Tuesday, May 12, 2009

Do you know? Volunteerism under federal wage and hour laws

According to EVliving.com, one employer has come up with a creative idea to combat the current economic downturn. The CEO of Greenleaf Book Group, a publishing company, has decided that instead of laying off any employees, his company will simply require its employees to volunteer one hour of time per week to the company.
“Cutting one person from the team is losing one invaluable resource that helps make this entire company tick,” he said. “In the short term, it’s hurting morale and lowering the productivity of a department. In the long run it means the entire company’s time and money spent trying to make up for the loss-redistributing tasks and overburdening departments, struggling to make up the slack, dealing with the paperwork, and eventually putting additional man-hours toward rehiring and retraining. And of course, the toll layoffs take on the economy are tremendous.” … 
“Essentially, every employee is putting in one voluntary extra hour per day at work,” he explained “One extra hour to be used in the most advantageous way possible: finishing up projects, having a meeting with a client or vendor, assisting a coworker, getting hands dirty working in another department. Even cleaning a desk or organizing files, if it helps improve efficiency.” 
The numbers work, he said:
  • 30 employees x 1 hour per day
  • Multiplied by a 5 day workweek
  • Equates to 150 extra hours
  • Divide that number by 40 hours per standard workweek
  • The result is 3.75, the equivalent of almost 4 full time employee work weeks
  • For any company, an extra hour increases the work week from 40 to 45 hours and is a simple 12.5% increase. 
Before you decide to copy Greenleaf’s idea in your own workplace, consider that it almost certainly violates federal wage and hour law. The FLSA requires employees to be paid for all hours worked. Requiring employees to work an hour without pay violates this law. For private employers, there is no such thing as a volunteer employee. All work hours must be paid hours.

To demonstrate the anachronistic nature of the FLSA, however, consider that Greenleaf could have achieved the exact same goal without violating any laws. Instead of asking for an hour of work without pay, it could have simply reduced each employee’s effective weekly rate of pay by one-fortieth. In other words, one could figure out what hourly rate of pay would get an employee to 39 hours worth of pay for 40 hours of work. There is nothing illegal about prospectively reducing pay, as long as the hourly rate is above the minimum wage.

[Hat tip: Workplace Prof Blog]