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.

Ohio amends its employment laws to limit joint employment for franchisors

As the debate over the meaning of "joint employer" continues to rage at both the NLRB and in the federal courts, Ohio has jumped into the debate by passing legislation to limit this definition under various Ohio employment laws.

Effective yesterday, franchisors will not be deemed joint employers with their franchisees unless:

• the franchisor agrees to assume that role in writing or a court of competent; or
• a court of competent jurisdiction determines that the franchisor exercises a type or degree of control over the franchisee or the franchisee's employees that is not customarily exercised by a franchisor for the purpose of protecting the franchisor's trademark, brand.

Beware pre- and postliminary activities

In Integrity Staffing Solutions v. Busk, the Supreme Court held that the FLSA only requires employers to compensate employees for time spent performing "preliminary" (pre-shift) and "postliminary" (post-shift) activities that are "integral and indispensable" to an employee’s principal activities. What are "integral and indispensable?" Those activities that are (1) "necessary to the principal work performed" and (2) "done for the benefit of the employer."

Why the Cleveland Clinic's $15 minimum wage matters to you

Earlier this week, the Cleveland Clinic committed, by January 2020, to raise the minimum wage for its employees to $15 an hour.

According to its CEO, Dr. Tom Mihaljevic, its all about making sure employees feel respected and valued … and attracting and retaining the best employees.

As the largest employer in Northeast Ohio and the second largest employer in the state of Ohio, Cleveland Clinic has a responsibility to lead the way and help shape the future of health care and the health care workforce.…

Every caregiver's role is important. Increasing our minimum wage demonstrates our commitment to our employees and their families, as well as the community and our patients. It is a reflection of who we want to be as an organization.…

Ultimately, we want to continue attracting the best and brightest caregivers in all roles. We want to remain an employer of choice and give back to the caregivers who do so much for the patients we serve at Cleveland Clinic. Our goal at Cleveland Clinic is to be the best place for health care and the best place to work in health care. To reach that goal, we will continue to align caregiver pay with other top employers in the markets where Cleveland Clinic operates.…

The Clinic joins other large employers—Amazon, Walmart, Target, Disney Parks, McDonald's—in adopting a $15 minimum wage.

Which is great for them and their employees, but why should this matter to you and your business?

Because by raising their minimum wage, you will have to do the same. Or you will if you want to attract and retain quality employees. These employers have moved the needle on the issue of the minimum wage. To compete in the job market against those offering a $15 minimum wage, other companies will have to match, or risk losing quality employees to higher paying employers. Thus, over time, the $15 minimum wage will organically spread.

This is not to say that this increased minimum wage is not without problems of its own. For example, if you raise your minimum wage to $15 an hour, what happens to all of those employees already earning $15 an hour? To the employee, hired 10 years ago at $8 an hour, who worked his butt off for the past decade, and, through a series of promotion and raises, earned his way up to $15 an hour? Will you provide a proportional raise to keep pace? And, if not, a $15 minimum wage will convert those millions of workers into minimum-wage employees. And, for better or for worse, there is a certain stigma with being classified as minimum wage—especially if you've worked hard for years not to be minimum wage.


These are not easy issues with easy solutions. However, the $15 minimum wage train has most definitely left the station, and there is no going back. The question is not if you will adopt it, but when, and how.

* Photo by Verne Ho on Unsplash

A quick review on the rules for docking pay for exempt employees

"Can I dock part of an employee's paycheck?"

It's one of the questions I get most often from clients.

So, let's take a quick run through the rules of docking employee's pay for exempt employees.

Court reminds that economic realities, not corporate formalities, govern independent contractor status

The distinction between independent contractors and employees continues to confound employers.

At issue in Acosta v. Jani-King of Oklahoma (10th Cir. 10/3/18) [pdf] is whether the Department of Labor could continue its FLSA claims on behalf of individuals who provide cleaning services as franchisees of a janitorial company. If the franchisees are independent contractors, then the FLSA does not coverthem. If, however, the company misclassified them as independent contractors, then the DOL has something to litigate.

Don't ignore state law when considering wage-and-hour issues

In Integrity Staffing Solutions v. Busk, the U.S. Supreme Court held the employees of an Amazon fulfillment center were not entitled to be paid under the FLSA for time spent waiting in line for a post-shift security screening.

And yet, last week, in parallel litigation under Nevada state law, the 6th Circuit Court of Appeals just held that time spent undergoing mandatory security checks is compensable under Nevada law,  reversing a contrary lower court ruling.

Compliance-by-carrot trumps compliance-by-stick

Democratic administrations are about enforcement.
Republican administrations are about education.

The endgame is still enforcement, but each side approaches this goal very differently.

This dichotomy might be an oversimplification, but, in at least in contrasting the Obama Administration to the Trump Administration, it is very true.

The FLSA's exemptions are becoming more "fair" for employers

In Encino Motorcars, LLC v. Navarro, the Supreme Court ruled that overtime exemptions under the Fair Labor Standards Act "are to be given a 'fair reading,' meaning they are not to be construed too narrowly" (as had historically been the case).

The Court applied this "fair reading" standard to conclude that automobile service advisors are exempt under the FLSA's automobile-service exemption.

The legality of pre-certification communications with potential class members

Your nightmare as an employer has just become your reality.

A disgruntled former employee has launched a wage and hour class action lawsuit against you.

You’d like to get out ahead of the game by having your lawyers start marshaling your evidence. For example, they’d like to interview employees and gather affidavits in opposition to the eventual motion for class certification.

But can they?

SCOTUS decision on class action waivers is not the epic win for employers it may seem to be

Yesterday, in a narrow, 5-4 partisan decision, the Supreme Court issued its most anticipated employment decision of its current term, Epic Sys. Corp. v. Lewis [pdf]. The Court reconciled six years of debate between split federal circuits into a unified standard that permits the waiver of class actions via the compelled individual arbitration of employment disputes.