So, a couple of weeks ago I get a letter from the DOL Wage and Hour Division. We were “selected” for a Wage and Hour investigation. Will drivers compensation be an issue? Will the DOL jump and scream as Mr. Gregster has forewarned? Stay tuned!
Is the investigator named Greg? :mrgreen:
If you’re paying them at least minimum wage, or between what you’re paying them plus their reported tips is greater than minimum wage, i dont think you’ll have a problem. Now if they have substantial unreported tips that you know about, that might become an issue.
That’s an IRS issue not a DOL issue. All the DOL cares about tips is that if tip credit is used that tips do infact make up the differance between the cash wage and minimum wage. Normally Credit Card tips alone do that even if drivers do not report their cash tips. If you use tip pooling, that will be looked at also.
The DOL is notiours for not enforcing their own mileage reimbursment rules, but they will enforce that min wage persons must not pay for their own uniforms or other required clothing.
The most frequent cases I see the DOL investigation is improper payment of overtime or hours worked ‘off the clock’. It is very common that the DOL finds that assistant managers are in fact ‘non exempt’ salaried employees but are in fact required to be paid overtime like regular employees because the vast majority of their time is in fact as a worker themselves and not managerial in nature.
AboutServicesTrainingContactArchivesHome > Both Exempt and Non-Exempt >
Employees Are Exempt or Non-Exempt - Not Both
Posted on November 24, 2009 by Matthew B. Wolin, Esq.
Since â€œexemptâ€ employees are not covered by the overtime pay regulations, they do not have the possibility of collecting overtime wages to earn additional money. Many, however, would be happy to take on an extra job for their employer in exchange for more pay. With businesses reluctant to expand payrolls or fill vacant positions during this time of economic uncertainty, it would seem like a win-win situation: the company gets a job done by a proven employee who already knows the organization; the employee gets extra pay.
It is win-winâ€¦if it is handled correctly.
Often, the employeeâ€™s second job will be a non-exempt position, such as a technical, production, or lower-level administrative role which can be done part-time. When that happens, it would seem logical to pay the employee at the appropriate hourly rate for the additional work. The employee is considered â€œexemptâ€ with regard to their original job, and â€œhourly non-exemptâ€ for their additional position. However, that is exactly what a business should not do. Employees cannot be classified as partially exempt and partially non-exemptâ€”they are one or the other.
A Department of Labor FLSA opinion letter provides guidance and discusses the inverse situation. In that case, a non-exempt employee assumed exempt responsibilities in addition to her regular job. The DOL said that the employeeâ€™s responsibilities should not be looked at as two different jobsâ€”instead, the â€œcharacter of the employeeâ€™s job as a wholeâ€ needed to be analyzed to see whether the entire position is exempt or non-exempt. The key is whether the employeeâ€™s â€œprimary dutyâ€ consists of exempt work. If it does, the employee is exempt from the overtime pay requirements; if not, the employee is non-exempt and must be paid overtime wages. (And note: overtime pay would not be just on the time spent performing the additional duties, but on any hours worked over 40 in a work week.)
What should an employer do when an employee works two differently classified â€œjobsâ€? First, consider that all employees for your company have only one jobâ€”although the job may consist of diverse tasks. If an exempt employee wants to take on non-exempt functions, rather than cast it as two separate jobs, rewrite the employeeâ€™s exempt job description to encompass all of their duties. Take care to not allow the non-exempt portion to require 50% or more of their time, as this factor could render the entire position non-exempt. Then, figure out what the company should pay this employee for the totality of his or her work and increase the positionâ€™s salary accordingly. That way, the employee can be compensated for his or her additional work without compromising an exempt status, and the company avoids yet another overtime pitfall.
Fixed Sum for Varying Amounts of Overtime: A lump sum paid for work performed during overtime hours without regard to the number of overtime hours worked does not qualify as an overtime premium even though the amount of money paid is equal to or greater than the sum owed on a per-hour basis. For example, no part of a flat sum of $180 to employees who work overtime on Sunday will qualify as an overtime premium, even though the employees’ straight-time rate is $12.00 an hour and the employees always work less than 10 hours on Sunday. Similarly, where an agreement provides for 6 hours pay at $13.00 an hour regardless of the time actually spent for work on a job performed during overtime hours, the entire $78.00 must be included in determining the employees’ regular rate.
Salary for Workweek Exceeding 40 Hours: A fixed salary for a regular workweek longer than 40 hours does not discharge FLSA statutory obligations. For example, an employee may be hired to work a 45 hour workweek for a weekly salary of $405. In this instance the regular rate is obtained by dividing the $405 straight-time salary by 45 hours, resulting in a regular rate of $9.00. The employee is then due additional overtime computed by multiplying the 5 overtime hours by one-half the regular rate of pay ($4.50 x 5 = $22.50).
Overtime Pay May Not Be Waived: The overtime requirement may not be waived by agreement between the employer and employees. An agreement that only 8 hours a day or only 40 hours a week will be counted as working time also fails the test of FLSA compliance. An announcement by the employer that no overtime work will be permitted, or that overtime work will not be paid for unless authorized in advance, also will not impair the employee’s right to compensation for compensable overtime hours that are worked.
You may also find this useful:
http://hr.blr.com/HR-news/Compensation/ … -for-Empl/
(There are good links in the original article)
March 12, 2010
[size=5]Top 10 Wage and Hour Investigation Issues for Employers[/size]
The Department of Labor’s Wage Hour Division conducts wage and hour investigations for a number of reasons, all having to do with enforcement of the laws and assuring an employer’s compliance. During a wage and hour investigation, employers may be called on to produce records and answer questions regarding a wide variety of issues. The significant issues that may be raised by an investigation are listed below:
1.Minimum Wage: The federal minimum wage in 2010 is $7.25 per hour. The Fair Labor Standards Act (FLSA) requires employers to pay nonexempt employees at least the minimum wage for all hours they work. State laws may require a higher minimum wage than the federal requirement. For example, California’s minimum wage is $8 per hour. (See state comparison chart Minimum Wage Rates, by State)
2.Overtime Laws: The FLSA requires enterprises engaged in interstate or foreign commerce and state and local governments to pay overtime of 1.5 times an employee’s regular rate of pay for hours worked in excess of 40 hours in a workweek. (See FLSA–What Supervisors Need to Know training presentation.)
3.Exempt Employees: The FLSA exempts broad categories of “white-collar” jobs from minimum wage and overtime requirements if they meet certain tests regarding job duties and are paid a certain minimum salary. These categories of employees are commonly known as “exempt” employees and include executive, administrative, professional, and outside sales personnel, as well as certain specialized computer personnel, certain highly compensated employees, certain retail sales employees, and employees covered by the Motor Carrier Act (MCA). Employers often get into trouble with the DOL when they have misclassified their employees as exempt from overtime. (See the FLSA Exemption Checklist.)
4.Rcordkeeping: Employers are required to make, keep, and preserve employees’ records, including wages earned and hours worked, for a specified period of time. Although there is no particular form for the records, they must include certain identifying information about each employee and accurate data about the hours worked and wages earned.
5.Child Labor : The child labor provisions of the FLSA prohibit employers from hiring minors (individuals under the age of 18) to work at dangerous occupations, for an excessive number of hours, and at unsuitable times of the day or night. States also have child labor laws and when state and federal laws differ, the stricter law applies. In addition, there are rules on proof of age, minors driving motor vehicles, minimum wage rates, children working in agriculture, and work under federal contracts.
6.Paychecks: The payment of wages is regulated by federal and state law. Employers must pay wages in cash or its equivalent, and direct deposit is gaining in popularity as a convenient method for paying wages. In addition to the method of payment, state laws also regulate how frequently employees must be paid. Many states have laws regarding the payment of wages upon the termination of employment, including accrued vacation, and these rules often differ depending on whether the termination is voluntary or involuntary.
7.Notices and Postings : Every employer subject to the minimum wage provisions must post a notice in conspicuous places in every division where employees work. If workers are not subject to minimum wage provisions because of an exemption in FLSA, then the notice may be modified to state that overtime provisions do not apply in certain situations.
8.Rest Periods: Federal law does not require rest or meal periods, but it does set standards for when work breaks, including meal periods, rest periods, and sleeping time, must be counted as paid work time. The laws of some states do require that paid and/or unpaid rest and meal periods must be provided.
9.Deductions from Pay: The federal law on deductions from pay contains few restrictions when compared to the laws in many states. Under federal law, almost any deduction is permitted, even if it reduces the employee’s pay below the minimum wage in some cases. Certain deductions may specifically reduce pay below the minimum. However, there are a number of deductions that may not be made if they result in pay that is less than the minimum wage. These rules apply only to nonexempt employees who are covered by minimum wage requirements. In general, deductions from pay should be made only where required by law or authorized in writing by the employee. Deductions from the pay of exempt employees are only allowed in a few, very specific situations.
10.Equal Pay: Two federal statutes prohibit gender-based differences in pay: the Equal Pay Act of 1963 (EPA) and Title VII of the Civil Rights Act of 1964 (Title VII). The EPA prohibits differentials in pay that are based primarily on gender. Employers covered by the EPA must ensure that male and female employees are paid equal wages for performing substantially equal jobs. Title VII requires the same equal treatment of employees regardless of gender. (see Federal Laws on Compensation Checklist.)
If I were as evil as you all thought I wouldn’t be posting all of this information that might just save you thousands of dollars one day. I don’t hate pizza shop owners. I hate pizza shop owners who knowingly don’t fairly compensate their employees IAW applicable laws. For the majority here that are in compliance I hope you know my posts are not directed to you. For those who are not, you might view me as your worst enemy, but the information I provide should make me your best friend to prevent a costly lawsuit or hefty fines, penalties, and years of back wages being paid which might sink your cherished business you’ve invested years if not decades into.
Small business is the key to the American economy. Starting a running a small business is likely one of the most demanding jobs around. You guys and gals are heroes and patriots in that regard. If you find however that the only way to ‘make it pay’ is to skim money rightfully belonging to employees even after you knew better, you deserve whatever is coming to you.
Iâ€™m not a lawyer by the way, but I read a heck of a lot of legal stuff on these issues. I strongly recommend that you have an attorney and accountant well versed in LABOR LAWS (not tax laws which is an entirely different specialty) review you situation before you make any changes. Hopefully the information I post helps you ask â€˜smarterâ€™ questions.
Good luck on your audit.
Here is an excellent example:
[size=5]Judge finds for plaintiff in labor lawsuit against Pizza Hut[/size]
23 Sep 2004
NEWPORT BEACH, Calif. â€” U.S. District Court (Central District of California) Judge Terry J. Hatter, Jr. ruled that Pizza Hut violated labor laws by improperly classifying a restaurant manager as an executive.
According to a news release from lawyers representing Ann Coldiron, the plaintiff in the case, Pizza Hut violated the Fair Labor Standards Act by misclassifying her as an exempt employee. The exemption kept Coldiron from receiving overtime pay while working as a “Restaurant General Manager” for Pizza Hut.
Coldiron, represented by Castle, Petersen & Krause LLP, wants to recover unpaid overtime wages she claims she’s due. In the release, her attorney’s stated, “Despite the executive sounding title of RGM, Coldiron, and others similarly situated, were misclassified as exempt as their primary or principal duties were non-managerial.”
According to the release, approximately 90 percent of RGMs’ working time is spent performing production-related, non-exempt tasks alongside subordinates they supervised. Those tasks include making pizzas, taking telephone orders and cleaning the facilities. Coldiron and her management counterparts worked in excess of 50 hours per week without overtime pay.
A Pizza Hut representative was not available for comment at press time.
In May the Court granted Coldiron’s Motion for Class Certification of the suit, which would include all current and former Pizza Hut employees nationwide employed as an RGM or Restaurant Training Manager at any time between August 18, 2000 and the present, to seek damages in the form of unpaid overtime from Pizza Hut.
Some 3,100 approved potential litigants currently have the opportunity to opt into the class during the discovery phase. After that the class must be certified as proper or not before proceeding to negotiation or trial.
Should the class be certifed, it will seek damages in the amount of time and one-half for all hours worked more than 40 per week, plus penalties. Double damages, the release said, may be granted for up to the three-year time period and could reach upwards of $100,000 per class member.
Coldiron’s counsel estimates the potential recovery for the class could reach $300 million.
And here is the result:
http://www.allbusiness.com/legal/legal- … 214-1.html
Lawfirm Castle, Petersen & Krause Announces Court Denied Defendant’s Motions for Appeal on…
Publication: Business Wire
Date: Friday, October 1 2004
NEWPORT BEACH, Calif. – Castle, Petersen & Krause LLP:
–Federal Judge Rules against Pizza Hut in Overtime Case: Restaurant Chain is Unsuccessful in Its Latest Attempts to Seek Appeal of a Recent Loss in the Class Action Case Brought against Them by Managers for Unpaid Overtime
In an Order entered on Sept. 17, 2004, the U.S. District Court denied Pizza Hut’s Motions for reconsideration and immediate appeal of a previous ruling on July 15, 2004, in a nationwide class action case filed by their current and former Restaurant General Managers (RGMs) and Restaurant Training Managers (RTMs) for unpaid overtime, according to Lawfirm Castle, Petersen & Krause LLP.
On July 15, 2004, Judge Terry J. Hatter Jr. of the U.S. District Court for the Central District of California ruled that Pizza Hut Inc. misclassified its RGMs and RTMs as exempt employees, even though the vast majority of their time was spent making pizzas, taking orders, providing customer service, cleaning the store and performing other production-related, non-exempt tasks. This ruling entitles Pizza Hut RGMs and RTMs to overtime compensation for all hours worked over 40 hours in any given workweek.
Castle, Petersen & Krause LLP originally brought the case to court on behalf of Ann Coldiron, a former RGM for Pizza Hut, to recover unpaid overtime wages. Coldiron and other similarly situated current and former RGMs and RTMs worked in excess of 50 hours per week without overtime pay.
As a result of the recent Sept. 17 ruling, the case will now progress to the phase in which the amounts of unpaid overtime Pizza Hut owes its current and former RGMs and RTMs will be determined. A successful prosecution of this case will result in each current and former RGM and RTM standing to collect a substantial sum of money from Pizza Hut for all of the unpaid overtime hours they worked.
Based on information currently available, current and former RGMs and RTMs who have joined this action are entitled to approximately $100,000 each. In order to be eligible to collect the unpaid overtime compensation, the current and former employees must sign-up to join this action as a plaintiff.
The current estimation of the total overtime wages Pizza Hut owes its current and former RGMs and RTMs is approximately $300 million. The courts have allowed similar class actions against other large corporations such as Wal-Mart, Taco Bell, Lowes, Farmers Insurance, Paine Webber and Radio Shack, because management avoided federally mandated overtime pay to its employees by granting managerial-sounding titles.
Pizza Hut settles overtime suits for $12.5 million
05 Jul 2006
The Courier-Journal: Pizza Hut has agreed to pay $12.5 million to settle two class-action lawsuits involving overtime pay for managers at its company-owned restaurants.
The deal would end a federal lawsuit claiming Pizza Hut improperly classified restaurant managers as exempt from overtime pay, even though most of their duties involved handling food, ringing up checks and cleaning up, much like workers who get overtime.
Just out of curiosity, how were you selected. I could understand if a complaint were filed and they were compelled to investigate although I am still too stupid to understand how the Federal Government gets the authority in the interstate commerce clause to regulate a business relationship between you and your employees all taking place inside one building. What frightens my libertarian heart is if you were randomly selected to prove you have not violated the law with no probable cause or complaint… it just sounds a little bit too much on the wrong side of the Constitution that we are supposed to be governed by.
In Oregon, every business is supposed to have this kind of audit, I believe, every six(?) years. I have had at least four or five, over the years. They weren’t anything exciting, just a review of records that you should have anyway. But we don’t do any of the stuff that people get in trouble for. Pay people what you are required to, and don’t think you can dance around the rules, and you’ll be fine. The stupidest thing people do, in business, is think, “No one will ever check this.” You have to assume that someone WILL check all your records, and act accordingly.