Pay for Travel Time
If an employee is required to travel on a
regularly scheduled workday, the employer must pay her. If the time the
employee spends traveling and working during her regular workweek takes her
over 40 hours, overtime must be paid. On the other hand, if the employee
travels on a non-workday, the employer does not have to pay her for travel
time, provided she is not required to do work while traveling. For example, if
an employee travels on Saturday and her work week is Monday through Friday, no
pay is required for travel.
Pay for Training Time
Time spent in employment-related training
activities need not be counted as working time if: (1) attendance is outside
the employee''s regular working hours; (2) the employee does not perform any
productive work during the program; (3) attendance is voluntary; and (4) the
program is not directly related to the employee''s job. If any one of these four
requirements is not met, the time must be compensated.
Bonuses and Overtime
The payment of a bonus may need to be
considered when calculating overtime, which may increase the employee''s regular
rate. A bonus may be excluded from the regular rate for purposes of calculating
overtime only if:
a. the bonus is
based on a percentage of each employee''s total earnings, including overtime; or
b. the payments and
amounts are at the sole discretion of the employer at or near the end of the
period that the bonus covers, and the payments are not made pursuant to any
prior contract, agreement, or promise that would lead the employee to expect
the bonus regularly.
Most regular bonuses are considered
non-discretionary. Attendance bonuses and other work incentives announced in
advance are generally included in the regular rate, because they are considered
part of an employee''s promised compensation package.
When including payments such as attendance
bonuses or shift differentials, the employer must add these amounts to the
employee''s earnings and divide the total by the hours worked in the workweek to
determine the regular rate. All time worked over 40 hours must be paid at one
and one-half times that enhanced "regular rate."
Compensatory Time
The FLSA prohibits private employers from
using compensatory time off in lieu of overtime pay except in one very limited
case. If the employer can foresee the need for emergency overtime work and
arrange ahead of time for an employee to perform the work on a compensatory
time basis, then compensatory time may be used instead of overtime pay. Under
this scenario, the employee must use the compensatory time before the end of
the pay period immediately following the pay period within which the comp time
was earned. The following example illustrates how the exception works:
An employee is paid
on a biweekly basis of $400 at the rate of $200 per week for a 40-hour
workweek. In the first week of the pay period he works 44 hours and would be
due 40 hours times $5 plus 4 hours times $7.50, for a total of $230 for the
week. So that the payment of $400 at the end of the biweekly pay period will
satisfy the monetary requirements of the Act, the employer permits the employee
to work only 34 hours during the second week of the pay period. The employee is
entitled to 34 times $5 or $170 for the second week, thus $400 ($230 plus $170)
for the biweekly pay period.
Overtime hours cannot be accumulated in one
pay period and the time off given in another pay period. Such plans cannot be
applied to an employee whose pay period is weekly, nor to a salaried employee
who is paid a fixed salary to cover all hours he may work in any particular
workweek or pay period. Time-off plans, however, are impractical and rarely
used. The arrangement is difficult to administer since the employer must
anticipate the workload requirements in all weeks of the established pay
period.
Public employers have more flexible
compensatory time options. The provisions for compensatory time differentiate
between public safety, emergency, seasonal personnel, and all other public
employees in their treatment of how much compensatory time the employee may
accrue before cash payments become mandatory.
Two or More Jobs in the Same Workweek
Problems can arise when an employee performs
two (or more) types of activities in the same workweek. Unless both activities
are exempt from minimum wage or overtime, the employer may lose the exemption
altogether.
Payment for Accrued, Unused Leave Time
upon Termination
Under the Maryland Wage Payment and
Collection Law, an employee is entitled to payment for accrued, unused leave
time upon termination of employment in the absence of a policy of the employer
to the contrary. That is, whether an employee is entitled to payment of the
cash value of his accrued, unused leave time upon termination depends on what the
employer has done with prior terminated employees. Employers should establish
and follow a written policy to avoid confusion and the possibility of being
liable for treble damages. The policy should make clear that leave is earned
over time and not all at once at the beginning of the year, even if it is
available to be used before it is earned.
Employment of Minors
Employers must be cautious when employing
individuals under eighteen years of age. The FLSA strictly prohibits employment
of children under the age of fourteen, with few narrow exceptions. Children who
are 14 or 15 may work in certain nonhazardous jobs, such as at retail and fast
food establishments, but the FLSA restricts the number of hours per day and per
week they may work, and the restrictions depend on whether school is in
session. The FLSA imposes some restrictions on the types of jobs minors aged 16
and 17 may perform, but it does not restrict the hours they may work.
Maryland law on the employment of minors is
stricter than the FLSA, and because the stricter law governs, Maryland
employers must be particularly cautious not to run afoul of State law.
Specifically, the employer must possess a work permit for a minor before the
minor may work.
Violations carry fines and jail terms. Moreover,
if a minor without a work permit is injured on the job, the employer''s Workers''
Compensation insurance carrier may deny coverage for the injury since the minor
was not lawfully employed, and the damage award can be doubled.
Note that Maryland''s anti-discrimination law
prohibits discrimination based on age; it is illegal for an employer to have a
policy of refusing to hire anyone under 18 years of age.
Losing Exempt Status of Exempt Employees
If an exempt employee''s pay is subject to
deductions for absences of less than one day, the employee may lose her exempt
status and become an hourly employee. This is known as the "pay
docking" rule. The rule also applies where the employee is allowed to take
leave time in increments of less than one full day. An exception to this rule
was created by the regulations issued under the Family and Medical Leave Act
("FMLA"). 29 C.F.R. 825.206. Under those regulations, deductions of
less than one day can be made without losing the salary status of an exempt
employee so long as the deduction relates to unpaid leave being taken under
that particular law. Of course, to qualify for this exception, the employee
must be eligible for FMLA leave.
Another issue that arises under the wage and
hour laws regarding exempt employees is whether the payment of extra
compensation for overtime or increases in production affects an employee''s
exempt status. As discussed above, the Department of Labor''s regulations
prohibit reductions in the pay of exempt employees because of variations in the
quality or quantity of work performed, but increases in compensation because of
variations in the quantity or quality of work are not expressly prohibited.
Some courts have held that receiving
additional compensation for overtime work does not jeopardize salaried status
as defined by Department of Labor regulations.
The Labor Department''s position is that
"extra compensation may be paid for overtime to an exempt employee on any
basis. The overtime payment need not be at time and one-half, but may be at
straight time, or flat sum, or on any other basis." Wage and Hour Division
Field Operations Handbook.
Telecommuting Employees
A problem facing employers today is ensuring
that they comply with the FLSA for employees who "telecommute" (i.e.,
employees who perform their jobs at home on personal computers and communicate
with their employers and submit their computer work product to their employer
using telecommunications devices, such as modems and the Internet.)
The regulations issued under the FLSA have
long required employers to compensate employees for work performed off the
worksite, even if performed at the employee''s home. 29 C.F.R. § 785.12. In
today''s digital age, where telecommuting has become a more feasible and
attractive option for both employees and employers, employers must be cautious
of the risks attendant to allowing employees to work from home.
For example, the recordkeeping requirements
of the FLSA that facilitate proper payment of employees can become particularly
problematic when an hourly employee works at home. Another potential problem is
that a telecommuting employee may work an excessive number of overtime hours;
in this case, the employer would be obligated to pay the employee for those hours.
To avoid some of the problems associated
with telecommuting employees, employers should create an accurate system for
documenting the time worked by nonexempt telecommuting employees, including
their overtime. For example, computer generated reports that show login times
and hours logged in could be effective for clerical workers, accounting staff,
and word processors.
If an employer permits telecommuting, the
employer is responsible for monitoring the telecommuters'' hours and taking
steps to restrict them if appropriate. The employer should develop a written
agreement with the telecommuting employee that provides that the employee is
not to work more than a certain number of hours per week without prior approval
from her supervisor.
Another problem is that the employee''s
status could be jeopardized by the employer''s system for monitoring the work of
an exempt employee who telecommutes. To be exempt from the minimum wage and
overtime requirements of the FLSA, an employee''s salary must not be "subject
to reduction because of variations in the quality or quantity of the work
performed." In addition, for most exempt classifications, the employee
also must maintain a certain degree of independence and decision-making
authority. If these tests are not met, the employee''s exempt status may be
compromised.
An employer who allows employees to
telecommute should:
Direct
Deposit
The
Maryland Wage Payment and Collection Law authorizes an employer to offer
employees the opportunity to have their wages directly deposited into their
bank accounts. Md. Code Ann., Lab. & Empl. § 3-502(d). The employer may
not, however, require employees to participate in a direct deposit program as a
condition of employment. Md. Att''y Gen. Op. No. 94-011 (Feb. 18, 1994).
Special
Rules for Computer Personnel
A
1996 amendment to the FLSA provides that certain computer-related employees are
exempt from the minimum wage requirements. 29 U.S.C. 213(a)(17). Those who
qualify are computer systems analysts, computer programmers, software
engineers, or other similarly skilled workers whose primary duties are:
i. the application of
systems analysis techniques and procedures, including consulting with users, to
determine hardware, software, and system functional specifications;
ii. the design,
development, documentation, analysis, creation, testing, or modification of
computer systems or programs, including prototypes, based on and related to
user or system design specifications;
iii. the design,
documentation, testing, creation, or modification of computer programs related
to machine operating systems; or
iv. a combination of the
aforementioned duties, the performance of which requires the same level of
skills, and who, in the case of hourly employees, are compensated at a rate of
not less than $27.63 an hour.
The
exemption does not include employees engaged in the operation of computers or
in the manufacture, repair, or maintenance of computer hardware and related
equipment, or employees whose work is highly dependent upon, or facilitated by,
the use of computers and computer software programs, but who are not in
computer systems analysis and programming occupations. 29 CFR 541.303(d).
Special
Rules for Other Specific Jobs
The
FLSA contains several exceptions that apply to other specific jobs or
industries. Employers should check whether any of these exceptions applies to
their industry or to some or all of their employees. Following is a nonexhaustive
list of some of the exceptions:
Certain agricultural
workers are exempt from the overtime pay and minimum wage requirements; others
are exempt from the FLSA''s child labor provisions;
Certain employees
involved in fishing and marine product processing are exempted from the minimum
wage and overtime pay requirements of the FLSA;
Employees who are
subject to Transportation Department regulation under the Motor Carrier Act are
exempt from the overtime, but not the minimum wage, provisions of the FLSA;
Employees of newspapers
and other print periodicals with a circulation less than 4,000 are exempt from
the minimum wage and equal pay requirements of the FLSA;
Other exemptions apply
to certain employees in the motion picture industry, the petroleum distribution
industry, and the lumbering, logging and forestry industry.
Kollman & Sheehan, P.A. ©
Copyright 2000
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Mr. VanDeusen has
been a partner with Kollman & Sheehan, P.A. since 1996 and is also in
association with HRLawForum.com, LLC., providing free forums for the
professional HR Manager.
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