Overtime Advisor : New York Employment Lawyer & Attorney : Greenwald Doherty Law Firm : NY Wage & Hour & Discrimination : Overtime Advisor Law Blog

Since there is an overtime exemption for computer employees, computer help desk staff (a/k/a technical support or IT support) must be exempt from the overtime pay requirements, right?

Wrong. Tech support employees are not the right kind of computer employees that fit under that exemption. Remember: under the Fair Labor Standards Act, all employees earn overtime pay unless they qualify for a specific exemption. Overtime wages, even for technology workers, is the default.
 

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Some employers think that overtime compliance is optional and even a luxury, especially in a difficult economy. But think again. Failing to comply with the overtime laws could invite an audit by the state or federal department of labor, which in itself is an expensive and invasive process.  

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In Joel Greenwald’s blog on April 30^th, he wrote about The Employee Misclassification Prevention Act (“EMPA”).  EMPA is making its way through Congress and was the subject of a hearing by the Senate Health, Education, Labor and Pensions (HELP) Committee on June 17^th.  The Committee heard testimony from Seth Harris, Deputy Secretary of the US Department of Labor, as well as the New York State Department of Labor Commissioner Colleen C. Gardner and others. 

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Just because an employer or its supervisors tell employees not to work overtime or there is a written policy forbidding employees from working overtime, does not mean that overtime wages do not need to be paid to employees who work overtime hours. Workers who are not otherwise exempt under the overtime laws and who actually work more than 40 hours in a week must be paid overtime – even if they are instructed not to work overtime. 

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Given the estimated tens of thousands of employers that misclassify their employees as independent contractors, on April 22, 2010, an Ohio senator introduced The Employee Misclassification Prevention Act to provide workers with benefits they are not entitled to as independent contractors. Only those classified as employees are entitled to the protections of wage and hour laws, employment discrimination laws, and unemployment and workers’ compensation insurance. This federal legislation would amend the Fair Labor Standards Act and permit penalties for improperly labeling workers as contractors.

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If you’ve been having trouble finding recent U.S. DOL wage and hour opinion letters, you are not alone. In fact, the DOL has not issued an opinion letter regarding the FLSA since January 16, 2009 (when it also curiously withdrew 14 of them for “further consideration”).  What happened? The DOL determined that it is no longer going to be issuing wage and hour opinion letters.

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The IRS has stepped up enforcement of rules regarding independent contractors. Early this year, the IRS started deploying auditors to conduct intensive audits of an estimated 6,000 employers in different industries and including both large and small companies. The federal government believes that misclassification is on the rise given that independent contractors receive fewer incentives to trim costs during these difficult economic times. The IRS is engaging in vigorous enforcement for various reasons, including to collect more money for the federal tax coffers and as a result of the Obama administration’s friendly approach to labor.

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Under the federal Fair Labor Standards Act (FLSA), if an employer violates the overtime provisions, employees may either bring their own lawsuit or file a complaint with the Department of Labor. In either case, the potential penalties against the employer are substantial and rectifying the original problem by paying back overtime wages owed to employees may not be the employer’s only concern.  Calculations of amounts due include the following:

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Under the FLSA, employees are paid overtime unless they qualify for one of the exemptions in the Act. One of the most common exemptions is the Executive Exemption.  While called an “executive” exemption, it’s not limited only to inhabitants of the C-suites and their VP-level direct reports. Instead, it may be available to a wide range of managerial or supervisory employees and should likely be called the “managerial exemption.”

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Non-exempt workers need to be paid for ALL time worked. Failing to do so can lead to substantial liability, especially for unpaid overtime pay. Amazon.com may be in the process of learning that lesson painfully.

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Employers are often unaware of the requirements under Federal law regarding paying exempt employees who serve jury duty. Failing to comply with these requirements can expose employees to significant risks. The main principle is simple enough: 

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Sometimes employees who are exempt from the overtime pay regulation need to work more hours, especially during busy seasons. Or perhaps you need more staff, but less than justifies hiring another person. Or perhaps you want to motivate exempt staff by offering them the opportunity to earn a commission or production bonus.

Can you pay an exempt employee more compensation for taking on extra responsibilities, working extra hours or shifts, or producing above-and-beyond the call?
 

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The Department of Labor ("DOL") earlier this year announced that it would be hiring 250 additional investigators in an effort to pursue violators of minimum wage, overtime and meal break laws throughout the country. The news that the DOL is increasing their audits of employers that are not paying employees proper amounts of compensation is nothing new to both labor and employment lawyers as well as employers themselves.  It seems that new audits and fines are being reported on a daily basis.   

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It’s tempting to have employees work through lunch—there’s always more to be done, business doesn’t necessarily come to a stop at lunchtime, and anyway, management often works through lunch without additional compensation. So, why not other staff?

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Since “exempt” employees are not covered by the overtime pay regulations, they do not have the possibility of collecting overtime wages to earn additional money. Many, however, would be happy to take on an extra job for their employer in exchange for more pay. With businesses reluctant to expand payrolls or fill vacant positions during this time of economic uncertainty, it would seem like a win-win situation: the company gets a job done by a proven employee who already knows the organization; the employee gets extra pay.

It is win-win…if it is handled correctly.

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$27.5 million settlement with Siebel Systems. $65 million settlement with IBM. $24 million settlement with Computer Sciences Corporation. Allegations in a recently certified class action against Wells Fargo with up to 3,000 possible class members. These are significant numbers. They come out of settlements and claims against major companies for misclassification of technical support workers.

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Many industries make unpaid internships the gateway to an entry-level position. Unfortunately, as with many things in the employment law arena, what seems like a good idea may just be something that gets your company in trouble with the local Department of Labor. Internships are one of these problematic arrangements under the Fair Labor Standards Act (“FLSA”).

In order for people participating in an internship or trainee program to qualify as something other than the company’s employees who need to be paid, the program must satisfy ALL of the following criteria:

1. The training, even though it includes actual operation of the employer’s facilities, is similar to that which would be given in a vocational school;
2. The training is for the benefit of the trainees or students, not the company;
3. The trainees or students do not displace regular employees, but work under close supervision;
4. The employer that provides the training receives no immediate advantage from the activities of the trainees or students and, on occasion, his or her operations may even be impeded;
5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
6. The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

A relatively safe way to set up an internship program is to partner with a local college or high school. If the student is getting school credit for the program, if the employer has to submit progress reports to the educational institution, and if there are sufficient educational components in the program (e.g., seminars and field trips, mentoring sessions with people in different departments, etc.), it is more likely that the program will pass muster . . . as long as all the above components are satisfied. 

Remember that an employer only needs to pay employees at minimum wage (currently $7.25/hour under the FLSA, which comes out to about $13,000.00/year), and to pay overtime wages if the employee works over 40 hours in one workweek (which the company can control). At that rate, it might be worth the investment to have paid “interns” and the associated ability to give them real work assignments that assist the company and its productivity, while providing peace of mind should the DOL come to call. Companies can still hire a paid intern for the summer, or a semester, and do not need to guarantee a job at the end of the internship period.  Doing this may well be preferable to putting the company at risk of incurring DOL penalties and fines—plus, the employer gets to see how the intern functions under real working conditions. 

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Confusion often reigns when employers attempt to determine what their responsibilities are in terms of paying non-exempt employees for travel time.  When employees are on the road on behalf of the company, it can be very difficult to say what, exactly, constitutes “time worked.”  The Portal-to-Portal Act was enacted by Congress in 1947 specifically to carve out certain work-related activities for which employers would not be responsible for paying an employee. 

In general, employers are not required to pay employees for normal commuting time to and from work.  However, employers are often required to pay employees when they engage in work-related travel during the workday (i.e., travel that occurs after they begin work for their employer but before the workday ends).

A recent federal case, Kuebel v. Black & Decker [2009 WL 1401694 (W.D.N.Y.) squarely addressed the issue of compensable time for employees who travel to and from remote locations.  A retail specialist for Black & Decker whose work demanded that he travel to inspect Black & Decker displays at various Home Depot locations disputed Black & Decker’s policy of deducting one hour each way of “commuting time” from the travel time for which it compensated such workers (based on an Opinion the DOL had given Black & Decker on retail specialist travel time in 1999).

The specialist argued that his workday began not when he arrived at his first Home Depot of the day, but before he got on the road, when he began reviewing and responding to company e-mails, reviewing company sales reports and engaging in other company activities.  He further argued that his workday ended after he got home, when he finished checking the computer again for company business.

The court disagreed, noting that the homework Mr. Kuebel did for the company (for which he was compensated) could have been done at any hour of the day or night.  The fact that he chose to do the homework immediately before and after his road trips did not make his commuting time compensable.

This case falls squarely within the general rule that commuting time is not compensable. Even if employees start or end their workday at a remote location away from the employer’s main place of business, employers are generally not required to pay for the time the employee spent traveling from home to a remote location at the beginning of the workday or from a remote location back home at the end of the workday.  However, this general rule is not always so clear cut, as there are potential exceptions in which employers might be required to pay for at least some of this traveling time. 

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