Beware the Legal Pitfalls of Managing Unpaid Interns
With many college students and recent graduates trying to start a career, their first step to getting introduced to what their degree can hold for them is working as an intern to learn different roles and to learn how a business operates. The U.S. Department of Labor (DOL) has raised concerns regarding what makes an intern an "employee" or a "trainee". Read this blog post to learn more about the guidelines that pertain to bringing an intern or a "trainee" into the workplace.
A college student or recent graduate is eager to make an impression. So is the early-in-career professional who’s been laid off by another company. You placed them both in an unpaid internship program because you want to give your company a chance to evaluate them as future employees. What could go wrong?
At job sites across the United States, interns not paid or earning less than minimum wage are given all sorts of jobs: answering phones, loading paper in the copiers, managing company social media campaigns.
But, federal guidelines released by the U.S. Department of Labor (DOL) in April 2010 raise concerns that employers might decide to provide fewer internship opportunities. The guidelines, which apply to “for-profit” private-sector employers, define what makes an intern an “employee” as opposed to a “trainee.” If a court or government agency decides that interns’ work qualifies them as employees, the company could face penalties that include owing back pay; taxes not withheld; Social Security; unemployment benefits; interest; attorneys’ fees; plus liquidated damages, defined by federal law as double the unpaid wages.
Six Standards
The DOL’s Wage and Hour Division lists six factors to use in determining whether an intern is a trainee or an employee under the Fair Labor Standards Act (FLSA).
- The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or other educational institution.
- The training is for the benefit of the trainees.
- The trainees do not displace regular employees, but instead work under their close observation.
- The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded.
- The trainees are not necessarily entitled to a job at the conclusion of the training period.
- The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.
If all of the factors listed above are met, then the worker is a “trainee,” an employment relationship does not exist under the FLSA, and the act’s minimum wage and overtime provisions do not apply to the worker.
Federal and state labor departments are cracking down on unpaid internships “due to a concern that paid jobs are being displaced and to increase payroll tax revenues,” says employment lawyer Terence P. McCourt of Greenberg Traurig in Boston.
With so much at stake, it’s a good time for HR professionals to review their companies’ internship policies to ensure that they are in compliance with government requirements.
Legal Exposure
The DOL standards state that most nonexempt individuals “suffered or permitted” to work must be compensated for the services they perform for an employer unless certain conditions are met. In general:
- The internship program must be similar to training that would be given in an educational environment, such as a college, university or trade school.
- The intern and the employer must both understand that the intern is not entitled to wages.
- The company must receive no immediate advantage from the internship and in fact may find its operations disrupted by the training effort.
- The intern must not take the job of regular employees.
Unpaid Programs on the Rise
Despite the risks, unpaid internships appear to be on the rise. In a May 2010 survey by Internships.com, an online clearinghouse for companies and would-be interns, two-thirds of the more than 300 college and university career center professionals who responded said that overall internship postings on their campuses increased from 2009 to 2010. However, more campuses reported lower numbers of paid internships than those reporting increases.
“Unpaid internships do appear to be on the rise,” says attorney James M. Coleman of the labor and employment law firm Constangy, Brooks & Smith LLP in Fairfax, Va. Whether the rise is in “reaction to the difficult economy and an effort to save on labor costs is not completely clear.”
Companies can protect themselves by having the college intern ask his professor for academic credit for the internship. Employers should coordinate with an intern’s school to determine requirements mandated by the educational institution, experts say.
An internship is more likely to be viewed as training if it provides interns with skills that can be used in multiple settings, as opposed to skills that are specific to one employer’s work environment.
Interns should be “allowed to observe aspects of the employer’s operations, such as job shadowing, without needing to perform services at all times,” McCourt says. He adds that an intern should not supervise regular employees or other interns, and the company should define the arrangement clearly and in writing, specifying that there is no expectation of a job offer at the conclusion of the internship.
HR professionals and lawyers say it may be useful for companies to keep written records of what an intern expects to gain from an unpaid program. Attorney Oscar Michelen of Sandback & Michelen in New York City suggests preserving memos, e-mails and other documentation covering what each intern does, such as attending scheduled training sessions and luncheon meetings with regular employees, and what type of training and supervision will be provided.
SOURCE: Taylor, S. (17 January 2020). "Beware the Legal Pitfalls of Managing Unpaid Interns" (Web Blog Post). Retrieved from https://www.shrm.org/hr-today/news/hr-news/pages/managingunpaidinterns.aspx
As Daylight-Saving Time Ends, Wages & Hour Problems Begin
On November 3 this year, daylight saving time will end in most states. This change presents challenges for employers who have nonexempt employees working at 2 a.m. when the clocks are set back one hour. Read this blog post from SHRM for wage and hour implications that stem from the end of daylight savings time and how to prepare to "spring forward".
On Sunday, Nov. 3, 2019, at 2:00 a.m., daylight saving time will end and in most states clocks will be set back one hour. As it does every year, this change presents a challenge for employers whose nonexempt employees are working during that time.
This wage and hour issue will affect all employers that employ nonexempt employees with the exception of those working in Arizona and Hawaii, both of which do not observe daylight savings time.
Below are some of the wage and hour implications stemming from the end of daylight savings time:
- Employers are required to pay employees for all hours worked. However, employers whose nonexempt employees are working at 2:00 a.m. on Sunday, Nov. 3, must pay them one additional hour of pay unless the start/end times of their shifts are adjusted in anticipation of the time change. In essence, such an employee will have worked the hour from 1:00 a.m. to 2:00 a.m. twice.
- Employers whose nonexempt employees are working at that time might owe those employees overtime compensation as a result of the time change. That is, employers must include the additional hour of work in determining the employee's overtime compensation for the week.
- In addition, employers must take this additional hour of work into account when computing the employee's regular rate of pay for purposes of calculating the employee's overtime rate.
Preparing to 'Spring Forward'
Employers also should be aware of their pay obligations at the beginning of daylight savings time in the spring. Nonexempt employees who are working on Sunday, March 8, 2020, at 2:00 a.m.—when clocks will spring forward to 3:00 a.m.—are entitled to one less hour of pay than they otherwise would have been. So, an employee scheduled to work an eight-hour shift from 11:00 p.m. to 7:00 a.m. will only have worked seven hours because essentially the employee did not work from 2:00 a.m. to 3:00 a.m.
Employers that decide to pay such workers for a full eight-hour shift are not required under the Fair Labor Standards Act (FLSA) to include that extra hour of pay in calculating employees' regular rate of pay for overtime purposes. In addition, the FLSA prohibits employers from crediting that extra hour of pay towards any overtime compensation due to the employee.
Employers, however, should ensure that they do not have any additional obligations under a collective bargaining agreement or state law.
Hera Arsen, J.D., Ph.D., is managing editor of Ogletree Deakins' publications in Torrance, Calif. Ogletree Deakins is a national labor and employment law firm. © Ogletree Deakins. All rights reserved. Reposted with permission. Updated from an article originally posted on 11/1/2017.
SOURCE: Arsen, H. ( 2 October 2019) "As Daylight-Saving Time Ends, Wages & Hour Problems Begin" (Web Blog Post) https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/daylight-saving-time-wage-hour-problems.aspx
DOL proposes new rule clarifying, updating regular rate of pay
The Department of Labor (DOL) recently released a proposal that defines and updates what forms of payment employers can include and exclude in the time-and-one-half calculation when determining overtime rates. Read this blog post to learn more.
For the first time in 50 years, the Department of Labor has proposed changing the definition of the regular rate of pay.
The proposal, announced Thursday, “defines and updates” what forms of payment employers include and exclude in the time-and-one-half calculation when determining workers’ overtime rates, according to the DOL.
The regulations the DOL is proposing to revise govern how employers must calculate the regular rate and overtime pay rate, including the types of compensation that must be included and may be excluded from the overtime pay calculation, says Tammy McCutchen, a principal at Littler Mendelson and former administrator of the Department of Labor’s Wage and Hour Division.
The regular rate of pay is not just an employee’s hourly rate, she says, but rather includes “all remuneration for employment” — unless specifically excluded by section 7(e) of the FLSA.
Under current rules, employers are discouraged from offering more perks to their employees as it may be unclear whether those perks must be included in the calculation of an employees’ regular rate of pay, the DOL says. The proposed rule focuses primarily on clarifying whether certain kinds of perks, benefits or other miscellaneous items must be included in the regular rate.
The DOL proposes that employers may exclude the following from an employee’s regular rate of pay:
- The cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes and employee discounts on retail goods and services;
- Payments for unused paid leave, including paid sick leave;
- Reimbursed expenses, even if not incurred solely for the employer’s benefit;
- Reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements;
- Discretionary bonuses;
- Benefit plans, including accident, unemployment, and legal services; and
- Tuition programs, such as reimbursement programs or repayment of educational debt.
The proposed rule also includes additional clarification about other forms of compensation, including payment for meal periods and call back pay.
The regulations will benefit employees, primarily, ensuring that employers can continue to provide benefits that employees’ value — tuition reimbursements, student loan repayment, employee discounts, payout of unused paid leave and gym memberships, McCutchen says.
“Remember, there is no law that employers must provide employees these types of benefits,” she adds. “Employers will not provide such benefits if doing so creates risk of massive overtime liability.”
Knowing when employers must pay overtime on these types of benefits, how to calculate the value of those benefits and overtime pay are all difficult questions, she adds. “Unintentional mistakes by good faith employers providing valued benefits to employees is easy. With this proposed rule, the DOL is embracing the philosophy that good deeds should not be punished.”
She notes the proposal does not include any specific examples of what reimbursements may be excluded from the regular rate.
“One big open question is whether employers must pay overtime when they provide employees with subsidies to take public transportation to work — as the federal government does for many of its own employees — I think around $260 per month in the DC Metro area,” she adds.
The DOL earlier this month proposed to increase the salary threshold for overtime eligibility to $35,308 up from the current $23,660. If finalized, the rule would expand overtime eligibility to more than a million additional U.S. workers, far fewer than an Obama administration rule that was struck down by a federal judge in 2017.
Employers are expected to challenge the new rule as well, based on similar complaints of administrative burdens, but a legal challenge might be more difficult to pass this time around.
SOURCE: Otto, N. (28 March 2019) "DOL proposes new rule clarifying, updating regular rate of pay" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/dol-proposes-new-rule-on-regular-rate-of-pay-calculation?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001
DOL proposes $35K overtime threshold
Recently, the Department of Labor proposed an increase in the salary threshold for overtime eligibility. The current overtime threshold is set at $23, 660. Continue reading this blog post to learn more about this proposed change.
The Labor Department proposed to increase the salary threshold for overtime eligibility to $35,308 a year, the agency announced late Thursday.
If finalized, the rule’s threshold — up from the current $23,660 — would expand overtime eligibility to more than a million additional U.S. workers, far fewer than an Obama administration rule that was struck down by a federal judge in 2017.
Unless exempt, employees covered by the Fair Labor Standards Act must receive at least time and one-half their regular pay rate for all hours worked over 40 in a workweek.
The proposal doesn’t establish automatic, periodic increases of the salary threshold as the Obama proposal had. Instead, the department is asking the public to weigh in on whether and how the Labor Department might update overtime requirements every four years.
The department’s long-awaited proposal comes after months of speculation from employers and will likely be a target of legal challenges from business groups concerned about rising administrative challenges of the rule. The majority of business groups were critical of Obama’s overtime rule, citing the burdens it placed particularly on small businesses that would be forced to roll out new systems for tracking hours, recordkeeping and reporting.
Labor Secretary Alexander Acosta said in a statement that the new proposal would “bring common sense, consistency, and higher wages to working Americans.”
Under the Obama administration, the Labor Department in 2016 doubled the salary threshold to roughly $47,000, extending mandatory overtime pay to nearly 4 million U.S. employees. But the following year, a federal judge in Texas ruled that the ceiling was set so high that it could sweep in some management workers who are supposed to be exempt from overtime pay protections. Business groups and 21 Republican-led states then sued, challenging the rule.
The Department said it is asking for public comment for periodic review to update the salary threshold.
SOURCE: Mayer, K. (7 March 2019) "DOL proposes $35K overtime threshold" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/news/dol-proposes-35k-overtime-threshold?brief=00000152-1443-d1cc-a5fa-7cfba3c60000
U.S. Department of Labor's New Compliance Assistance Tool
On February 6, 2019, the U.S. Department of Labor announced the launch of the electronic version of their Compliance Assistance Tool (Handy Reference Guide to the Fair Labor Standards Act (FLSA)). This new version will assist employers by providing them with basic Wage and Hour Division (WHD) information, as well as links to other resources.
This electronic resource was created as a part of the WHD's efforts to modernize compliance assistance tools, as well as provide easy-to-use, accessible compliance information. In coexistence with worker.gov, employer.gov, and other online tools, this tool will help improve employer understanding of federal labor laws and regulations.
View the digital Compliance Assistance Tool here.
Read the DOL's full press release here.
SOURCE: U.S. Department of Labor (6 February 2019) "U.S. Department of Labor Announces New Compliance Assistance Tool" (Web Press Release). Retrieved from https://www.dol.gov/newsroom/releases/whd/whd20190206-0
Ninth Circuit Holds that Cash Payments Made in Lieu of Health Benefits Must Be Included in Regular Rate for Overtime Purposes Under FLSA
A ruling from the Ninth Circuit Court may impact your cash benefit offerings. See the article below for more insight.
Original Post from ThinkHR.com on July 7, 2016
On June 2, 2016, the Ninth Circuit Court of Appeals, in Flores v. City of San Gabriel, held that the City of San Gabriel willfully violated the Fair Labor Standards Act (FLSA) by failing to include cash payments to police officers for unused medical benefits allowances when calculating their regular rate of pay, which ultimately resulted in a lower overtime rate and an underpayment of overtime.
In Flores, the City provided a flexible benefits plan to its employees under which the City furnished a designated monetary amount to each employee to be used for purchasing medical, vision, and dental benefits. While employees were required to use a portion of these funds to purchase vision and dental insurance, employees with access to alternative medical coverage (for example, through a spouse) could decline to use the remaining benefits and opt for a cash payment instead. The cash payment would then be added to the employee’s regular paycheck. The City did not consider the value of that cash payment when calculating the employees’ regular rate of pay and resulting overtime rate. A group of current and former officers sued, claiming they were underpaid for overtime hours worked because the cash provided to employees in lieu of benefits should have been used in calculating their overtime rate.
The primary issue was whether the City’s cash-in-lieu payments were properly excluded from the employees’ regular rate of pay. The Ninth Circuit held that cash payments made to employees in lieu of health benefits must be included in the hourly “regular rate” used to compensate employees for overtime hours worked. The City argued that the cash-in-lieu payments were not payments made as compensation for hours of employment and were not tied to the amount of work performed for the employer, and therefore were excludable under 29 U.S.C. § 207(e)(2) from the regular rate of pay as are payments for leave, travel expenses, and other reimbursable expenses. The Ninth Circuit disagreed, finding the payments were “compensation for work” even if the payments were not specifically tied to time worked for the employer.
The Ninth Circuit also rejected the City’s argument that its cash in lieu of benefit payments were properly excluded pursuant to § 207(e)(4) because the payments were paid directly to employees. Section 207(e)(4) excludes from the regular rate of pay “contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing old age, retirement, life, accident, or health insurance or similar benefits for employees.”
Note: This decision only affects those employers located in the Ninth Circuit. The Ninth Circuit includes Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Washington, and Guam.
See Original Article Here.
Source:
Unknown (2016, July 7). Ninth Circuit Holds that Cash Payments Made in Lieu of Health Benefits Must Be Included in Regular Rate for Overtime Purposes Under FLSA [Web log post]. Retrieved from https://www.thinkhr.com/blog/hr/ninth-circuit-holds-that-cash-payments-made-in-lieu-of-health-benefits-must-be-included-in-regular-rate-for-overtime-purposes-under-flsa/
Final Rule Released: Fair Labor Standards Act, Overtime Regulation
From the Society for Human Resources.
Today, the Department of Labor (DOL) released its final regulations making changes to Part 541 governing overtime exemptions under the Fair Labor Standards Act (FLSA). As you know, SHRM leads the employer coalition, the Partnership to Protect Workplace Opportunity, on the rule and SHRM members have shared their views on numerous occasions with Congress and the Administration through testimony, listening sessions, comments on the regulation, and thousands of letters to policymakers.
While SHRM appreciates the Administration’s attention to some of the concerns relayed by SHRM members, we are disappointed that the final rule includes a significant increase to the salary threshold and automatic increases in the future. These will present considerable challenges to employees and employers. This is why SHRM-supported legislation to block the rule, pending a full economic analysis of the changes to overtime regulations, is still needed. This legislation also contains critical provisions preventing the rule from including automatic updates to the salary threshold.
SHRM is reviewing the final rule and will provide information and resources over the next few days to help you understand the changes and prepare to implement the rule in your workplace.
In the meantime, here are the key elements of the new regulation that you need to know now:
1. Salary Threshold Changed to $913/week ($47,476 per Year)
This threshold doubles the current salary threshold level. While this level is slightly lower than the threshold in the proposed rule, it still encompasses many employees that are currently classified as exempt. SHRM was disappointed that DOL did not offer a more reasonable increase and set the threshold, as it has in the past, at a level designed to encompass those employees that are clearly not engaged in exempt-type work.
2. Automatic Salary Threshold Increases Every 3 Years (Not Annually) to Maintain Level at 40th Percentile in Lowest-Wage Census Region
DOL reduced the frequency of the automatic increases in response to concerns raised by SHRM and others. Instead of annual increases, the threshold will be adjusted every 3 years to maintain the level at the 40th percentile of full-time salaried workers in the lowest-wage Census region. Automatically updating the salary threshold, however, does not allow the government to take into account changing economic conditions, specific impact on certain industries, or regional differences. It also denies the public the ability to have input on the threshold as required by the regulatory process.
3. Duties Test is Unchanged
The absence of a duties test change is a significant win for the thousands of SHRM members who expressed concern in this area. DOL did not make changes to the standard duties test.
4. Effective Date is December 1, 2016.
SHRM advocated for a longer implementation period than the standard 60 days and the final rule provides additional time for employers to prepare. With the rule going into effect on December 1, 2016, HR professionals should review their current workforce immediately to determine which employees are affected, whether to re-classify those employees, and execute a communications strategy. HR should keep in mind the periodic adjustments and set a regular review process.
5. Highly Compensated Employee (HCE) Exemption Is Now $134,004 Per Year
The final rule retains the methodology in the proposed rule setting the threshold at the 90th percentile of full-time salaried workers nationally.
6. Stay Tuned for SHRM Member Resources…
• SHRM Webcast – Understanding DOL's New Overtime Rule. Register Now for the Thursday, May 19, 2 p.m. ET webcast!
• SHRM Special Report for HR – coming soon! Look for an upcoming SHRM summary of the final rule with tips on compliance. Visit SHRM’s Overtime Resource Page for additional resources.
• SHRM’s 2016 Annual Conference -- From the final FLSA overtime regulations to health care to performance management to the latest innovations in HR, you’ll get the practical tools and resources you need to solve your toughest HR challenges.
7. Advocacy in Congress is Even More Important
While the final rule contains some limited improvements, it is critical for Congress to pass the Protecting Workplace Advancement and Opportunity Act (S. 2707 and H.R. 4773), which would nullify this rule and require DOL to perform an economic analysis of how changes to overtime regulations will impact nonprofits, small businesses, and employers in other vulnerable industry sectors before issuing a new rule. Visit SHRM’s call to action to quickly and easily send an email to your members of Congress to ask that they cosponsor this important workplace legislation.
NEXT STEPS: As referenced above, Congress will continue to try to nullify the rule through legislation requiring DOL to conduct a robust economic analysis, by refusing to fund the rule’s enforcement, and other means. Given the breadth of the rule, SHRM is considering all policy options.
SHRM has taken a leading role in educating the Administration and Congress on the rule’s impact on the workplace. As a member, you can trust that SHRM will keep you up-to-date on every critical detail of the regulations. We’ll also be here to answer your specific questions as you begin to implement these changes over the coming weeks – this is just one way your SHRM membership works for you.
Tips for Handling Employee Pay Issues Caused By Mother Nature
Originally post February 9, 2015 by Laura Kerekes on www.thinkhr.com.
If you are inclined to believe “Punxsutawney Phil,” we’re in for another six weeks of wintry weather. When the groundhog emerged from his dwelling at Gobbler’s Knob in west-central Pennsylvania on February 2nd, he did not see his shadow. Let’s all hope for an early spring while we stay vigilant for more bad weather. Super storms packed punches in the Midwest and Northeast to start the New Year and continue adding to the area’s already taxed weather relief efforts. While your business may not have been affected by the recent superstorms, it is a great wakeup call to think through how businesses should handle the employee relations and pay issues that arise when they are forced to close due to inclement weather and/or when employees simply cannot get to work due to transportation or personal difficulties.
What should an employer do? Pay employees to stay at home? After all, in most cases, they are not at work through no fault of their own. Many businesses, however, do not have the financial resources to pay employees not to work. What follows are the rules regarding paying employees who miss work due to Mother Nature, along with some practical tips. From an employee relations perspective, the more generous you can afford to be to your employees who are suffering as a result of a weather-related disaster, the better. Employees (and their families) do pay attention to how they are treated, and a little extra time off and compassion for individual circumstances can go a long way towards enhancing employee loyalty.
If the company has no power and sends employees home for the day, should they be paid? And does it matter if the employee is exempt or nonexempt?
In general, there are two sets of rules for paying employees depending upon their classification under the Fair Labor Standards Act (FLSA) as it relates to eligibility for overtime. With nonexempt employees (those eligible for overtime pay), there is no obligation under federal or state law to pay for time not worked. However, under certain state laws, employers may have an obligation to compensate nonexempt employees under call-in/reporting pay laws, especially if the employees were not advised that they should not report to work and were denied work upon arrival at the workplace.
These pay obligations vary by state. With respect to salaried exempt employees who must be paid on a “salary basis” under the FLSA, employers may not make salary deductions for absences that result from an employer’s partial-week closing of operations, including closings due to weather-related emergencies or disasters. The bottom line is that exempt employees must be paid their full salary if they perform any work in a workweek and only miss work time due to the employer’s closure of operations. Closures for a full workweek need not be paid if no work is performed.
Are these rules different if the company can tell the employee not to come to work the next day?
For nonexempt employees, if they are told in advance not to come to work and the employees stay home, then the employer is under no obligation to pay them for the time off. The employer and the employee can choose to use accrued paid time off to compensate the employee for the missed workdays.
For exempt employees, the “salary basis” rule still applies. In some cases the employee may be working from home during the bad weather days. If state laws permit employers to do so, employers may deduct from the exempt employees’ accrued paid time off balances to resolve the issues related to “salary basis” compliance. The employer should ensure, however, that these employees have not done any work from home during the office closure prior to deducting time from the accrued paid time off bank balances.
If an employee is on Family and Medical Leave Act (FMLA) leave, do those “bad weather days” count against the employee’s 12-week allotment of time off?
The FMLA regulations are silent about bad weather office closures. However, the regulations do allow for situations when the employer’s business stops operating for a period of time and employees are not expected to come to work (plants closing for a few weeks to retool, mandatory company-wide summer vacation, etc). In that case, the week the business is closed and no employees are reporting to work would not count against the employee’s FMLA leave entitlement. If the business is closed for a shorter period of time, the general thinking is that the FMLA regulations relating to holidays would likely apply. Under those rules, if the business is closed for a day or two during a week in which the employee is on FMLA leave, then the entire week would count against the employee’s FMLA leave entitlement. If, however, the employee is on intermittent FMLA leave, then only the days that the business is closed and the employee is expected to be at work would count against the leave entitlement.
How do we handle attendance issues where the office is open but public transportation is not available due to the weather and employees cannot come to work?
If the business remains open but employees cannot get to work because of the weather, employers will need to consider their own attendance policies and practices in determining what flexibility to give employees as it relates to attendance. Employers may encourage employees to car pool or assist them in establishing alternative methods of transportation to get to work.
Under the FLSA rules as it relates to pay, however, employers do not need to pay nonexempt employees if they perform no work. For exempt employees, if the business remains open but an employee cannot get to work because of the weather, an employer can deduct an exempt employee’s salary for a full day’s absence taken for personal reasons without jeopardizing the employee’s exempt status. Employers cannot, however, deduct an exempt employee’s salary for less than a full-day absence without jeopardizing the employee’s exempt status.
Does a company have to allow employees to work from home (exempt or nonexempt) if the office is closed due to bad weather?
No, the employer does not need to allow employee to work from home, regardless of their FLSA status (exempt or nonexempt). The employer can make those decisions based upon the work that can be done remotely and based on the needs of the business. The employer should have clearly communicated policies and expectations regarding working from home during office closures.
The bottom line is that every employer should think about the needs of the business, its financial resources, and employees’ needs and have plans in place to manage business issues due to inclement weather. Thinking through what the wage and hour laws require and developing your policies and then applying them consistently and fairly with all employees can reap huge dividends in employee loyalty and retention.
Wage Fights
The number of wage-hour lawsuits filed under the Fair Labor Standards Act hit a record mark this year, according to the law firm Seyfarth Shaw LLP. A total of 7,064 cases were filed in fiscal year 2012, compared with 2,035 in fiscal year 2002. Misclassification of employees, alleged uncompensated work and issues regarding overtime were the top causes of the lawsuits.