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Elements of Employment Law for Supervisors: The Fair Labor Standards Act and Massachusetts Wage Act


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The Fair Labor Standards Act (FLSA) and the Massachusetts Wage Act (MWA) establish minimum wage, overtime pay, recordkeeping and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. This session will review the basic requirements of the FLSA and MWA, including:

The legal definition of independent contractors vs. regular employees
Differences between exempt and non-exempt employees
How to determine what activities count as work for time reporting purposes, even for situations like:
travel time
on-call time
work from home
break time
Time reporting and overtime pay
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Published in: Law
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Elements of Employment Law for Supervisors: The Fair Labor Standards Act and Massachusetts Wage Act

  1. 1. Presenter: Kevin M. Kinne Cohen Kinne Valicenti & Cook LLP
  2. 2. Everett Public Schools Case. Female cafeteria workers. Argued they were doing work comparable to male janitors in the schools, such as cleaning and lifting heavy objects, but were paid half as much. Won at trial. Lost on appeal – not “comparable work.” Statute changed.
  3. 3. New law requires employers to pay women and men the same wages if they do comparable work. The law defines “comparable work” to “solely mean work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions.” Job titles and job descriptions alone do not determine comparability.
  4. 4. Massachusetts prohibits discrimination based on an employee’s gender in the payment of wages. New law went into effect on January 1, 2018. Three basic requirements: (i) employers may not inquire about an applicant’s salary or benefits history before extending an employment offer that contains compensation terms; (ii) employers may not prohibit employees from talking to their co-workers about wages or benefits; and (iii) employers must pay women based on competitive market rates and not salary history.
  5. 5. Exceptions to the equal pay requirement: 1. A bona fide seniority system; 2. A bona fide merit system; 3. A bona fide system that measures productivity; 4. Geographic location; 5. Education, training or experience; and 6. Travel.
  6. 6. An affirmative defense to claims of pay inequality is available to employers who perform a good faith self- evaluation of their pay practices that is reasonable in detail and scope at least once every three years. The employer must also be able to demonstrate reasonable progress in addressing any disparity identified during a self-evaluation. Corrective action may not, however, include lowering one individual’s salary to correct an identified disparity.
  7. 7. Steps to take for compliance: 1. Perform a self-audit to identify any pay disparity. 2. Review positions that are similar in title or function and which involve “comparable work.” 3. Disparity based on merit or productivity should be validated using reliable metrics and the findings should be carefully documented. 4. Take corrective actions – increase not decrease. 5. Train interviewers about illegal questions.
  8. 8. Employers often prefer to hire “Independent Contractors” rather than “Employees” Independent Contractors are not entitled to accrue benefits such as health insurance, vacation, paid sick time and unemployment compensation Workers often prefer being classified as Independent Contractors because taxes are not deducted
  9. 9. Massachusetts dislikes Independent Contractor relationships Decreases tax revenues Burdens the unemployment system Creates workers’ compensation risks Attorney General cracking down
  10. 10. To classify a worker as an Independent Contractor, employers must meet all three of the following tests: 1. The individual must be “free from control and direction in connection with the performance of the service, both under the contract for the service and in fact.” 2. The service being performed must be “outside the usual course of the business of the employer.” 3. The individual must be “customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.”
  11. 11. Drywall company classifies individual installing drywall as IC – misclassification Company in business of providing motor vehicle appraisal classifies individual appraiser as IC – misclassification Accounting firm hires individual to move office furniture – IC under prong 2
  12. 12. Risks associated with misclassification: 1. Wage Act requirement regarding time of pay 2. Minimum wage 3. Overtime wage 4. True and accurate records of employees 5. Withholding taxes on employee wage 6. Worker’s compensation provisions punishing knowing misclassification – B&B Case
  13. 13. Action Items: 1. Evaluate all IC relationships carefully in terms of actual day to day work relationship to determine whether there may be a misclassification. 2. Work only with incorporated companies with multiple employees and multiple customers. 3. Hire ICs through another company/employer.
  14. 14. Traveling from home to work before/after a regular workday is not considered “hours worked” and need not be compensated. Traveling from home to work for an emergency is considered “hours worked” and should be compensated.
  15. 15. An employee who is required to travel from one place to another during the workday must be compensated for all time spent traveling at the same rate as for working time and must be reimbursed for all transportation expenses. If, for the College’s convenience, an employee is required to report to a location other than his/her regular work site, the beginning of the work day is construed to include only the additional time it would take for the employee to travel from the regular work site to the alternate work site and return, and expenses will be reimbursed for any additional transportation needed.
  16. 16. On travel days, travel from home to the airport is not counted as hours worked – it is considered the same as traveling from home to campus. Travel by plane, bus, car or train outside of normal work hours is not considered hours worked.
  17. 17. Comp time – a system that allows employees to work longer hours during one day/week in exchange for shorter hours another day/week. Some employers allow employees to “bank” comp time. Comp time works for exempt employees. Significant risks for non-exempt employees.
  18. 18. Violations occur with non-exempt employees when they work more than 40 hours one week in exchange for comp time the next week, but are not paid overtime for hours over 40. It is permissible to have comp time from one day to the next, so long as the total number of hours in the week does not exceed 40. 10 hours for three days in a week and 5 hours for the other two days is not a violation.
  19. 19. Employers must allow employees to take a 30-minute meal break for each six hours worked in a calendar day. During the break – must be free of all duties and free to leave the workplace. Paid meal breaks are not required – unless movement is restricted in any manner during the meal period. Teacher doing lunchroom duty. Answering phones while eating lunch.
  20. 20. Voluntary waivers of meal breaks are permissible but employees must be paid for work. Employer cannot waive the meal break for the employee and cannot coerce employee into waiving. Has to be clear that the employee initiated the request to waive the meal break and that the request is voluntary and for the convenience of the employee.
  21. 21. Dangers of auto-deduct Pay policies that automatically deduct 30 minutes from an employee’s time card under the assumption that the employee will take the uncompensated meal break. FLSA requires that employees be compensated for all “hours worked,” so if an employee is interrupted for work purposes during a lunch break that time needs to be compensated. Tending to emergencies.
  22. 22. Cell phone dangers. Work-related calls, emails or texts during lunch break. If an employee spends time during an uncompensated meal break performing work related tasks, the employer must compensate the employee for that break time. Instruct employees not to check or respond to work emails, calls, or texts during their breaks. Avoid contacting nonexempt employees during their lunch breaks.
  23. 23. No legal requirement to provide rest breaks or coffee breaks in Massachusetts. US Department of Labor regulations – rest breaks or coffee breaks of 20 minutes or less must be counted as hours worked and must be paid.
  24. 24. If the College requires an employee to be on call at or very near the work site to attend to emergencies, the employee must be paid as if s/he were doing any other work for the College. If an employee is not required to remain on or near the College’s premises, but is merely required to leave word where s/he may be reached, s/he is not working and need not be paid (unless s/he is called into work).
  25. 25. Unless specifically exempted, employees covered by the FLSA must receive “overtime pay” for all hours worked in excess of 40 in a workweek at a rate not less than one and one‐half times their regular rates of pay. Overtime is intended to reduce the detrimental impact of “overworking” employees by incentivizing employers to hire and spread hours over more workers.
  26. 26. Exempt v. Non‐Exempt 1. Important to understand the basics 2. What do the terms mean? 3. Why are they important? 4. Salaried v. Hourly
  27. 27. To qualify for exemption, white collar employees generally must satisfy three tests: Salary Basis ‐ Paid a predetermined and fixed salary each week that is not adjusted because of variations in the quantity or quality of work performed; Salary Level ‐ Paid at least a minimum salary level set by regulation (employees can be paid more); and Primary Duty ‐ Job primarily involves performing executive, administrative, or professional duties, depending on the nature of the exemption.
  28. 28. Regardless of duties, someone can only pass the White Collar Exemption test if they are paid a certainly salary. $455/week. Obama‐era initiative defeated. Salary increase to $913/week did not go into effect. Overtime protection would have been extended to millions of workers.
  29. 29. Four White Collar Exemptions – Duties Test 1. Executive ‐ Primary duty must be managing enterprise, or managing a customarily recognized department or subdivision of the enterprise; customarily and regularly direct work of at least two other full‐time employees or the equivalents; and have authority regarding personnel issues. 2. Administrative ‐ Primary duty to perform office or non‐manual work directly related to operation of the business and primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. 3. Learned Professional ‐ Primary duty to perform work requiring advanced knowledge that includes exercise of discretion of judgment in a filed of science or learning that is acquired after a prolonged course of specialized instruction. 4. Creative Professional ‐ Primary duty to perform work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.
  30. 30. Executive Exemption Test 1. Earn at least $445/week; 2. Primary duty is managing the enterprise in which the employee is employed or a recognized department or subdivision; 3. Customarily and regularly direct the work of two or more full time employees (or full time equivalents); 4. Have the authority to hire or fire other employees or to recommend advancement or promotion of employees.
  31. 31. Management includes the following: Establishing rates of pay; Making job assignments; Supervising employees; Handling employee complaints; Evaluating employees; Disciplining employees; Planning and controlling budgets; and Monitoring legal compliance.
  32. 32. What happens when managers perform a mix of managerial and non‐managerial tasks?
  33. 33. Administrative Exemption: 1. Primary duty must involve the exercise of discretion and independent judgment; 2. Must deal with matters of significance; 3. Perform office or non‐manual work; 4. Directly related to the management or general business operations of the employer or its customers. Examples: formulate policies, negotiating for employer, deviate from procedures, expert advice, planning business objectives – not clerical work.
  34. 34. Audit your exemptions Inventory all employees you categorize as exempt Do you have the right call regarding duties? Do they actually do what you think they do?
  35. 35. Review Practices/Procedures Overtime authorization procedures? Standard timekeeping procedures? Accurate and up‐to‐day job descriptions? Meal break waivers?
  36. 36. To be exempt, an employee must be paid on a salary basis. The employee must regularly receive a predetermined salary on a weekly or bi‐weekly basis. Making certain deductions from this predetermined salary may destroy the salary basis. Destroying the salary basis turns an exempt employee into a non‐exempt employee. That could have significant implications for overtime.
  37. 37. Employers may not make salary deductions for absences of less than one full day without defeating the salary basis test and causing substantial overtime liability for otherwise exempt staff. A pay system that subjects exempt employees to partial day salary deductions may destroy the salary status, even if no actual deductions are made.
  38. 38. Permissible Deductions 1. During Initial and Terminal Weeks of Employment. 2. When the Employee is Absent from Work for a Day or More for Personal Reasons Other than Sickness or Accident. 3. When the Employee is Absent from Work for a Day or More Due to Sickness or Disability. 4. When the Deduction Constitutes a Penalty Imposed in Good Faith for an Infraction of a Safety Rule of Major Significance. 5. Where a Salaried Employee Takes Intermittent or Reduced Schedule Leave Under the Family and Medical Leave Act.
  39. 39. Work performed remotely is compensable time. Mobile devices and laptops create problems. Time spent working should be carefully monitored. Exposure for unpaid wages, overtime, treble damages and attorneys’ fees.
  40. 40. In order to control the impact of mobile devices on nonexempt employees’ work time, supervisors should prevent nonexempt employees from using mobile devices during non-working hours and require nonexempt employees to report any time spent using such devices. Restrict nonexempt employees’ remote access to email. Managers should not seek information from non- exempt employees remotely without paying for the time.
  41. 41.  Dooley v. Liberty Mut. Ins. Co., employees worked as automobile damage appraisers.  Sought unpaid overtime compensation for travel and other time that they spent working and driving to and from appraisal sites from their homes.  They started laptops, checked email and voice mail, responded to messages, reviewed the day’s assignments and those for the following day, electronically sent appraisals and photographs to their employer, and made work-related phone calls at the beginning and ending of their regular work days from their homes.  These tasks were part of the employees’ regular work so commuting time spent driving from home to the first appraisal site at the beginning of day and from the last appraisal site at the end of day to their home was compensable.
  42. 42. For exempt employees, mobile access can also cause FLSA concerns. If an exempt employee is out for a full day absence not compensable under the FLSA, the employer can run into a problem if the exempt employee performs work remotely. Since the employer cannot deduct from an exempt employee’s salary for a partial day absence, an employer may have to pay the exempt employee for the absence if more than de minimis work is performed.
  43. 43. FLSA regulations require employers to maintain a record of the hours worked each workday and the total hours worked each workweek for each of their nonexempt employees. The regulations do not mandate that any particular recordkeeping methods be used, and virtually any storage medium is acceptable.
  44. 44. In the absence of these records, employees can make exaggerated claims of hours worked. The best defense to these claims is to maintain accurate time records. They should be as exact as possible – exactly the same number of hours every day should be scrutinized when a supervisor knows that an employee’s hours have fluctuated.
  45. 45. FLSA requires employers to keep the same records for exempt employees that they keep on their nonexempt employees, but not the exact number of hours worked. This relief from the burdens of recordkeeping for exempt employees, can be a major vulnerability in misclassification cases. Consequently, employers should keep accurate time records on their exempt employees, even though the law does not explicitly require it.
  46. 46. Employers have the ability to change employee time records but must ensure that the records accurately reflect the time actually worked. There are only certain times when employers should change employee time records: (a) when an employee forgets to record time, (b) when an employee is out sick the employer may change the time record to reflect a paid sick day instead of time worked, and (c) when the employee has made a mistake. An employer may not change a time record to show fewer hours than actually worked.
  47. 47. Presenter: Kevin M. Kinne Cohen Kinne Valicenti & Cook LLP