Coronavirus Update 9-9-21: Don’t forget about overtime laws when paying employees pandemic-related bonuses

If you pass any restaurant these days you'll almost certainly see a sign like this one: 

"Now hiring: $________ sign-on bonus."

I've seen that blank filled in with numbers as high a $1,000 to work at a fast-food restaurant.

Employers are paying these bonuses because they continue to struggle to fill job vacancies in the tightest and toughest labor market I've ever witnessed.

If you find yourself in this position, do not forget about the wage and hour implications of these bonus payments, specifically their inclusion in the "regular rate" for purposes of calculating an employee's overtime premium.

There’s nothing illegal about paying employees a “day rate,” as long as you also pay an overtime premium for overtime hours

Here's how the president of Fusion Japanese Steakhouse describes the manner in which his company (unlawfully) pays its kitchen staff:

I pay a teriyaki chef $120 per day. He worked ten hours—ten hours a day. So here’s how to calculate it. He works ten hours a day at $120 a day. I divide it by hours, and it’s $10.97 per hour. If he works overtime, it will be $16.20 overtime pay. So $120 a day, I have it covered because it was way past—way beyond $7.25 minimum wage rate. So I take consideration of the industry standard, you know. So either it is for teriyaki chef, it is $120 or $120 per day.

In other words, as the court correctly surmised in Walsh v. Fusion Japanese Steakhouse, the employer "works backward to calculate the hourly rate of the employees based on the day rate." That backward calculation, however, to jerry-rig an hourly rate plus and overtime rate to arrive at the agreed-upon day rate, is not legal.

Biden Administration announces $15 minimum wage for all federal contractors

Yesterday, the White House announced that effective January 30, 2022, all federal contractors will be required to incorporate a $15 minimum wage in new contract solicitations, and by March 30, 2022, all federal agencies will need to implement the minimum wage into new contracts and into existing contracts with annual options to renew.

The Executive Order that implements these changes will also tie this new minimum wage to inflation and adjust accordingly annually, eliminate the tipped minimum wage for federal contractors by 2024, and extends the required $15 minimum wage to federal contract workers with disabilities.

DOL reopens the floodgate to liquidated damages in wage and hour investigations

The Department of Labor's breakup with liquidated damages in wage and hour investigations lasted only four years. Late last week, the agency announced that it would again seek liquidated damages (an amount equal to the unpaid wages themselves) in investigations, undoing a  policy change made by the Trump administration.

According to the DOL, it will "return to pursuing liquidated damages from employers … in its pre-litigation investigations provided that the Regional Solicitor of Labor or their designee concurs with the liquidated damages request.… Liquidated damages shall not be assessed by WHD where the employer has set forth credible evidence of a good faith defense or the where the RSOL deems the matter inappropriate for litigation."

Have you felt the pain of a wage/hour investigation or lawsuit?

For the past three years, the Department of Labor has been trying to get employees PAID for their unpaid overtime and minimum wages. That's PAID, as in the Payroll Audit Independent Determination program, a creation of the Trump administration that allowed employers to self-report FLSA violations to the Department of Labor without risk of litigation, enforcement proceedings, or liquidated damages.

As of last week, however, the PAID program is history, as the DOL announced its immediate end.

What employers can expect from Biden’s presidency: A $15 minimum wage

This week I'll be examining what employers can expect from Joe Biden's presidency. Today, a $15 minimum wage.

Late last week President-elect Biden released his America Rescue Plan, a comprehensive legislative package to provide relief to those struggling because of COVID-19. Among its proposals was a $15 minimum wage.

DOL publishes proposed regulations that would make it easier for employers to classify workers as independent contractors

Yesterday, the U.S. Department of Labor announced a proposed rule amending its regulations on how to determine whether a worker is an employee covered by the Fair Labor Standards Act or an independent contractor not covered by the FLSA. This proposed rule is significant because the FLSA lacks clear guidance on these important definitions, which has left employers struggling, scrambling, and risk-taking to properly classify workers for purposes of paying overtime and other wage/hour obligations.

6th Circuit gives employers relief on the evidence employees must present to prove off-the-clock work

The difficulty in defending certain wage-and-hour cases is that employers are often asked to prove a negative. “I worked __ number of hours of overtime,” says the plaintiff employee. “Prove that I didn’t.” If the hours are for unclocked work, the employer often lacks documentation to refute the employee’s story. Which, in turn, leads to a case of "I worked / no you didn't." That, in turn, creates a jury question, the risk of a trial, and a settlement (since very few employers want to risk paying the plaintiff’s attorneys’ fees if the employee wins).

In Viet v. Le, the 6th Circuit Court of Appeals provides employers much needed relief from these extorting lawsuits.

Chipotle settlement highlights child labor issues

According to CNN, Chipotle has agreed to pay a $1.3 million fine for more than 13,000 child labor violations at over 50 of its Massachusetts restaurants. The state’s attorney general’s office accused the company of forcing teenagers to work without proper work permits, late into the night, and for too many hours per day and week. It’s the largest child labor penalty in Massachusetts history.

DOL provides employers much needed clarity on joint employment

Joint employment is a legal theory in which the operations of two employers are so intertwined that each is legally responsible for the misdeeds (and the liabilities that flow from those misdeeds) of the other. It’s also a legal theory with which federal agencies and courts have struggled over the past several years.

Do you know how to calculate the “regular rate of pay” for your employees? (hint: probably not)

The Fair Labor Standards Act requires that employers pay their non-exempt employees one and one-half times the “regular rate of pay” for any hours worked in excess of 40 in any work week. For an employee paid a straight hourly rate, this calculation is simple and straight forward. A $10 per hour employee earns an overtime rate of $15 per overtime hour. Easy peasy.

Often times, however, employees aren’t just paid a straight hourly rate. Uh oh.

DOL announces new salary threshold for white collar exemptions

Yesterday, the Department of Labor announced that effective January 1, 2020, the salary threshold for an employee to be exempt from overtime under the administrative, executive, professional, and computer exemptions will increase from $455 per week to $684 per week (or $35,568 per year). For employers, this new threshold means that employees who are currently exempt and earn a salary of less than $684 per week will, in most cases, become non-exempt. The change is expected to impact an estimated 1.2 million workers.

Is it legal to dock the pay of employees who skip a political rally being held in the workplace?

Has an employer violated the law if it docks the pay of an employee who skips a speech being given by Donald Trump in their place of employment?

Over the weekend news broke of a Pennsylvania employer who had an interesting way to influence its employees attendance at a rally Donald Trump was holding at their place of employment during the work day. Only pay those employees who show up.

“NO SCAN, NO PAY,” a supervisor wrote to his employees.

Don’t forget about overtime pay when providing bonuses to non-exempt employees

Last week Chipotle announced a new bonus plan that could earn its employees up to an extra month of pay each year. Per the chain’s press release, the program is offered quarterly and can result in a bonus worth one week’s pay, calculated as an individual’s average weekly pay per quarter. To qualify for the quarterly bonus program, restaurant teams must meet certain sales and cash goals.

This bonus program has the potential to be a great way for the restaurant to break through in a tight labor market to attract talent. It also, however, has the potential to pose an FLSA nightmare. Bonus payments often count as part of a non-exempt employee’s regular rate of pay, thereby increasing the overtime premium owed to that employee.

Employers are making new dog ownership a little less ruff by offering “pawternity” leave

In three days, my family grows by one. We’re adding a puppy.

My wife and kids have been clamoring for a new dog for a year. Loula (our current dog) is seven years old, and they don’t want to be in a position of not having a dog in our family. Plus, we don’t want to wait until Loula’s too old to tolerate the energy of a new puppy.

The top 10 wage and hour mistakes businesses keep making

No law causes employers more compliance headaches than the Fair Labor Standards Act. On its face it’s simple—pay employees no less than a minimum wage of $7.25 per hour (or more, depending on your state or locality), and non-exempt employees an overtime premium of 1.5 times their regular rate of pay for any hours worked in excess of 40 in any work week.

Simple on its face, yet extraordinarily complicated in application. This law costs employers billions of dollars per year in non-compliance.

Supreme Court signs off on death by a thousand cuts

Lingchi was a form of torture and execution used in China from roughly 900 BC until China banned in 1905. It translates variously as the slow process, the lingering death, or slow slicing. It's more commonly known as "death by a thousand cuts," in which the torturer uses a knife to methodically remove portions of the body over an extended period of time, ultimately resulting in death.

Yesterday, in Lamps Plus v. Varela, the Supreme Court held that parties to an arbitration agreement cannot be required to arbitrate their claims as a class action unless they specifically agreed to do so in the arbitration agreement.

Happy New Regulation Tuesday! DOL proposes updates to the definitions of "regular rate" and "joint employer".

Over the past week, the Department of Labor's announced proposals for significant (and much needed) regulatory updates to the definitions of "regular rate" and "joint employer".

The FLSA's salary test just doesn't matter

By now you've likely heard that the Department of Labor announced its intent to increase the qualifying salary threshold for its white collar exemptions from $455 per week ($23,660 annually) to $679 per week ($35,308 annually).

I'm here to tell you that this increase just doesn't matter.

The way we work might be changing, but independent contractors risks are staying exactly the same

The way we work in America is changing. The relationships between companies and their workers are more fluid and varied than in decades past. Our task in this appeal is to apply traditional legal protections to one such relationship. 

So starts the 6th Circuit's opinion in Acosta v. Off Duty Police Servs., which applies the traditional "economic realities" test to determine whether private security and traffic control officers are employees or independent contractors.

One would think that with such a pronouncement at the head of the 6th Circuit's opinion, the court would be making a startling pronouncement broadening the landscape of who qualifies as an independent contractor. Those making that assumption, however, are sorely mistaken.