Dispelling six common wage and hour misconceptions

19 hours in a workday without overtime pay. That's how one Amazon delivery driver described his experience working for online conglomerate.

To be clear, while it might make for an awful work environment to work a 19-hour shift, there is nothing in the federal wage and hour laws that require overtime pay for a 19-hour workday. 

Overtime under the federal Fair Labor Standards Act is based on hours in a work week, not a workday. (Please check your state laws, employers in Alaska, California, Colorada, and Nevada, as your overtime obligations might be tied to hours in a workday, not work week.) The FLSA only requires time and a half of one's regular rate of pay is required for any hours in excess of 40 in a week. 

While it's easy to imagine 19-hour days quickly adding up to a number over 40 hours in a week, 19 hours in one workday, in and of itself, does not qualify one to overtime pay under the FLSA. 

Employers, repeat after me: “Tips belong to employees, not employers.”

$1,351,253.34. That's the amount a federal judge has ordered the Empire Diner, its owner, Ihsan Gunaydin, and its manager Engin Gunaydin to pay a group of 107 servers and kitchen workers based on an illegal tip scheme.

What rendered the restaurant's tip scheme illegal? It required servers to turn over 10 to 15 percent of their total tips received on any given shift to pay the bussers' wages. That's a clear violation of the Fair Labor Standards Act.

Lyfting independent contractor status

If I asked you to identify Lyft's business, how would you answer? 

"They're a transportation company," you'd say. There's no other correct answer … unless you ask Lyft. 

Lyft will tell you that it's a tech company, not a provider of transportation.

The wage and hour implications of employee electronic surveillance

Every now and again I come across a story that make me question how any in-house counsel blessed a workplace policy or practice.

The following story, taken from yesterday's episode of The Daily on the rise of workplace surveillance, is one of those stories.

Carol works as a Vice President for a bank. Like many white-collar employees these days, she's working remotely from her home. Pretty early on in her employment, she begins to notice that her paychecks are light. Then she figures out why.

Every 10 minutes at random points the company took a screenshot of her computer monitor and a photo of her face. The company was using that information to pay Carol (and every other worker) only for the minutes when they appeared be active according to the photos. If, for example, the photo happened to capture Carol during a moment of inactivity (for example, a 30-second interval when she went to get a cup of coffee), it would dock her for the entire 10-minute span. As you can imagine, the digital tracking actually missed a lot of Carol's work, including any work she did offline. She's working, but the company thinks she's not working, and it's going to dock for that any perceived increments of inactivity. 

There are two HUGE Fair Labor Standards Act red flags here.

Unlike ordering at Chick-Fil-A, legal compliance isn’t chosen from a menu.

"We are looking for volunteers for our new Drive Thru Express!🚘 Earn 5 free entrees per shift (1 hr) worked. Message us for details"

Anyone see anything wrong with this (since deleted) post? I sure do, as does my friend Suzanne Lucas (aka the Evil HR Lady), who correctly points out: "You cannot do this. Even if you want to declare yourself the Lord's chicken, you are still a for-profit business, and for-profit businesses cannot have volunteers. Not ever. Paying in sandwiches does not count."

To put in more succinctly, In a for-profit business, volunteer labor is illegal. Hard stop. 

Let’s play spot the issue

Let's see if you can spot the employment law issue from this story, which I've borrowed from our local police blotter.

On April 26, the owner of a bar came to the police station regarding an ex-employee who stole his daughter's AirPods.

The stealing incident, which took place in February, led the owner to track the pods to a house that just so happened to be the home of the ex-employee's sister.

That's when the owner told the employee he was withholding his last check to cover the cost of the AirPods.

The man needed a police report to document the incident and provide the state justification of docking the ex-employee $250 from his last paycheck.

What do you think? 

Restaurant learns the hard way what an illegal tip pool looks like

Hard Eight BBQ says it misunderstood its obligations under the Fair Labor Standards Act by paying managers a share of tips earned by servers across the restaurant's five locations. As a result, following a Department of Labor investigation it reached a settlement with its managers totaling $867,572. 

Matt Perry, COO of Hard Eight BBQ, told 5 NBCDFW that "managers were part of the tip pool at their five restaurants because they do the same jobs as other hourly employees on any given shift and that because of that they felt like managers should also receive a small portion of the tip share."

Ohio enacts sweeping changes to state wage and hour laws

Beginning July 6, 2022, Ohio employers have a new set of rules under which to pay their employees. 

SB 47 revamps Ohio's wage and hour statute to correct some major differences that have historically existed between it and the federal Fair Labor Standards Act.

Don’t confuse “tips” and “service charges” for hospitality employees

How often have you looked at you bill at a restaurant and have seen an added service fee? Do you think to yourself, "No need to tip; it's already been added to the bill." 

Think again, at least according to the 11th Circuit in Compere v. Nurset Miami, LLC, which held that restaurant service charges are not considered tips under the Fair Labor Standards Act.

I’m going to say this loudly for the people in the back: IT’S ILLEGAL FOR EMPLOYEES TO WORK FOR FREE

I woke up Saturday morning to a tweet asking me for my take on this job posting.

I'm going to say this one time, really loudly, for the people in the back.

FREE WORK IS ILLEGAL

(in almost all cases)

Local bag company learns an expensive lesson on wage and hour compliance

A federal judge has ordered American Made Bags to pay $189,756 to a group of 48 employees, half as unpaid wages and half as liquidated damages.

The allegations that came to light in two separate Department of Labor investigations that date back to 2014 include the misclassification of employees as independent contractors, the payment of the employees' regular rate instead of the statutorily required time and half rate for overtime hours, and the failure to keep records of amounts paid to employees. 

The wage and hour risks of rounding

"Iraene" asks the following question on the Antiwork subreddit.

I was told to round down or round up my time. So if I start work at 7:55 I need to put 8. If I work 37 minutes, I should round down to 30, instead of 45 because this is a common business practice. Is this normal? I have entered exact times on the card and into ADP so idk why it's a problem now.

While this practice as explained appears to be legal, it doesn't necessarily mean it's a good idea for the employer, at least according to this employment lawyer. 

Let me explain.

Tip credits and tip pools — the tip of the FLSA iceberg

No employment law is more misunderstood and misapplied by employers than the Fair Labor Standards Act, our federal wage and hour law. There are more than 8,000 federal FLSA lawsuits filed per year, with nearly one-quarter filed against employers in the accommodation and food service industry … including craft breweries. 

These employers get themselves in legal trouble because of the special manner in which service industry employees are compensated. If you employ workers who customarily and regularly receive more than $30 a month in tips (and every craft brewery does), there are two key FLSA phrases you must understand to avoid FLSA landmines — tip credit and tip pool.

Pumping up workplace lactation rights

The U.S. Department of Labor has reached a settlement with Labcorp over allegations that it failed to provide lactating employees a space for them to express milk privately without fear of intrusion.

The investigation stemmed from an allegation of one employee in the company's Lynwood, California, location. DOL investigators determined that when the employee asked for a private place to express her breast milk, supervisors offered a common space that resulted in her being interrupted twice. As result, and per its settlement with the DOL, Labcorp has agreed, for all of its 2,000-plus locations nationwide, to "provide a private space as required with a notification on the door to guarantee an intrusion-free space."

The “Penny Pincher” gets sued for retaliation — an update on a 2021 Worst Employer finalist

A OK Walker Autoworks and its owner, Miles Walker, a 2021 Worst Employer finalist, finished dead last in last year's voting, garnering only 7% of the total weighted vote. They may win the prize after all, however. The Department of Labor just filed a lawsuit against the auto repair shop and its owner for retaliation under the Fair Labor Standards Act.

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.