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.