Feb 27, 2019 | Overtime & Wages
Under the Fair Labor Standards Act (“FLSA”), Can Uniforms or Other Items Primarily for the Benefit of the Employer Be Included as Wages?
The FLSA does not allow uniforms, or other items which are considered to be primarily for the benefit or convenience of the employer, to be included as wages. Thus, an employer may not take credit for such items in meeting his/her obligations toward paying the minimum wage or overtime.
FLSA Requirements for Uniforms and Other Items
Uniforms: The FLSA does not require that employees wear uniforms; however, if the wearing of a uniform is required by some other law, the nature of a business, or by an employer, the cost and maintenance of the uniform is considered to be a business expense of the employer. If the employer requires the employee to bear the cost, it may not reduce the employee’s wage below the minimum wage of $7.25 per hour effective July 24, 2009 – nor may that cost cut into overtime compensation required by the FLSA.
For example, if an employee who is subject to the statutory minimum wage of $7.25 per hour (effective July 24, 2009) is paid an hourly wage of $7.25, the employer may not make any deduction from the employee’s wages for the cost of the uniform nor may the employer require the employee to purchase the uniform on his/her own. However, if the employee were paid $7.75 per hour and worked 30 hours in the workweek, the maximum amount the employer could legally deduct from the employee’s wages would be $15.00 ($.50 X 30 hours).
The employer may prorate deductions for the cost of the uniform over a period of paydays provided the prorated deductions do not reduce the employee’s wages below the required minimum wage or overtime compensation in any workweek.
Other Items: Employers at times require employees to pay or reimburse the employer for other items. The cost of any items which are considered primarily for the benefit or convenience of the employer would have the same restrictions as apply to reimbursement for uniforms. In other words, no deduction may be made from an employee’s wages which would reduce the employee’s earnings below the required minimum wage or overtime compensation.
Some examples of items which would be considered to be for the benefit or convenience of the employer are tools used in the employee’s work, damages to the employer’s property by the employee or any other individuals, financial losses due to clients/customers not paying bills, and theft of the employer’s property by the employee or other individuals. Employees may not be required to pay for any of the cost of such items if, by so doing, their wages would be reduced below the required minimum wage or overtime compensation. This is true even if an economic loss suffered by the employer is due to the employee’s negligence.
Employers may not avoid FLSA minimum wage and overtime requirements by having the employee reimburse the employer in cash for the cost of such items in lieu of deducting the cost from the employee’s wages.
Examples of Employee Reimbursement Issues
A minimum wage employee working as a cashier is illegally required to reimburse the employer for a cash drawer shortage.
An employer improperly requires tipped employees to pay for customers who walk out without paying their bills or for incorrectly totaled bills.
An employer furnishes elaborate uniforms to employees and makes them responsible for having the uniforms cleaned.
An employee driving the employer’s vehicle causes a wreck, and the employer holds the employee responsible for the repairs, thereby reducing the employee’s wages below the minimum wage.
A security guard is required to purchase a gun for the job, and the cost causes him/her to not earn the minimum wage.
The cost of an employer-required physical examination cuts into an employee’s minimum wage or overtime.
Source: U.S. Department of Labor. According to the Department of Labor, the aforementioned is for general information and is not to be considered in the same light as official statements of position contained in regulations.
Feb 27, 2019 | Overtime & Wages
Restaurant and Fast Food Employees: Application of the Fair Labor Standards Act (“FLSA”) to Restaurant and Fast Food Employees
The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in federal, state, and local governments. Covered nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour effective July 24, 2009. After 40 hours of work in a workweek, pay at a rate not less than one and one-half times the regular rate of pay is required.
Restaurant and Fast Food Establishment Characteristics
The restaurant/fast food industry includes establishments that are primarily engaged in selling and serving to purchasers prepared food and beverages for consumption on or off the premises.
Restaurants/fast food businesses with annual gross sales from one or more establishments that total at least $500,000 are subject to the FLSA. Also, any person who works on or otherwise handles goods that are moving in interstate commerce is individually subject to the minimum wage and overtime protection of the FLSA. For example, a waitress or cashier who handles a credit card transaction would likely be subject to the FLSA.
Restaurant and Fast Food Establishment Wage and Labor Requirements
Minimum wage: Covered non-exempt workers are entitled to a federal minimum wage of not less than $7.25 per hour effective July 24, 2009. Wages are due on the regular payday for the pay period covered. Deductions made from wages for items such as cash shortages, required uniforms, or customer walk-outs are illegal if the deduction reduces the employee’s wages below the minimum wage or cuts into overtime pay. Deductions made for items other than board, lodging, or other recognized facilities normally cannot be made in an overtime workweek. Tips may be considered as part of wages, but the employer must pay not less than $2.13 an hour in direct wages and make sure that the amount of tips received is enough to meet the remainder of the minimum wage.
Food Credit: The employer may take credit for food which is provided at cost. This typically is an hourly deduction from an employee’s pay. However, the employer cannot take credit for discounts given employees on food (menu) prices.
TIPS: Tipped employees are those who customarily and regularly receive more than $30 a month in tips. Employees must be informed of the provisions of FLSA section 3(m) in advance if the employer elects to use the tip credit. Also, employees must retain all of their tips, except to the extent that they participate in a valid tip pooling or sharing arrangement.
Overtime: Overtime must be paid at a rate of at least one and one-half times the employee’s regular rate of pay for each hour worked in excess of 40 hours per week. In determining the regular rate for a tipped employee, all components of the employee’s wages must be considered (i.e., cash, board, lodging, facilities, and tip credit).
Some Typical Restaurant and Fast Food Establishment Wage and Labor Problems
If uniforms are required by the employer the cost of the uniform is considered to be a business expense of the employer. If the employer requires the employee to bear the cost, such cost may not reduce the employee’s wages below the minimum wage or cut into overtime compensation. When an employer claims an FLSA 3(m) tip credit, the tipped employee is considered to have been paid only the minimum wage for all non-overtime hours worked in a tipped occupation and the employer may not take deductions for walkouts, cash register shortages, breakage, cost of uniforms, etc., because any such deduction would reduce the tipped employee’s wages below the minimum wage.
Exemptions from Overtime: Section 13(a)(1) of the FLSA provides an exemption from FLSA monetary requirements for an employee employed in a bona fide executive, administrative or professional capacity or as an outside salesperson. An employee will qualify for exemption if all pertinent tests relating to duties, responsibilities and salary, as set forth in Regulations, 29 CFR Part 541, are met. The salary and duties tests for the exemptions are fully described in Regulations Part 541.
Source: U.S. Department of Labor. According to the Department of Labor, the aforementioned is for general information and is not to be considered in the same light as official statements of position contained in regulations.
Apr 17, 2018 | Overtime & Wages
Fair Labor Standards Act & Higher Education Overtime Compensation
The Fair Labor Standards Act requires that a non-exempt employee receive minimum wages, as well as overtime pay whenever he or she works more than 40 hours in a workweek.
Section 13(a)(1) of the FLSA, however, exempts certain employees who perform bona fide executive, administrative, professional, and outside sales duties from minimum wage and overtime requirements. These exemptions are often called the “white collar” exemptions.
General Requirements for the “White Collar” Exemption
To qualify for a “white collar” exemption, an employee must generally satisfy three tests:
- The employee must be paid on a salary basis that is not subject to reduction based on the quality or quantity of work (the “salary basis test”), rather than, for example, on an hourly basis;
- The employee must receive a salary at a rate not less than $455 per week (the “salary level test”); and
- The employee’s primary duty must involve the kind of work associated with the exempt status sought, such as executive, administrative, or professional work (the “duties test”).
NOTE: The U.S. Department of Labor is undertaking rulemaking to revise the regulations located at 29 C.F.R. part 541, which govern the exemption of executive, administrative, and professional employees from the FLSA’s minimum wage and overtime pay requirements. Until the Department of Labor issues its final rule, it will enforce the part 541 regulations in effect on November 30, 2016, including the $455 per week standard salary level.
Various Types of Exemptions for Common Higher Education Jobs
Teacher Exemption
A teacher is exempt if his or her primary duty is teaching, tutoring, instructing, or lecturing to impart knowledge, and if he or she is performing that duty as an employee of an educational establishment. See 29 C.F.R. § 541.303.
Educational establishments include elementary school systems, secondary school systems, institutions of higher education, and other educational institutions. See 29 C.F.R. § 541.204(b).
If a bona fide teacher meets this duty requirement, the salary level and salary basis tests do not apply. See 29 C.F.R. §§541.303(d), 541.600(e). Given these standards, professors, instructors, and adjunct professors typically qualify for this exemption.
A faculty member who teaches online or remotely also may qualify for this exemption. The regulations do not restrict where bona fide teaching may take place, to whom the knowledge can be imparted, or how many hours a teacher must work per week to qualify for the exemption. The exemption, therefore, would ordinarily apply, for example, to a part-time faculty member of an educational establishment whose primary duty is to provide instruction through online courses to remote non-credit learners. The exemption could likewise apply, for example, to an agricultural extension agent who is employed by an educational establishment to travel and provide instruction to farmers, if the agent’s primary duty is teaching, instructing, or lecturing to impart knowledge. To determine a teacher’s primary duty, the relevant inquiry in all cases is the teacher’s actual job duties. Job titles or full/part-time status alone do not determine exempt status.
A teacher does not become non-exempt, merely because he or she spends a considerable amount of time in extracurricular activities (such as coaching athletic teams or supervising student clubs), provided the teacher’s primary duty is teaching.
Athletic Coaches
Athletic coaches employed by higher education institutions may qualify for the teacher exemption. After all, teaching may include instructing student-athletes in how to perform their sport. But a coach will not qualify for the exemption if his or her primary duties are recruiting students to play sports or visiting high schools and athletic camps to conduct student interviews. The amount of time the coach spends instructing student-athletes in a team sport is relevant, but not the exclusive factor, in determining the coach’s exempt status.
Professional Employees
The FLSA provides for several kinds of exempt professional employees—such as learned professionals, creative professionals, teachers, and employees practicing law or medicine. In higher education, employees eligible for the professional exemption are often either teachers (as previously discussed) or learned professionals (as discussed below).
To qualify as a learned professional, the employee must satisfy three requirements:
- The employee’s primary duty must be the performance of work requiring advanced knowledge;
- The advanced knowledge must be in a field of science or learning; and
- The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
See 29 C.F.R. § 541.301. Unless the employee is a teacher or practicing law or medicine, he or she must also satisfy the above-referenced salary basis and salary level tests to be an exempt professional.
In higher education, examples of exempt non-teacher learned professionals generally include certified public accountants, psychologists, certified athletic trainers, and librarians. Postdoctoral fellows, who conduct research at a higher education institution after completing their doctoral studies, likewise generally meet the duties requirements of the learned professional exemption, and they may additionally qualify for the teacher exemption if teaching is their primary duty. Of course, an employee’s qualification for the exemption depends on his or her actual job duties and education. Job titles alone are not sufficient for determining whether an employee satisfies the duties test.
Administrative Employees
Various employees at higher educational institutions may qualify as exempt administrative employees. The administrative exemption applies when the following requirements are met:
- The employee’s compensation must satisfy the above-referenced salary basis and salary level tests;
- The employee’s primary duty must be the 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
- The employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.
See 29 C.F.R. § 541.200. Such administrative employees in higher education might include, for example, admissions counselors or student financial aid officers. An employee’s qualification for the exemption depends on his or her actual job duties; job titles alone are not sufficient for determining whether an employee satisfies the duties test.
Notably, there are specific regulatory provisions for certain administrative employees—known as “academic administrative employees”—whose primary duty is performing administrative functions directly related to academic instruction or training in an educational establishment.
To be exempt as an academic administrative professional:
- The employee must satisfy the above-referenced salary basis and salary level tests or receive a salary of at least the entrance salary for teachers in the same educational establishment; and
- The employee’s primary duty must be to perform administrative functions directly related to academic instruction or training in an educational establishment.
See 29 C.F.R. § 541.204. Employees who work in higher education but whose work does not relate to the educational field (such as work in general business operations) do not qualify as exempt academic administrative employees. See id.
In higher education institutions, exempt academic administrative personnel generally include department heads, intervention specialists who are available to respond to student academic issues, and other employees with similar responsibilities. Exempt administrative personnel would likewise generally include academic counselors who administer school testing programs, assist students with academic problems, and advise students concerning degree requirements. Again, whether an employee satisfies the duties test for these exemptions depends on the employee’s actual job duties, not just the employee’s job title.
Executive Employees
To qualify for the executive exemption, an employee must satisfy the following tests:
- The employee must receive compensation that satisfies the above-referenced salary basis and salary level tests;
- The employee’s primary duty must be managing the enterprise or a customarily recognized department or subdivision thereof;
- The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent (for example, one full-time and two half-time employees); and
- The employee must have the authority to hire or fire other employees, or in the alternative, the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees must be given particular weight.
See 29 C.F.R. § 541.100. Various positions in higher education institutions might qualify for the executive exemption, including deans, department heads, directors, and any other manager or supervisor whose job duties and compensation satisfy the above criteria.
Student-Employees
As a general matter, most students who work for their college or university are hourly non-exempt workers and do not work more than 40 hours per week. The following, however, are examples of students who often receive a salary or other non-hourly compensation:
- Graduate Teaching Assistants. Graduate teaching assistants whose primary duty is teaching are exempt. Because they qualify for the teacher exemption, they are not subject to the salary basis and salary level tests.
- Research Assistants. Generally, an educational relationship exists when a graduate or undergraduate student performs research under a faculty member’s supervision while obtaining a degree. Under these circumstances, the Department would not assert that an employment relationship exists with either the school or any grantor funding the student’s research. This is true even though the student may receive a stipend for performing the research.
- Student Residential Assistants. Students enrolled in bona fide educational programs who are residential assistants and receive reduced room or board charges or tuition credits are not generally considered employees under the FLSA. They therefore are not entitled to minimum wages and overtime under the FLSA.
An employment relationship will generally exist when a student receives compensation and his or her duties are not part of an overall education program. For example, students who work at food service counters, sell programs or usher at events, or wash dishes in dining halls and anticipate some compensation (for example, money or meals) are generally considered employees entitled to minimum wage and overtime compensation.
Compensatory Time at Public Universities
Public universities or colleges that qualify as a “public agency” under the FLSA may compensate non-exempt employees with compensatory time off (or “comp time”) in lieu of overtime pay. A college or university is a public agency under the FLSA if it is a political subdivision of a State. When determining whether a college or university is a “political subdivision,” the Department considers whether (1) the State directly created the entity, or (2) individuals administering the entity are responsible to public officials or the general electorate.
If the public university or college qualifies as a public agency, non-exempt employees generally may not accrue more than 240 hours of comp time. However, employees engaged to work in a public safety activity, an emergency response activity, or a seasonal activity may accrue as much as 480 hours of comp time. See 29 U.S.C. 207(o)(3)(A). Private higher education institutions may not pay employees comp time in lieu of overtime pay.
Source: U.S. Department of Labor, Wage and Hour Division, Fact Sheet #17S: “Higher Education Institutions and Overtime Pay Under the Fair Labor Standards Act (FLSA),” March 2018.
Jul 19, 2017 | Overtime & Wages
Class & Collective Action Lawsuit Filed
Allegheny Technologies, Inc., & Strom Engineering Corporation
Kehoe Law Firm, P.C. and co-counsel have filed a class and collective action lawsuit against Allegheny Technologies, Inc. (“ATI”) and Strom Engineering Corporation (“STROM”) on behalf of replacement workers who worked for these companies between August 2015 and March 2016.
The complaint claims that Strom and ATI violated the Fair Labor Standards Act (“FLSA”) by not paying its employees for their time spent being transported to and across picket lines in front of ATI facilities.
To review a copy of the ATI and Strom Complaint, filed on July 10, 2017, please click here: Filed Complaint ATI and Strom 7.10.17
Lockout Of Approximately 2,200 Employees
ATI, a publicly-traded corporation, manufactures and supplies specialty metals-including steel and other types of materials-for its customers worldwide. On August 15, 2015, ATI instituted a lockout of approximately 2,200 employees, all of whom are covered by various collective bargaining agreements (“CBAs”) with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC (“USW”).
ATI & USW Contract Dispute & Strom’s Temporary Workforce
The lockout occurred due to a contract dispute between ATI and USW. In response to the lockout, the USW mobilized its members to protest ATI’s decision. These protests included picket lines and rallying at plant gates.
Regarding the lockout, ATI contracted with Strom, a privately-held corporation that provides strike and replacement labor for unionized employers throughout the United States, to provide a non-unionized temporary workforce to work at the ATI plants.
ATI and Strom scheduled these replacement workers to work 84 hour workweeks, 12 hours per day, 7 days per week. The replacement workers were required to travel to ATI facilities in vans that were owned, leased, or rented by Strom and driven by the replacement workers. The time spent driving or traveling to and across picket lines to enter the ATI facilities was unpaid.
Plaintiffs allege that the required travel is compensable work time, because it was an integral and indispensable part of their principal work activities.
Replacement Workers
Replacement workers are individuals hired to fill the roles of company employees who are unable to work due to a strike or lockout. They are sent from workplace to workplace by strike replacement companies such as Strom.
Replacement workers are often limited in their ability to organize and advocate for their rights because of the temporary and transient nature of replacement work.
Instead, without job security, the ability to organize, or access to labor protections that are traditionally associated with permanent positions, replacement workers are placed at the mercy of strike staffing agencies and companies whose priorities center on ensuring continuity of their own operations, frequently at the expense of the work conditions and basic rights of the replacement workers.
In addition, replacement workers, who are typically hired from outside the community where a lockout or strike occurs and who need hourly work to support themselves and their families, are often pitted against the union employees they are replacing.
If you are a replacement worker who was employed by Strom and ATI between August 2015 and March 2016 and did not receive payment for your travel time in Strom-operated vans, please contact Kehoe Law Firm, P.C., Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], or send an e-mail to [email protected], to discuss your circumstances, including whether you are eligible to join the lawsuit.
Replacement Worker Lawsuit News
Two news stories regarding the lawsuit can be accessed at:
https://www.bna.com/pay-crossing-picket-n73014461561/
http://triblive.com/local/valleynewsdispatch/12494796-74/ati-replacement-workers-sue-steel-maker-over-commuting-time-during-lockout
Kehoe Law Firm, P.C.
The Kehoe Law Firm, P.C. is a multidisciplinary, plaintiff–side law firm dedicated to protecting investors and consumers from corporate fraud, negligence, and other wrongdoing. Driven by a strong and principled sense of social responsibility and obtaining justice for the aggrieved, Kehoe Law Firm, P.C. represents plaintiffs seeking to recover investment losses resulting from securities fraud, breaches of fiduciary duty, corporate wrongdoing or malfeasance, those harmed by anticompetitive practices, and consumers victimized by fraud, negligence, false claims, deception, data breaches or whose rights to minimum wage and overtime compensation under the federal Fair Labor Standards Act and state wage and hour laws have been violated.
