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Aesop For Employers:  The Hyenas And The Maze

Aesop For Employers: The Hyenas And The Maze

By:  Bill Pilchak – 11/25/15

Once upon a time, there was a huge, scary book of wage hour regulations known as 29 CFR 541. The passages were as if written by madmen. They followed neither logic nor any recognizable order, with pitfalls and dangers lurking around every corner. The entire volume was an insane, written maze.

Only a few people in the land ever dared to read the book. Some of the selected few, known as HRers, mainly read small portions- and only when they had to. Though courageous, they didn’t have the time to read the entire tome. Besides, despite the dangers lurking in the pages, the regulations were boring.

Others of the selected few, known as MgrLawers, enjoyed exalted positions where they battled fierce creatures, guarded the HRers and were paid handsomely to read the daunting, boring text. Being so paid, they read more than they had to, although they could not read the whole opus in one sitting. Still, they eventually learned of the many dangers found in the maze of regulations, and strove to teach the HRers of them. Their message was dire: If one of the flock failed to avoid the traps, pitfalls and dangers in the maze in the first place, the MgrLawer might not be able to rescue anyone who had fallen prey.

For decades, the MgrLawers guarded their flocks of HRers, only occasionally losing a straggling member of the herd to a stately lion named DOL, who had not only read the regulations, but had written them and thus easily negotiated the maze. A tolerable balance of nature developed over those many years. DOL only hunted when she was hungry. The MgrLawers earned their keep by guarding the flock, and lost only the occasional careless HRer who failed to heed the dangers.

For those same many decades, a troupe of lazy and indolent scavengers (jackals, hyenas and dogs) known as PLtfLawers scraped out an existence. Since they were not paid the handsome sums to read the massive tome of regulations, they remained ignorant of their contents and unable to negotiate the maze. They fed off scraps, using methods of attacking the herd that required less knowledge and were more easily defended by the MgrLawers.

One fateful day, one of the hyenas was forced to enter the regulations against his will and could not avoid the complex rules spread over many pages. Stumbling through the maze, nearly delirious from absorbing too much information at one time, the hyena happened upon a hapless victim: A careless HRer, who had failed to heed the warnings of the MgrLawer, and now found herself at the bottom of a pit, within easy grasp of the hyena, who snatched her up and enjoyed a tasty reward.

As one would expect, the hyena returned to the brood and related his tale. Hearing of the easy meal, a jackal next braved the massive text. She too found the regulations dreadful, but like the hyena found a hapless victim trapped in the maze, who she devoured. The jackal returned to the den and informed the pack that the MgrLawer was nearly powerless to save one who had fallen into a trap, and soon all kinds of jackals, hyenas and dogs were patrolling the maze of regulations, feasting on the prey trapped within. Soon, the horde of scavengers had spread across the land, with the fattest of the brood in California.

The moral of the story should be obvious.

The Fair Labor Standards Act regulations are a haphazard set of arbitrary rules that do not necessarily follow logic or common sense. One cannot comply by intuition. For years, employers were reasonably safe because the nuances of the regs were not known by the plaintiffs’ bar. The Department of Labor responded to complaints by employees, but since the employees did not appreciate technical violations, they only reported the most obvious infractions and problems with the DOL were manageable.

However, in recent years, the plaintiffs’ bar has learned that employers are frequently not in compliance. They have found that knowing the regulations can lead to a huge payday and now have a financial incentive to learn them. They have also learned that an employer can be “dead in the water” if out-of-compliance, making for an easy payday.

Wise HR personnel will review their pay practices to assure wage/hour compliance in advance. Though not every danger can be stated here, in Michigan and in most states, this means assuring, for example: ●Anyone not paid overtime is statutorily exempt; ●“Administrative Exempt” employees exercise the requisite discretion and judgment on matters of significance; ●Administrative exempt employees are not actually turning out (even white collar) “production;”●Managing a department is the “most important” duty of a manager who also does some non-exempt work;●All required compensation is being included in overtime calculations; ●Employees cannot claim unpaid hours (driving to assignments, travelling on business, etc.) are “hours worked” for overtime purposes; ●Employees are not required to incur expenses (such as driving their vehicle on the job) that drop their pay below minimum wage; ●Maintain records of hours worked for at least three years, ideally even for exempt employees.

For those with employees who work (even occasionally) in California, the task is much more complex: ●Employees must have meal and rest breaks; ●Overtime must be paid if one works more than eight hours in one day; ●Doubletime must be paid for more than 12 hours in a day or hours worked on the 7th consecutive work day ●To be exempt, the exempt duties must occupy more than 50% of the employee’s time; ●If a terminated employee is not paid what is owed on the date of termination, up to 30 days of salary/wages can be owed as “waiting time penalties.”

Pilchak & Cohen offers training on Wage-Hour compliance. Contact us if we can help you.

HOLIDAY SHUTDOWNS MAY HAVE IMPACT ON EXEMPT STATUS

HOLIDAY SHUTDOWNS MAY HAVE IMPACT ON EXEMPT STATUS

By:  Dan Cohen – 11/20/15

With Thanksgiving just a week away, many of us have already begun our holiday preparations and planning. Most of us will spend next Thursday, and even Friday and Saturday eating, spending time with family, watching parades and the Lions and shopping. Most of us will not be worrying about whether docking pay of our salary exempt employees for the Thanksgiving Holiday will jeopardize their overtime exemption because they can no longer meet the salary basis test. However, this is something that should be taken seriously by employers because losing an overtime exemption can result in significant back wage claims. The Department of Labor, Wage and Hour Division provides a solution for dealing with short term closures like Thanksgiving. According to the Wage and Hour Division:

 [s]ince employers are not required under the FLSA to provide any vacation time to employees, there is no prohibition on an employer giving vacation time and later requiring that such vacation time be taken on a specific day(s). Therefore, a private employer may direct exempt staff to take vacation or debit their leave bank account . . . , whether for a full or partial day’s absence, provided the employees receive in payment an amount equal to their guaranteed salary.

     Wage and Hour Opinion Letter FLSA2005-41 (Oct. 24, 2005); see also 29 C.F.R. §§ 541.600, 541.602(a); 69 Fed. Reg. 22,122, 22,178 (Apr. 23, 2004) (“[E]mployers, without affecting their employees’ exempt status, may take deductions from accrued leave accounts.”).

The DOL’s opinion does not apply to shutdowns lasting a full workweek, like the December shutdown of the automotive plants, since exempt employees need not be paid for any workweek in which they perform no work. The opinion also does not apply to employees who have no vacation or paid time off available. Indeed, the DOL has emphasized that if an exempt employee has no vacation time remaining, or has a negative vacation leave balance, the employee still must receive the employee’s guaranteed salary during the temporary shutdown in order to avoid violating the salary basis requirement and jeopardizing the employee’s exempt status.

Employers are also cautioned that employees qualify for unemployment if they lose a full week of work due to a holiday shutdown. Moreover, if the shutdown results in the loss of a partial week, employees can claim unemployment for the time off unless they earn 1 ½ times the applicable benefit rate (which is 4.1% of the highest wage paid in a base period quarter up to a maximum of $362). Holiday and vacation pay is included as remuneration when calculating eligibility for unemployment, providing another reason why employers often designate the shutdown week as a mandatory vacation week.

EMPLOYING MILITARY SERVICE MEMBERS

EMPLOYING MILITARY SERVICE MEMBERS

By:  Rob Dare – 11/11/15

On this day, November 11th, we would like to extend our sincerest thanks to all the brave men and women who have served, and continue to serve, in the armed forces. It is important to recognize, celebrate, and honor America’s veterans for their patriotism, love of country, and willingness to serve and sacrifice for the common good.

Military service and employment law may seem worlds apart, but they are sometimes brought together through The Uniformed Services Employment and Reemployment Rights Act (“USERRA” or “the Act”). Generally, USERRA is designed to protect civilian job rights and benefits for veterans and members of Reserve components. The law and its regulations cover a number of topics, but here are the key highlights:

  • Discrimination
    o A person who is a member of, applies to be a member of, performs, has performed, applies to perform, or has an obligation to perform service in a uniformed service shall not be denied initial employment, reemployment, retention in employment, promotion, or any benefit of employment by an employer on the basis of that membership, application for membership, performance of service, application for service, or obligation.
    o An employer engages in a prohibited action if the person’s membership, application for membership, service, application for service, or obligation for service in the uniformed services is a motivating factor in the employer’s action, unless the employer can prove that the action would have been taken in the absence of such membership, application for membership, service, application for service, or obligation for service.
  • Reemployment
    o Any person whose absence from a position of employment is necessitated by reason of service in the uniformed services shall be entitled to the reemployment rights and benefits and other employment benefits of the Act, so long as he/she gave notice to his/her employer in advance of his/her deployment, was absent for five years or less, and seeks reemployment.
    o However, there is no right to reemployment if the employment from which the person leaves to serve is for a brief, nonrecurrent period, and there is no reasonable expectation that such employment will continue indefinitely or for a significant period. In such an instance, it would be the employer’s burden of proving the brief or nonreccurent nature of the employment without a reasonable expectation of continuing indefinitely or for a significant period

The Sixth Circuit Court of Appeals recently had the opportunity to explain the boundaries of reemployment rights under USERRA in Slusher v. Shelbyville Corp., No. 15-5256 (6th Cir. 2015). Plaintiff Richard Slusher, an orthopedic surgeon and military reservist, began a 30-day assignment at Heritage Medical Center (“Heritage”), which was renewed several times. Heritage was searching for a full-time orthopedic surgeon, and it offered the position to Slusher but he declined. Instead, Slusher signed a one-year contract with Heritage to serve as its orthopedic surgeon. The contract could be terminated by either party for any reason so long as 90 days’ notice was provided, and it did not provide for renewal or extension.

About two months later, Slusher received military orders that he was being deployed to Iraq. He informed Heritage the next day and Heritage informed him that it was continuing its search for a full-time, permanent orthopedic surgeon. While in Iraq, Slusher was notified that his employment would cease in 90 days, on Oct. 25, 2011. Slusher returned before the end of the 90 days and he continued worked at Heritage for two weeks before effective termination.

Slusher sued Heritage, asserting claims for discrimination and violation of reemployments rights under the USERRA. The trial court dismissed the case and the Sixth Circuit affirmed. According to the Sixth Circuit, there is no right to reemployment if the employment from which the employee is deployed is for a brief, non-recurrent period. Because Slusher’s contract was for one year and did not provide for renewal or extension, his employment was for a “non-recurrent period” with no “reasonable expectation” that his employment would “continue indefinitely.”

Slusher’s remaining employment term, which was measured in weeks or months, was not for a “significant period.” Although Slusher’s at will status was a factor, the court cautioned that the at-will nature of a contract should not always weigh as heavily as it did here, where all parties contemplated that Heritage intended to invoke the at-will clause as soon as it could, in order to hire a permanent orthopedic surgeon.

With respect to the discrimination claim, the court concluded that Heritage would have terminated Slusher’s employment notwithstanding his military service. Specifically, the court emphasized that Heritage sought to find an orthopedic surgeon to work at the hospital permanently (a position Slusher had been offered and declined), and to that end, the hospital signed Slusher to a one-year contract that it could terminate at-will when it found the best candidate. Further, the court observed, the hospital was seeking Slusher’s replacement before it knew he was deployed, and at the time he was hired, the hospital knew he was subject to deployment. Therefore, the court held,

Heritage sought to replace Slusher because it wanted a permanent surgeon, not because of his military service.
The aim of the Act – preserving the employments rights of veterans – is a noble one, and as employer and citizen alike, in order to support your employees in the reserve and National Guard, it is important to be aware of the obligations of both parties. Again, with heartfelt gratitude we thank all who have served our country and wish everyone a happy Veterans’ Day.