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Aug 2008
13
August 13, 2008

Common Wage-Hour Issues: They May Not Be Exciting, But They Sure Can Be Expensive

If asked, many human resources professionals would say that ensuring compliance with laws such as the Americans with Disabilities Act and the Family and Medical Leave Act is one of the most challenging and important things they do. And while no one would argue that resolving ADA and FMLA issues is tricky and time consuming, as a practical matter, making sure your organization is in compliance with the Fair Labor Standards Act (FLSA) also can have significant financial consequences.

The proliferation of lawsuits being brought almost daily under the FLSA demonstrates that it is fertile grounds for the plaintiffs' bar, and the double-damages and attorney fee provisions of the FLSA mean there is often a lot of money at stake in FLSA litigation.

The vast majority of recent FLSA lawsuits being filed center around one of two issues: proper classification of employees as "exempt" or "non-exempt," and proper calculation of and compensation for "hours worked" under the law.

There are a number of exemptions to either the minimum wage and/or the overtime requirements of the FLSA. The most common exemption is the "white collar" exemption, which excludes certain managerial, administrative, professional and outside sales employees from both the minimum wage and the overtime requirements of the Act.

While it is not possible to provide a detailed listing of all aspects of the white-collar exemptions in a short article like this, the basic keys to qualifying for these exemptions are generally that the employee be paid a minimum guaranteed salary of $455 per week (except for outside sales employees who can be paid on commission), and that they perform the "right" kind of work. Generally speaking, this work entails either management duties or the exercise of discretion and independent judgment on significant matters.

Whether allegedly-exempt employees are performing the proper duties is an issue in a large number of lawsuits currently pending against national retail chains, pharmaceutical companies, and many financial and real estate lending institutions.

The U.S. Department of Labor's Web site contains a helpful chart outlining the duties tests of the various exemptions and it is useful to periodically review that chart against the requirements of your various exempt jobs. The chart can be found at http://www.dol.gov/esa/regs/ compliance/whd/fairpay/side-by-side_PF.htm.

The other issue being litigated in hundreds of lawsuits nationwide is whether non-exempt employees are being properly paid for all "hours worked." These cases typically involve allegations that employees either are not being paid for certain "off-the-clock" work, or that they are not being paid for donning and doffing special protective equipment required for their jobs. Off-the-clock work cases usually involve claims that employees were not paid for work done before or after their work shifts, or for work done during an otherwise unpaid meal period. Bob Chovanec's June 2007 E-bulletin covers many of the do's and don'ts associated with off-the-clock work. It can be found at http://www.wnj.com/6-19-07_labor_free_lunch_e-bulletin/.

Donning-and-doffing cases have been on the rise since the U.S. Supreme Court's decision in IBP v. Alvarez, 546 U.S. 21 (2005), where the court held that employees working in meat-processing plants were entitled to compensation under the "continuous work-day rule" from the time they put on special, required protective gear before their shift to the time they took it off afterward. In a nutshell, where employees must wear unique protective clothing or equipment in order to perform the principal activities of their jobs, and where donning and doffing that clothing or equipment must be done at the workplace and takes more than a de minimis amount of time, the time may be compensable under the FLSA. Time spent putting on and taking off steel-toed shoes, hardhats and safety glasses is generally not compensable because it only takes a few seconds to do so and because those items are not unique.

Whether an employee is exempt under the white-collar exemptions and whether certain time is compensable under the FLSA are often fact-intensive inquiries that require an objective analysis of the situation by someone who is very familiar not only with the job and how it is done, but also the evolving legal issues. Because of the penalties and fee provisions of the FLSA, however, a little review and necessary modification now may save your organization a lot of money later. If you have FLSA questions, call your Warner attorney or any member of our HR practice group.
 

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