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

The Department of Labor’s ongoing enforcement initiative found widespread noncompliance with various provisions of the Fair Labor Standards Act including minimum wage, overtime and record-keeping in full-service Long Island restaurants.

Thus far, the DOL has completed 46 investigations and recovered $2,341,507.00 in back wages for 578 employees.  The DOL has also found willful and repeated FLSA violations for which it assessed $202,315.00 in civil money penalties.

The investigation is still on-going and is yet another example of the fact that industry practice does not make perfect. Just because others in your field are paying their employees in a particular manner, does not necessarily guarantee that such is acceptable under the law.

Unfortunately, as one Arizona construction company recently found, it doesn’t matter if the actions are not what the company considers “productive.” If an employer requires employees to do something, and the time spent doing it is more than de minimus, that’s work, and nonexempt employees must be compensated for it. Also, time records have to be accurate, and reflect their tasks as working time.

Arizona Pipeline Co. does what its name says: it installs pipelines and other underground utilities. It was not paying its employees for time spent before or after their shifts, loading and unloading materials and supplies, cleaning equipment, etc. They were also not paid for traveling from the company’s location to job sites, or for time spent attending required meetings. As a result, Arizona Pipeline Co. will pay $750,000 in back wages for pre-shift and post-shift work, travel, and meetings for which its employees were not compensated.

Under the Fair Labor Standards Act, employees must be paid for all work time—even for time spent performing tasks that the company does not consider to be productive. Basically, if the only reason employees are engaged in a particular tasks, is because a manager told them to do it, that’s probably work. Non-exempt employees must be paid for that time, and paid overtime for their tasks of they performed after the employee has already reached the 40-hour threshold for the workweek.
 

In many states--yes, you can force most adult employees to do just that. You just have to pay them for it (and potentially provide periodic meal or rest periods as required). Child labor laws generally regulate the number of hours children can work per day and workers in some regulated industries (truck drivers and airline pilots for example), may have maximum shift lengths. Collective Bargaining Agreements may also limit the hours unionized employees can be scheduled to work. But for many employees in the private sector, such restrictions on their hours worked do not apply.

Of course, hourly employees must receive their base hourly wage for all hours worked, plus regular overtime pay (time-and-one-half their regular hourly wage) for hours worked over 40 in a work week. In a number of states, additional premium pay may apply. For example, in California, if someone works more than 8, but up to 12, hours in a day, he or she earns daily overtime at time-and-half for hours 9, 10, 11, and 12, and daily double time for any additional hours worked in that day. New York has a “spread of hours” rule, which requires that employees with work days longer than 10 hours (i.e. more than 10 hours from start time to finish time even if there is a long mid-day break) receive an additional hour’s pay at minimum wage. But, that wage requirement, like the California daily overtime pay rule, does not dictate a maximum number of hours employees can work per day or per week.

Federal law, as set out in the Fair Labor Standards Act says nothing about how many hours someone can work in a day or at a time. In fact, under the FLSA, the only limit on how many hours an employee can work in a week is the number of hours in a week. To work an employee more than 168 hours in a week requires breaking the laws of physics, not the FLSA. The result may be different under state law, however. Some states, such as New York, Illinois and Wisconsin, have laws putting a cap on the number of days certain employees can work per week (often called “one-day-rest-in-seven” laws). But, even those laws do not prohibit employers from scheduling long days during the six days those employees work.

In many states, if an employer’s wallet is deep enough, the need great enough, and the employee is not covered by a wage order dictating otherwise for the employee’s position (such as for individuals in certain health care positions, mining or other safety-sensitive positions), or by other regulations, an employee can be required to work all day and night long—as long as the employee is properly compensated under the law (and meal or other rest-break laws are complied with). While it is probably not advisable, it may be permissible.

Keep in mind as well, however that, even if permissible, some states may have laws or regulations making long hour requirements difficult to enforce. For example, in California, employees cannot be disciplined or terminated for refusing to work more than 72 hours in a week—even though the law does not limit the work-week to 72 hours.

Thus, although it may not be prudent to do so, and morale concerns may dictate otherwise, where an employee’s hours are not otherwise limited by applicable regulations or otherwise, an employer can require long work days (and long weeks) so long as the company pays its employees appropriately, under federal and state wage payment law, and provides any required breaks (which generally are not as numerous as most employees believe).

However, if the issue is just “can the company mandate overtime hours?” For the most part, the answer is “yes.”
 

It’s easy to understand why employers might prefer to utilize independent contractors. There’s saving on the taxes paid on employee wages. There’s also no health insurance or 401(k) match, no paid leave, no unemployment insurance or employee’s compensation contribution, such as one would pay for an employee. The government, however, sees misclassification as taking money out of government coffers and out of employee’s pockets.

As a result, as Overtime Advisor previously reported, the government has been increasing enforcement of the existing rules about correctly classifying employees.

However, stepped-up enforcement of the existing rules is only part of the picture. There is also a bill currently pending before the U.S. Senate that would enhance protection against misclassification. The Payroll Fraud Prevention Act., introduced by a trio of Democratic Senators, is intended to prevent misclassification of employees as independent contractors, which the sponsors frame as issue of fairness and equity. They say that besides cheating the government and affected employees, misclassification also presents an uneven-playing field, with honest businesses forced to compete with ones that don’t pay their fair share.

Of course, talk is cheap—especially in Congress. How does the proposed bill actually aim to accomplish its goals? As drafted, it would put in place a system of record keeping and notice requirements, backed by fines and penalties, to compel compliance. Highlights include:

• Employers required to keep accurate records as to the classification of each employee

• Employees would have to be explicitly notified of their classification—and directed to a Department of Labor (DOL) website for information about employee rights

• Penalties ranging up to $5,000 per employee would be levied for notice violations or misclassification

• Triple damages would be imposed for willful (i.e. intentional or knowing) violations of minimum wage or overtime law resulting from misclassification

These penalties would be on top of the existing liability that employers face for violation of tax law or the FLSA, making misclassification a very expensive (as well as illegal) way to save money.
 

Grace, a store manager for Family Dollar claimed she was owed overtime pay and should not have been classified as an exempt store manager. Because she spent most of her workday on nonmanagerial tasks such as running the cash register, putting out stock, and janitorial work, she claimed that her “primary duty” was not management. Thus, despite the fact that she managed two or more other employees, had hiring and firing authority, and was responsible for overall store profitability and management, she asserted that she should receive overtime pay.

Unfortunately for her, no matter how much time she spent ringing up sales or mopping the floor, the Court of Appeals had little difficulty finding she is still the store’s manager and is still an exempt executive employee. The Court’s analysis is particularly well stated, so let’s borrow the Court’s words:

“[T]ime alone ‘is not the sole test’ [of whether someone is an exempt manager or executive] . . .Grace was in charge of a separate retail store, seeking to make it profitable. While she catalogs the nonmanagerial jobs that she had to do, claiming they occupy most of her time, she does so without recognizing that during 100% of the time, even while doing those jobs, she was also the person responsible for running the store. Indeed, there was no else to do so, and it cannot be rationally assumed . . . that the store went without management 99% of the time. Grace also fails to acknowledge the importance of performing nonmanagerial tasks in manner that could make the store profitable, the goal of her managerial responsibility.”

Bottom line: mopping the floor does not necessarily make an employee not a manager for purposes of the Fair Labor Standards Act, at least in the view of the 4th Circuit. If the person’s overall role and responsibilities are managerial, helping out in other ways won’t necessarily remove his or her overtime exemption.

So, while courts in other parts of the country may differ, go ahead . . . make that VP you don’t like take out the trash. Just make sure that 100% of the time, he or she has one or more over-arching exempt responsibilities.
 

The app is designed to allow employees to keep independent track of—and calculate the wages they’re owed for—hours worked, including overtime. The app also has other employee-helpful features, such as break time tracking and links to DOL web resources, such as information about wage and hour laws or how to contact the Department. Users can annotate their work-related information on the app and view summaries by day, week, or month.

Of course, as with most apps, it doesn’t do everything you might want it to. For example, it’s great so long as the employee only has regular and overtime (at time-and-half) wages to track. However, it does not handle more complex or less common wage calculations, including tips, commissions, bonuses, holiday pay, or shift differentials among others. Actually, given how many employees in the hospitality industry receive tips, and how many employees in some sales capacity receive commissions, the DOL app might not work for many employees.

Also, not surprisingly, the federal DOL focused on the federal labor laws, such as the requirements under the Fair Labor Standards Act. Their app does not help you with state variations, such as California’s requirement for double time when working more than 12 hours in a day.

The DOL’s free app is available in English and Spanish and can be downloaded at http://www.dol.gov/whd. You can view screen shots here.

Like other app developers, though, the Department is not resting on its laurels. It’s planning to expand the app’s capabilities—such as adding the capacity to handle tips, commissions, bonuses, etc.—and to also port it to other smartphone platforms, like Android and Blackberry. With employees now able to track their own hours on this app, employers would be prudent to ensure they’ve got their own “app” in place to track employee hours and properly calculate wages that’s compliant with both federal and applicable local wage and hour laws.
 

Back in 2005, this restaurant became subject to a federal court order telling it to not violate the FLSA. Six years later, the Manor engaged in further violations. Specifically, it did not pay dishwashers, cooks, waiters, busboys, and bartenders minimum wage or overtime pay when employees worked more than 40 hours in a week. In addition to these violations—which resulted $482,780.00 in back wages, $50,000.00 in prejudgment interest, and $69,330.00 in penalties for overtime and minimum wage violations—the facility also:

•  Violated recordkeeping requirements of the FLSA by not keeping accurate time and payroll records (the restaurant reported the same hours for kitchen employees, for example, week after week for years, even though the actual hours worked varied) and

•  Violated child labor laws by having 14 and 15 year olds work longer than permitted (another $7,920.00 was owed for child labor penalties)

In the consent judgment which it then entered into, the restaurant agreed to pay $610,000.00 and promised (again) not to violate the FLSA in the future. In addition, three officers of the company all also had to agree, personally, to not violate the FLSA. Unlike some other laws, company officers can become personally liable to their employees if the business does not pay those employees properly under the wage and hour laws.

Here’s a hint: it’s bad enough to violate the FLSA, but if there’s already a court order against the company, be extra careful. Not only will the Department of Labor tend to scrutinize past violators more closely, but the courts understandably take a dim view of anyone who ignores them. Companies would be wise to learn about these laws and work out how to be in compliance.
 

The U.S. Department of Labor (DOL) calls it a violation of the Fair Labor Standards Act (FLSA). That’s what a Cincinnati-area animal hospital did—and explains why the DOL is looking to recover $108,000.00 from Hamilton Avenue Animal Hospital in back wages, liquidated damages and penalties.

The usual unpaid overtime case involves failing—whether negligently or intentionally—to record or credit an employee with all hours worked, resulting in unpaid overtime hours. Here, the Animal Hospital put its own unique twist on it by paying workers the overtime due to them, then forcing the workers (many of whom did not speak English) to return the overtime pay to the hospital in cash. The hospital then allegedly falsified payroll records to show overtime wages as having been paid.

The 21 workers affected are claimed to be owed $42,628.58 in overtime wages. In addition, the DOL is assessing $23,100.00 in civil penalties, and another $42,628.58 in liquidated damages under the FLSA. (Employers who violate the Act by not paying overtime are liable for double damages plus fines, making FLSA violations one of the costlier ways to break the law.)

This is the hospital’s fourth FLSA violation investigation. And by not paying overtime this time, the hospital may also be in contempt of court for violating a 2007 injunction ordering it to not violate the FLSA. While creativity has its place, dealing with employee wages is not one of them.

The DOL is clamping down on violators, and businesses would be prudent to endeavor to comply with employee wage payment laws, rather than risk the fines, fees and penalties that come with their violation.
 

They generally don’t, as a California Appeals Court recently confirmed when upholding a $5.2mm verdict against a newspaper for wage and hour violations.

The Chinese Daily News—an American paper in California, despite the name—had been requiring its reporters to work 12-hour shifts, six days a week. That’s 72 hours per week—which is a lot more than the 40-hour threshold over which overtime pay is required under the FLSA and many states’ laws. The paper’s labor practice left it potentially on the hook for up to 32 hours of overtime pay per reporter per week.

The paper’s chief defense was to claim that its reporters were exempt from the overtime pay requirements as “creative professionals.” The “creative professional” exemption allows certain employees to be exempt from the overtime pay requirements if that professional’s primary duty is “work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.”

Invention? Imagination? In reporting the news? That doesn’t sound right, does it? Or at least, that’s what the Ninth Circuit U.S. Court of Appeals concluded in Wang v. Chinese Daily News.  Not only do the expectations connected to a typical journalistic role run counter to a finding of the requisite level of imagination or invention, but the break-neck pace of Chinese Daily News reporters—writing two to five stories a day—left no time for creativity or even meaningful analysis. Instead, the reporters simply gathered and reported—in the most literal sense of the word—facts about events relevant to the community served by the paper. Under a Department of Labor regulation cited by the Wang Court, journalists “who simply collect and organize information that is already public, or do not contribute a unique or creative interpretation or analysis to a news product, are not likely to be exempt” from overtime pay.

In short, to be a “creative professional,” one must be a “creative professional”—and generally, newspaper reporters aren’t. Any writer whose role, like that of the Chinese Daily News reporters, is primarily to aggregate and repackage facts is probably not exempt from overtime pay. That’s a lesson that many businesses, not only traditional news businesses, should bear in mind as they produce online newsletters and blogs that only report, without analysis or creative insight. If anything, the faster-than-fast pace of online reporting is even less likely to support a finding that reporters are exempt creative professionals than did the newspaper business involved in Wang.