we continue to see lay-offs and slow growth in hiring.  As a result, more employees are being asked to take on additional responsibilities and assignments.  These circumstances, coupled with the fact that some employers are properly re-classifying certain jobs as non-exempt, have led to an increase in work-related travel for non-exempt employees.  For some employers, requiring non-exempt employees to travel is new territory.  As a result, I thought it would be beneficial to provide some general guidance on hours worked for travel time purposes.  The following general rules apply to non-exempt employees:

 General Rules Applicable to All Travel Time

  • Ordinary commuting time from home to work and work to home is not considered hours worked unless the employee is required to perform work or tasks for the employer during the commute.
  • Work performed while traveling, regardless of when the travel occurs, is considered hours worked.
  • Even if the employee is required to travel overnight for the employer, sleep time is never counted as hours worked.

 Same Day, In-Town Travel

  • If an employee spends time traveling as part of their principal work activity, such as travel from job site to job site during the workday, all time spent traveling during the employee’s normal workday is considered hours worked, except the employee’s commute to and from work. 
  • Time spent commuting from home to an alternate work location within reasonable proximity to the office is not considered hours worked.  However, if the alternate work location is not within reasonable proximity to the employee’s home and the associated travel requires additional time, effort, or cost, the travel time may be considered hours worked. 

Special One Day Assignment in Another City

  • This scenario arises when an employee who regularly works at a fixed location in one city is given a special one day assignment in another city and returns home the same day.
  • All time spent by an employee traveling to and from the other city is considered hours worked, whether or not the travel occurs during the employee’s normal work hours.
  • The employer may deduct/not count that time the employee would normally spend commuting to the regular work site.

Overnight Travel

  • Generally speaking, travel time that occurs during an employee’s normal work hours— even if such travel occurs outside of the regular work week (e.g., Saturday and Sunday) — is considered hours worked.
  • Time spent as a passenger of an airplane, train, boat, bus or automobile outside of regular working hours will not be considered hours worked.
  • Travel time spent by an employee driving a vehicle, regardless of whether the travel takes place within normal work hours, counts as hours worked.
  • Time spent traveling from home to the airport will not count as hours worked.

Obviously, these rules are general and specific facts may lend to different results.   Like any wage and hour issue left unchecked, failure to properly pay travel time may lead to serious monetary damages down the road.  Even if you are familiar with these rules, it may be worth a few minutes of your time to confirm your travel time policy with an experienced employment attorney. 

Audit stampEarlier this week, the U.S. Department of Labor held a ceremony at which Secretary of Labor Hilda Solis signed a memorandum of understanding with the Internal Revenue Service to “improve departmental efforts to end the business practice of misclassifying employees in order to avoid providing employment protections.” The DOL also signed or has agreed to sign memorandums of understanding with officials in 11 states to coordinate efforts to crack down on independent contractor misclassification, including Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah, and Washington. 

Although misclassifying workers as independent contractors can result in violations of numerous laws, including the tax code and wage and hour laws, the various government agencies charged with enforcing those laws have historically not shared information or coordinated their enforcement efforts. That now now appears to be coming to an end, as the DOL becomes more aggressive in its enforcement efforts and state and federal governments look for opportunities to enhance their revenues.

At the same time, the IRS has announced a new “Voluntary Classification Settlement Program” to encourage employers who have misclassified workers in the past to “get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit.” To be eligible for this program, applicant employers must (1) consistently have treated the workers as nonemployes, (2) have filed all required 1099s for the workers for the prior three years, and (3) not currently be under audit by the IRS, DOL, or a state agency concerning the classification of the affected workers. Employers accepted into the program will be required to pay an amount “effectively equaling just over one percent of the wages paid to the reclassified workers for the past year.” No penalties or interest wll be assessed, but for the first three years under the program, the employers must agree to an extended statute of limitations for the IRS to pursue payroll tax violations. Unfortunately for employers, the IRS program would not provide any amnesty for violations of other laws, such as state or federal overtime laws or state tax violations. The IRS announcement also makes no mention of whether the agency will shre information from the settlement program with the Department of Labor or other agencies. 

Because misclassification violations implicate a wide range of laws and frequently involve multiple workers, they can represent a significant liability for employers, particularly for small and midsize businesses without significant financial reserves to defend or settle these claims. Given the risks and the spotlight that the DOL is shining on this issue, businesses that use independent contractors should act now to ensure that their workers are properly classified. Among other things, this means making sure that when you classify a worker as an “independent contractor,” you are prepared to prove that your classification decision is warranted under all of the relevant laws, including but not limited to the Fair Labor Standards Act, state wage and hour laws, workers’ compensation statutes, and the state and federal tax codes. Unless you are well-versed in these laws, this is yet another area where a few hours of consultation with an experienced employment lawyer now may help avoid serious liability down the road.

 

I’m pleased to announce that on September 28, I will be conducting a webinar with my partner Ed Druck covering some common wage and hour issues encountered in the college and university setting and best practices for complying with the Fair Labor Standards Act and state wage and hour laws. Our program will focus on problems of misclassification and other common issues relating to typical university and college employees including: 

  • Residence hall personnel
  • Coaching staff
  • Admissions counselors

The webinar will also include a brief look at the wage and hour issues that arise for student interns. 

This program has been submitted to the HR Certification Institute for review. For more information about certification or recertification, please visit the HR Certification Institute website at www.hrci.org. Illinois CLE credit also will be available to attorneys attending the program. 

Online registration is available here.  

We hope you’ll join us!