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· Complying with local, state and federal employment laws and regulations
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Real Workplace Issues
November 2010
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Greetings!
As we near the end of 2010, we remind employers that the end of the calendar year is an ideal time to audit Human Resources practices for compliance with the wide array of employment laws that affect the workplace.
In this edition of "Real Workplace Issues," we review several major employment law topics that should be the focus of every end-of-the-year compliance audit.
As always, feel free to contact us should you require any assistance, or have any questions regarding the information contained in this newsletter. |
As always, feel free to contact us should you require any
assistance, or have any questions regarding the information contained in this
newsletter.
Sincerely,
Jules Z. Halpern
Halpern Employment Law Advisors
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REVIEW EXEMPT CLASSIFICATIONS AND SALARY DEDUCTION PRACTICES
Whether an employee is exempt from being paid overtime depends on whether that employee meets the requirements for an exemption under federal and applicable state laws.
Oftentimes, employers think employees are exempt and do not need to be paid overtime simply because they are paid on a salary basis. Legally, however, an employee must satisfy multiple specific criteria in order to qualify for an exemption under federal/state law. Furthermore, even where an employee meets these criteria, improper deductions from the salary of an exempt employee can result in the loss of the exemption, and the employer could be liable for unpaid overtime wages.
Subject to certain exceptions, exempt employees must receive their full salary for any week in which the employee performs any work, regardless of the number of days or hours worked. Improper salary deductions typically occur where the employer makes deductions from an exempt employee's predetermined salary because of the operating requirements of the business. Some common examples of improper salary deductions under the Fair Labor Standards Act (FLSA) are as follows:
- A deduction of a day's pay because the employer was closed due to inclement weather;
- A deduction of three days' pay because the exempt employee was absent for jury duty;
- A deduction for a two-day absence due to a minor illness when the employer does not have a bona fide sick leave plan, policy or practice of providing wage replacement benefits; and
- A deduction for a partial day absence to attend a parent-teacher conference.
However, not all salary deductions are impermissible under the FLSA. Employers may make deductions from an exempt employee's salary in the following circumstances:
- When an employee is absent from work for one or more full days for personal reasons other than sickness or disability;
- For absences of one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness;
- To offset amounts employees receive as jury or witness fees, or for temporary military duty pay;
- For penalties imposed in good faith for infractions of safety rules of major significance;
- For unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions;
- In the employee's initial or terminal week of employment if the employee does not work the full week, or
- For unpaid leave taken by the employee under the federal Family and Medical Leave Act.
Reviewing exempt classifications and salary deduction practices now, before an issue surfaces, can save employers a great deal of time and money down the road. |
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UPDATE EMPLOYEE HANDBOOKS TO REFLECT CHANGES IN WORKPLACE LAW
State law is constantly evolving and new laws are passed every year that affect the workplace. Employers should update their employee handbooks to reflect new state laws, particularly those that have posting requirements. (Employers should also ensure their labor posters are up-to-date and displayed in an area that is accessible to all employees. "All-in-one" posters may be purchased from a reputable supplier.)
New York employers in particular have a host of laws to reference (or consider referencing) in their employee handbooks, including state-specific leave laws (e.g., blood donation leave, bone marrow donation leave, family military leave, voting leave) and the New York Employee Personal Identifying Information law (which governs the proper use and disclosure of personal identifying information such as Social Security Numbers).
In addition, under New York Civil Service Law § 79-n, employers who provide employees funeral or bereavement leave for the death of an employee's spouse or the child, parent or other relative of the spouse must now provide the same leave to an employee for the death of the employee's same-sex committed partner or the child, parent or other relative of the committed partner.
Other policies, such as those governing electronic communications and social networking, should be updated to reflect both advances in technology and developing case law. For example, on October 27, 2010, the National Labor Relations Board's (NLRB's) Hartford Connecticut regional office filed a complaint against American Medical Response of Connecticut (AMR), whose social media policy allegedly prohibited employees from making online posts that disparaged the employer or its supervisors, and generally prohibited employees from making any references to the employer over the Internet without the employer's permission. In its complaint, the the NLRB argues that AMR's policy interferes with an employee's right to engage in protected, concerted activity (i.e.., the right to discuss the terms and conditions of their employment with other employees or non-employees) under Section 7 of the National Labor Relations Act (NLRA). While the NLRB has not yet ruled on this case, all employers (even those who are not unionized) should watch this case closely and re-consider whether their workplace rules and policies are overly broad so as to prohibit any and all employee discussion of the employer via social media. Such policies will likely be considered overbroad and in violation of the NLRA.
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REVIEW INDEPENDENT CONTRACTOR CLASSIFICATIONS
Unfortunately for employers, there is no universal definition of an "independent contractor," and different laws and government agencies (e.g., Internal Revenue Service, U.S. Department of Labor) utilize different fact-specific tests when determining whether an individual is an independent contractor or an employee.
The IRS test, for example, focuses on "control" to determine if the worker is an employee or independent contractor. More specifically, the IRS examines behavioral control (i.e., does the company control or have the right to control what the worker does and how the worker does his or her job?), financial control (e.g., how the worker is paid, whether expenses are reimbursed, who provides tools/supplies), and the type of relationship between the parties (e.g., whether there is a written independent contractor agreement, whether the worker receives benefits, whether the work performed by the worker is a key aspect of the business).
The U.S. DOL, on the other hand, focuses on the "economic realities" of the relationship, including:
1. The extent to which the worker's services are an integral part of the employer's business (e.g.,Does the worker play an integral role in the business by performing the primary type of work that the employer performs for his customers or clients? Does the worker perform a discrete job that is one part of the overall process of production? Does the worker supervise any of the company's employees?);
2. The permanency of the relationship (e.g., How long has the worker worked for the same employer?);
3. The amount of the worker's investment in facilities and equipment (e.g., Is the worker reimbursed for any purchases or materials, supplies, etc.? Does the worker use his or her own tools or equipment?);
4. The nature and degree of control by the principal (e.g., Who decides the working hours? Who is responsible for quality control? Does the worker work for any other employers? Who sets the pay rate?);
5. The worker's opportunities for profit and loss (e.g., Did the worker make any investments such as insurance or bonding? Can the worker earn a profit by performing the job more efficiently or exercising managerial skill or suffer a loss of capital investment?); and
6. The level of skill required in performing the job and the amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent enterprise (e.g.,: Does the worker perform routine tasks requiring little training? Does the worker advertise independently via yellow pages/the Internet, business cards, etc.? Does the worker have a separate business site?).
Employers should work with legal counsel to review their independent contractor classifications and independent contractor agreements for legal compliance. |
REVIEW FORM I-9S
All current employees must have completed I-9s on file. Employers are also required to maintain the I-9 forms of former employees for the later of three years from the date of hire, or one year from the date of termination.
The form I-9s should be inspected to ensure they are completed properly. Deficiencies and missing information should be corrected, dated and initialed by either the employee (Section 1 of the form) or the employer (Section 2 of the form).
Any I-9s for terminated employees that do not need to be maintained should be purged. |
Exempt wage and hour classifications, independent contractors, I-9 forms and employee handbooks are just some of the many areas that we suggest employers review to ensure legal compliance as we move into the New Year. Halpern Employment Law Advisors is available to assist employers in conducting employment law audits. |
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This newsletter is provided for informational purposes only and is neither intended to be legal advice nor does it create an attorney-client relationship between Halpern Employment Law Advisors and any reader.
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