Show Them the Money: Wage & Hour Compliance (Series: Protecting Your Employee Assets: The Life Cycle of the Employment Relationship 2018)

Practical and entertaining education for
attorneys, accountants, business owners and
executives, and investors.
2

The material in this webinar is for informational purposes only. It
should not be considered legal, financial or other professional
advice. You should consult with an attorney or other appropriate
professional to determine what may be best for your individual
needs. While Financial Poise™ takes reasonable steps to ensure
that information it publishes is accurate, Financial Poise™ makes
no guaranty in this regard.
DISCLAIMER
3

MEET THE FACULTY
MODERATOR:
Mark M. Trapp Conn Maciel Carey LLP
PANELISTS:
Jason B. Klimpl Tannenbaum Helpern Syracuse &
Hirschtritt LLP
Charles A. Krugel Law Offices of Charles Krugel
Phillip Schreiber Holland & Knight
4

ABOUT THIS WEBINAR
Compliance with federal (as well as state) wage and hour laws returned to the forefront towards the end of the
Obama administration when it appeared that the salary threshold that applied to exempt employees would be
increased significantly. While the proposed change will not happen, the Trump administration has signaled that
the threshold will nonetheless likely increase. Regardless of where the new threshold lands, employers must
nonetheless be mindful of the risks posed by misclassifying individuals as exempt as well as by a host of practices
that can imperil otherwise proper classification decisions. And while the federal government is no longer
scrutinizing the use of independent contractors as closely today, employers must still be careful when relying on
contractors. This webinar delves into the mistakes commonly made by employers and endeavors to provide
attendees with the tools needed to help find and fix potential wage and hour pitfalls.
This webinar is delivered in Plain English, understandable to you even if you do not have a background in the
subject. It brings you into an engaging, even sometimes humorous, conversation designed to entertain as it teaches.
And, it is specifically designed to be viewed as a stand-alone webinar, meaning that you do not have to view the
other webinars in the series to get a lot out of it.
5

ABOUT THIS SERIES
If you have employees or advise companies with employees, this webinar series is for you! No employer—whether
large, medium or small—is immune from the reach of federal, state and/or local employment laws and regulations.
Now, more than ever, employers should consider taking a proactive approach to auditing their employment
practices and policies so that they can better respond when issues arise. This webinar series approaches the
employer-employee relationship from beginning to end, with programs covering the most important steps along
the way, including hiring and onboarding, policy and procedure development and training, wage and hour
compliance, accommodating disabled employees, conducting investigations and considerations associated with
ending the relationship.
As with every Financial Poise Webinar, each episode is delivered in Plain English understandable to investors,
business owners, and executives without much background in these areas, yet is also valuable to attorneys,
accountants, and other seasoned professionals. And, as with every Financial Poise Webinar, each episode brings
you into engaging, sometimes humorous, conversations designed to entertain as it teaches. Each episode in the
series is designed to be viewed independently of the other episodes, so that participants will enhance their
knowledge of this area whether they attend one, some, or all episodes.
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Dates shown are premiere dates; all episodes will be available on demand after
their premiere date.
EPISODES IN THIS SERIES
EPISODE #1 Welcome to the Team! Recruiting and Hiring, Including Restrictive Covenants 1/23/18
EPISODE #2 An Ounce of Prevention: Policies, Procedures and Proactivity 2/20/18
EPISODE #3 Show Them the Money: Wage & Hour Compliance 3/20/18
EPISODE #4 Time for a Break: Managing Leaves of Absence and Accommodating Disabilities 4/17/18
EPISODE #5 I Know What You Did Last Summer: Workplace Investigations 5/15/18
EPISODE #6 It’s So Hard To Say Goodbye: Minimizing Risk When Terminating Employees 6/19/18
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Episode #3: Show Them the Money: Wage &
Hour Compliance

WAGE AND HOUR ISSUES ARE ON THE RISE
WHY?
The “perfect storm” of events:
– Increased activity by plaintiff’s bar.
– Greater focus on wage and hour violations by the Department of Labor.
– Some employers do not understand the law
– Some employers lax in auditing wage and hour compliance.
– Almost every employee is a potential plaintiff
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WHAT ARE THE MOST COMMON TYPES
OF CLAIMS?
1. Unpaid work
• Auto-deduction for meal periods
• Rounding
• Remote Work
• Requiring/permitting off the clock work
• Miscalculating regular rate for overtime purposes
2. Misclassification of Exempt/Non-exempt Employees
3. Improper salary deductions
4. Failure to comply with more stringent state regulations
5. Poorly drafted pay plans

FAIR LABOR STANDARDS ACT (FLSA)
The FLSA is the primary federal law regulating minimum wage and overtime
payments.
• Must be an employment relationship between the employee/employer
• Applies to all employees of an enterprise engaged in interstate commerce
or production of goods
• Enacted in 1938.
• Now being applied to jobs that didn’t exist in the 20th century.

FAIR LABOR STANDARDS ACT (FLSA)
(CONT.)
Two types of coverage:
Enterprise coverage: If an enterprise is covered, all employees of the enterprise
are entitled to FLSA protections; and
Individual coverage: Even if the enterprise is not covered, individual employees
may be covered and entitled to FLSA protections
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STATE AND LOCAL WAGE LAWS
• Federal law does not preempt state employment laws
• Employees are entitled to the provision most favorable to them
• State wage law concerns:
1. Higher minimum wages
2. Different or non-existent exemptions
3. Wage payment laws
4. Wage deduction laws
5. “Living wage” laws

IMPACT OF STATE WAGE AND HOUR
LAWS
State law claims may be brought as class actions as opposed to FLSA collective
actions
• Class vs. collective actions:
– A class member must affirmatively “opt in” to an FLSA collective
action in order to participate and be bound by the judgment
– Under traditional class actions, each class member is bound by the
judgment and notified of award or settlement unless he or she
affirmatively “opts out”
– Thus, class actions under state law may have very large classes

AUTO DEDUCTIONS FOR MEAL PERIODS
What is a “bona fide” meal period?
– At least 30 minutes.
– Employees must be completely relieved from duty during that time.
– Any duties performed, whether active or inactive, disqualifies the whole time
period from being unpaid.
– Issues carrying pagers or radios.

TIME ROUNDING
• Like automatic deductions, the practice is lawful.
• DOL accepts rounding if employees are “fully compensated.”
• Ripe for class-certification because of a uniform policy.

REMOTE WORK
• Employee able to perform work outside of visual observation from a
supervisor.
– E.g., logging onto computer system, checking Blackberry, taking
phone calls at home.

OFF THE CLOCK WORK
• Occurs when employee performs work on premises, but not clocked in,
whether before or after shifts or during meal periods.
• Employees must be compensated for closely related duties and tasks that
are indispensable to the performance of the employee’s activities.

POLICIES REGARDING OFF THE CLOCK
WORK
• Accurately record all work time.
• Prohibit off-the-clock work.
• Mandatory process for reviewing exceptions to time entries.
• Mandatory reporting of all suspected off-the-clock work.
• Internal mechanism for hourly employees to complain about
uncompensated work
• Prohibiting arriving at work station before set start time.
• Automatic discipline of employees who violate the timekeeping policy.

CALCULATING OVERTIME
• Covered, non-exempt employees must receive one and one-half times the
regular rate of pay for all hours worked over forty in a workweek
• Cannot be less than the minimum wage.
• Each workweek stands alone

PROPERLY CALCULATING “REGULAR
RATE”
✓ Is determined by dividing total earnings in the workweek by the total
number of hours worked in the workweek
✓ May not be less than the applicable minimum wage

REGULAR RATE INCLUDES
-Non-discretionary bonuses
-Incentive pay
-Commissions
-Shift differentials
-Retroactive pay increases
-Board or Lodging (if customarily furnished by employer to employee)

REGULAR RATE DOES NOT INCLUDE
• Gifts
• Paid Time Off (e.g., vacation pay, holiday pay, sick leave)
• Expense Reimbursements
• Discretionary Bonuses
• Retirement Plan Contributions or Insurance Payments

DIFFICULTIES CALCULATING “REGULAR
RATE”
Non-discretionary bonuses and commissions can be problematic because they
generally must be apportioned back over the period in which they were
earned.

EXEMPT VS. NON-EXEMPT IN A NUTSHELL
Employees are generally presumed “non- exempt,” and entitled to 1½ times
their regular rate of pay for all time worked in excess of 40 hours per week.
Non‐Exempt
✓ Must be paid at least minimum wage
✓ Must be paid time‐and‐one‐half for all hours worked over 40 in a work
week
Exempt
✓ If an employee is exempt, he/she is exempt from overtime and
minimum wage requirements

EXEMPT VS. NON EXEMPT IN A NUTSHELL
(CONT.)
Exempt:
-only means that these employees generally meet all the criteria and are
generally exempt from overtime
Not exempt:
-only means that these employees generally do not meet the criteria for
this exemption and generally are not exempt
Take note: Job titles are not controlling

EXEMPT…OR NOT? THAT IS THE QUESTION.
To be exempt, must meet two tests:
Duties Test:
-Different for each exemption
Salary Basis Test:
-Currently $455/week or $23,660/year,
-Salary basis does not apply to lawyers, doctors, teachers, or outside
sales
-Computer employees can be paid hourly, at least $27.63

EXEMPTIONS
• White collar exemptions:
– Executive
– Administrative
– Professional
• Other typical exemptions:
– Outside sales
– Computer Analyst, Computer Programmer, Software Engineer

“WHITE COLLAR EXEMPTIONS”
• Section 13(a)(1) of the FLSA provides an exemption from both minimum
wage and overtime pay for employees who are employed in a bona fide:
• Executive;
• Administrative;
• Professional; or
• Outside Sales capacity.
• Certain computer employees may be exempt professionals under Section
13(a)(1) or exempt under Section 13(a)(17) of the FLSA.

WHAT DOES “PRIMARY DUTY” MEAN?
✓ Primary duty means the position’s “principal, main, major or most
important duty that the employee performs.”
✓ Employees who spend approximately 50% of their time performing exempt
work will generally satisfy the primary duty requirement under federal law.

PRIMARY DUTY: FACTORS TO CONSIDER
The following factors should be considered:
– The relative importance of the exempt duties as compared with other
types of duties;
– The amount of time spent performing exempt work;
– The employee’s relative freedom from direct supervision;
– The relationship between the employee’s salary and the wages paid to
other employees for the kind of non- exempt work performed by the
employee.

EXECUTIVE EXEMPTION
• Primary duties must include:
– Management of the enterprise or of a recognized department or
subdivision thereof
– Direct the work of two or more other employees or their full-time
equivalents
– Authority to hire or fire or offer valued suggestions as to hiring, firing,
advancement, promotion or any other change of status

ADMINISTRATIVE EXEMPTION
Primary duties must include:
– Performance of office or non-manual work directly related to the
management or general business operations of the employer or the
employer’s customers; and
– Exercise of discretion and independent judgment with respect to
matters of significance.

COMPUTER EMPLOYEE EXEMPTION
Includes persons employed as:
– Computer systems analysts
– Computer programmers
– Software engineers and other similarly skilled workers in the
computer field.

COMPUTER EMPLOYEES ARE NOT
• Employees engaged in the manufacture or repair of computer hardware and
related equipment;
• Employees whose work is highly dependent upon, or facilitated by, the use
of computers and computer software programs;
• Individuals who work in a “help desk” capacity who perform installation or
troubleshoot computer or network issues.

OUTSIDE SALES EXEMPTION
• Makes sales and takes orders away from the employer’s place of business,
and
• Spends less than 20% of work hours at the employer’s place of business
doing work unrelated to sales duties

CREATIVE PROFESSIONAL EXEMPTION
Primary duties must consist of:
– Performance of work requiring invention, imagination, originality or talent in
a recognized field of artistic or creative endeavor.
-Recognized field of artistic or creative endeavor includes, for example,
music, writing, acting and the graphic arts.

OVERTIME
• If an employee is not exempt from overtime, the employer must pay
overtime premium on all compensation the employee receives.
“Compensation” includes:
-Hourly wages
-Salary
-Commissions
-Bonuses
-Spiffs
-Payments from the manufacturer

PENALTIES FOR OVERTIME VIOLATIONS
• Plaintiff may recover unpaid wages/overtime (i.e., backpay)
• In addition to backpay, a successful plaintiff is entitled to an equal amount
(i.e., doubling) as liquidated damages for claims under the FLSA.
• Successful plaintiff is entitled to reasonable attorneys’ fees
• Individual managers/supervisors can be held personally liable.

ALTERNATIVES TO OVERTIME
Employers may chose other methods to compensate for additional time
worked:
For example:
✓ Comp Days: working less time another day in the same week
✓ Time-Off Plan: Take comparable # of hours off the next work week

MINIMIZING UNPAID WORK RISKS
• Training
• Clear timekeeping policies
• Accurate timekeeping software
• Reporting and audit protocol to monitor hours worked reports
• Internal reporting system
• Employees to certify time records and paychecks accurately reflect time
worked and pay due.
DOL Guide to Minimum Wage and Overtime Pay can be found:
http://webapps.dol.gov/elaws/elg/minwage.htm

WHO IS AN INDEPENDENT CONTRACTOR?
• Depends on the forum you are in:
• The definition may vary between the IRS and other agencies
(Department of Labor, EEOC) and courts tasked with making this
determination
• No clear line-no general test
• Important considerations:
✓ Extent to which services rendered by an individual are an integral
part of the principal’s business
✓ Permanency of the relationship between the individual and the
principal

(CONT.)
✓ The amount of investment in facilities and equipment by the individual
✓ The opportunities for profit or loss by the individual, and the method of
compensation
✓ The degree of independent business organization and operation by the
individual
✓ The degree and nature of control of the individual by the principal

(CONT.)
✓ The degree of independent judgment exercised by the individual who
performs the services
✓ Performance of the same or similar services by the individual for third
parties in addition to the principal
✓ Employment of the individual by the principal in any other capacity
✓ A comparison of the relationship to other independent contractor
operations of a similar nature in the industry
✓ The right of either party to terminate the relationship on short notice
without penalty

RECORDKEEPING TIPS
“Basic records” that a covered employer must keep certain for each non-
exempt worker, For example –
Full Name, sex, social security number, age (if younger than 19);
Regular rate of pay, total hours worked, total daily or weekly straight-time
earnings
Deductions and date of payment and pay period for payment, etc.
Reference: Fact Sheet 21: Recordkeeping Requirements Under The Fair
Labor Standards Act (FLSA).

CONCLUSION
Wage and hour compliance program
(1) employee complaint;
(2) manager report; or
(3) audit result.

ABOUT THE FACULTY
Mark M. Trapp is a partner in Conn Maciel Carey’s Chicago office. He practices law with a concentration in labor and
employment. Mr. Trapp defends employers in a broad range of NLRB litigation and arbitration proceedings, and
provides counsel on issues involving the National Labor Relations Act. He offers guidance on union election campaigns
and labor relations, and has negotiated numerous collective bargaining agreements. Mr. Trapp also handles matters
arising under the ADA, ADEA, and Title VII federal anti-discrimination laws.
Mr. Trapp’s experience with multiemployer pension withdrawal liability has been recognized across the country and has
prompted numerous speaking engagements for professional organizations and businesses. His articles on withdrawal
liability and other labor and employment issues have been published in a variety of respected publications. The scope of
his service encompasses issues beyond general labor and employment law including litigation, trade secrets, and non-
competes. He has briefed and argued numerous appeals before federal and state appellate courts.
MARK M. TRAPP
mtrapp@connmaciel.com

ABOUT THE FACULTY
Jason B. Klimpl is a partner in the Employment Law Group of Tannenbaum Helpern Syracuse & Hirschtritt LLP. In
this capacity, he advises clients on a broad range of employment law matters, such as wage and hour compliance;
healthcare; equal opportunity actions and policies; employment agreements and restrictive covenants; independent
contractor and consulting issues, reductions in force; technology and privacy concerns; and other human resources
counseling. Jason is also the Associate General Counsel of the New York Staffing Association and is heavily involved in
legal and legislative efforts to support the staffing industry.
Jason has written numerous employment law articles and is a contributing faculty member of both Lawline and the
National Academy of Continuing Legal Education. Jason is also a member of the Manhattan Chamber of Commerce’s
Speakers Bureau and Help Desk. Jason was awarded the Martindale‐Hubbell “Preeminent” peer review rating and was
named New York Super Lawyer (Rising Star) from 2013 ‐2017. Finally, the New York Enterprise Report named Jason
the winner of the 2012 Best Attorneys and Accountants “Rising Star Attorney” category.
Follow Jason on Twitter: @HR_Attorney
JASON B. KLIMPL
klimpl@thsh.com

ABOUT THE FACULTY
As a management side labor & employment attorney & human resources (HR) counselor, Charles
Krugel has 20-plus years of experience in the field & has had his own practice for more than 15 years;
www.charlesakrugel.com.
Charles’ clients are small to medium sized companies & not-for-profits in a variety of industries. His
practice is equal parts prevention, negotiation & litigation. Besides providing traditional labor &
employment law services, he represents companies desiring to institute preventive & proactive HR
functions. These functions include policies & procedures that which help to efficiently and discreetly
resolve issues in-house & prevent lawsuits & complaints. They also help to reduce costs & act as
catalysts for increasing productivity & profits.
For perspectives of what Charles’ clients think of him, please see his “Client Testimonials” web page.
CHARLES KRUGEL
cak1@charlesakrugel.com

ABOUT THE FACULTY
Phillip Schreiber is a partner in Holland & Knight's Chicago office. He is experienced in employment discrimination
and wage and hour class and collective action litigation before federal and state administrative agencies and federal and
state courts. Mr. Schreiber also is experienced in issues relating to drug and alcohol testing, the WARN Act, the
Family and Medical Leave Act, the Illinois Prevailing Wage Act, military leave, wrongful discharge, employee
handbooks, employment contracts, covenants not to compete, separation agreements, unemployment compensation
benefits claims and various other employment related matters. Mr. Schreiber is experienced in traditional labor
matters, including union elections, contract arbitration and proceedings before the National Labor Relations Board.
During his legal career, Mr. Schreiber has litigated a variety of complex commercial litigation matters. He also
has gained significant experience counseling clients on a wide range of issues involving contract disputes and fraud
claims. Mr. Schreiber has appeared as a panelist on Chicago Tonight, a local television news program. He also has
made numerous presentations to the Chicago Chapter of SHRM on a wide variety of employment law issues. Read
more: https://www.hklaw.com/phillip-schreiber/
PHILLIP SCHREIBER
phillip.schreiber@hklaw.com

The material in this presentation is for general educational
purposes only.
It has been prepared primarily for attorneys and accountants for
use in the pursuit of their continuing legal education and continuing
professional education.
IMPORTANT NOTES

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About Financial Poise™
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DailyDAC LLC, d/b/a Financial Poise™ provides continuing education to
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