The SESCO Report – March 2014
Overtime Violations Continue to be Employers' No. 1 Financial Liability
As SESCO conducts labor and employment audits with a focus on complying with the Fair Labor Standards Act (minimum wage, overtime and recordkeeping requirements), overtime violations continue to be a major liability facing employers of all sizes and industries. Further, the Department of Labor has increased its number of investigators by one-third (1/3) creating more enforcement action.
As we explore overtime violations, SESCO has created the following checklist to help HR and payroll staff as well as payroll processing companies in understanding the complexities in complying with the regulations. Please note, to those organizations who utilize an outside third-party to process payroll that your organization will be held liable for all back wages and claims up to three (3) years federal and up to four (4) years plus attorney fees via state claims. Also please note that in our audit practice that violations are equally as common by third-party payroll services as with in-house staff.
The following checklist provides directions to clients to determine whether a wage payment needs to be considered (included) when calculating overtime pay. Remember, overtime pay must be calculated on all wages earned, not just the hourly rate. Thus, overtime must be also calculated as noted below.
• Absences with Pay – Overtime need not be paid for hours not worked even though an employee is paid for such time, as for example absences due to vacations, holidays, illnesses, and time off to vote, and payments for reporting for work when none is available.
• Apprentices/Trainees – Overtime must be paid to apprentices for training time if they are not working under a written agreement, if they do regular or productive work.
• Board and Lodging – Overtime must be paid on the reasonable cost or fair value of board and lodging furnished by the employer if board and lodging are not excluded from wages.
• Bonuses – Overtime must be paid on production and attendance bonuses which employees are entitled to as part of their weekly earnings.
• Call-Back or Call-Out Pay – Overtime need not be paid on call-back or call-out pay that covers hours not worked.
• Changing Clothes – Overtime need not be paid for time spent before and after work in changing clothes for the employee's convenience.
Overtime must be paid for time spent at the beginning or end of the workday if changing clothes is required by the employee's duties or the employer's rules.
• Civic and Charitable Work – Overtime must be paid for charitable work if the employer directs or controls it or if the employee is required to be on the employer's premises.
• Coffee and Snack Breaks (less than 30 minutes) – Overtime must be paid for time in coffee and snack breaks.
• Commissions on Sales – Overtime must be paid on sales commissions earned by nonexempt employees.
• Executive, Administrative, Professional, Outside Sales Employees – Overtime need not be paid exempt employees meeting the qualifications of the exemptions under the Act.
• Expense Accounts – Expense allowances are excludable from computation of the regular rate.
Fixed Wages for Fluctuating Hours – Overtime of only half-time (½), and not time and one-half (1.5), need be paid under employment contracts providing a fixed weekly salary for variable hours worked.
• Hospitals/Nursing Home Organizations – Overtime may be paid to hospital employees on a 14-day basis, rather than a 7-day workweek basis, if the employee agrees to such an arrangement prior to performance of his work and if overtime is paid for hours worked in excess of 8 daily and in excess of 80 during the 14-day period.
• Hours Worked - Overtime need not be paid for time spent on incidental activities before or after the workday which are not an integral part of the employee's regular duties.
• Make-Ready Time – Overtime must be paid for make-ready activities, even though performed at the beginning or the end of the workday, where they are a part of the employee's principal duties, as, for example, cleaning and oiling machinery and replacing parts; keeping tools in shape, distributing work to workbenches, discussing work problems involved in shift changes, etc.
• Meal Periods – Overtime need not be paid for meal periods during which an employee is relieved of all duties for at least one-half hour (30 minutes).
Overtime must be paid for meal periods if the employee is not free of all duties, including inactive duties or the lunch is less than 30 minutes.
• Medical Care – Overtime need not be paid on the cost to the employer of on-the-job medical care furnished to his employees.
Overtime must be paid on time spent during working hours in getting medical attention on plant premises or at employer's direction.
• Night Premiums – Overtime must be paid on night shift differentials.
• On-Call Pay – Overtime must be paid to employees who are required to remain on call on their employer's premises or at a fixed location.
• Out-of-Town Business Trips – Overtime need not be paid on travel time of employees outside of their regular working hours while out of town on overnight business trips, except for time spent in performing regular duties.
Overtime must be paid on travel time during normal working hours on nonworking days, as well as on regular working days, of employees on overnight business trips.
• Production Bonuses – Overtime must be paid on production bonuses even though they are unascertainable at the time of the pay period in which they are earned.
• Show-Up or Call-In Pay – Overtime must be paid on a part of the show-up or call-in pay if the employees are required to wait 10 or 15 minutes before being advised that they may return home.
• Sleeping Time – Overtime need not be paid on up to eight hours' sleeping time of employees who are on duty for 24 hours or more if there is an agreement to this effect, if the employee is furnished adequate sleeping facilities, and if the employee gets at least five hours' sleep.
• Training Programs – Overtime need not be paid to an employee who voluntarily attends a lecture, meeting or training program outside his regular working hours if the lecture, meeting or program is not related to his job and if he does no productive work.
Overtime must be paid to an employee for time spent outside his regular hours on a course sponsored by his employer if the course is intended to make him more efficient in his present job.
• Travel Time – Overtime need not be paid on travel between an employee's residence and his work place, in the usual case.
Overtime must be paid on travel from a meeting place at the beginning of the day to the work site.
Overtime must be paid on travel between job sites during the work day.
• Truck Drivers – Overtime must be paid to truck drivers for time spent in sleeping berths while relief drivers operate the truck if the tour of duty is less than 24 hours.
Overtime must be paid to truck drivers for time spent in waiting between specific tasks, unless they are relieved of all duties for a definite period which is long enough to be used by them for personal reasons.
• Two Rates of Pay for One Employee – Overtime of an employee who works for two or more different straight-time rates of pay during the same workweek may be computed on the basis of his average hourly rate for the week or on the basis of the straight-time rate applicable during the overtime hours if agreed to prior to performance of the overtime work.
• Unauthorized Overtime Work – Overtime must be paid for unauthorized overtime work which the employee is suffered or permitted to perform, even though the employer has announced that no overtime work will be permitted unless authorized in advance.
• Wages – Overtime must be paid on the basis of all things of value forming part of an employee's normal weekly income, such as salary, wages, piece work earnings, bonuses, commissions, and board or lodging not excluded from wages.
• Waiver of Overtime Payments – Overtime payments required under the FLSA may not be waived by employees.
SESCO's retainer services include:
• Hotline for HR and employment law questions
• Annually-required training and HR updates
• Annual compliance audits
• Annual handbook review
• Required federal and state posters
Note: Month fee covers all services as noted above — no additional fees apply. Contact SESCO at 423-764-4127 to request a follow-up contact.
Special Pricing on SESCO's Human Resource DVD
One (1) hour DVD containing four (4) separate topics:
• Screening and Hiring — Provides EEOC basic do's and don'ts as well as suggestions for an employer to screen an applicant thoroughly to make the right decision the first time.
• Workplace Harassment — Meets required training for managers and supervisors as well as what is and isn't legal harassment and how to address complaints.
•Wage and Hour — Provides an overview of exemptions, what is working time, what is required to be computed in overtime pay and the most common violations and how to avoid those violations.
• Employee Discipline and Termination — Provides for recommendations to improve behavior and then subsequently address poor behavior and SESCO staff recommendations on how to conduct discipline and termination interviews as well as proper documentation.
Retainer Clients: $49.99
Non-retainer Clients: $79.99
SESCO Client Feedback
"I am retiring this week but wish to continue to receive your newsletter and other information. I have found the material to be of great benefit for several years." ~ Joe Burt, Former Director of Human Resources — Holy Cross Village at Notre Dame
"Bill, once again thank you for your assistance. You are a wise man." ~ Charlotte Parsons, Director — Washington County Public Library
Special Thanks to New SESCO Clients!
Paul Henney Memorial Chapel, Inc.
Bethel Park, PA
Forestry Equipment of Virginia
Forest, VA
Quaker Steak and Lube
(Bristol Lube, LLC)
Bristol, VA
Basic Coordinated Health
Farmington, NM
SESCO Client Inquiry — Staff Response
Question: What is a part-time employee?
Answer: There is no set number of hours an employee must work to be considered part-time. Part-time employees work fewer hours than a full-time employee on a continuing basis. It is the employer that sets the threshold for the number of hours an employee has to work to be considered full-time, and any schedule that falls below that schedule in number of hours would be considered part-time. Some common definitions of a full-time schedule include 40 hours per week or 37.5 hours per week; other employers have defined a full-time schedule with even fewer hours. Part-time employees may or may not be eligible for any benefits – that is a decision for each employer to make. However, it should be noted that the Affordable Care Act defines a full-time employee as an individual who on average works 30 or more hours per week.
SESCO's Spring Seminar Series 2014
Richmond, VA
March 19-20, 2014
Effective Leader/Manager
Virginia Community Healthcare Association
April 16-17, 2014
Human Resources — The Basic Course
Virginia Community Healthcare Association
May 14, 2014
Human Resources — The Advanced Course
Virginia Community Healthcare Association
Bristol, VA
March 25-26, 2014
Effective Leader/Manager
Courtyard by Marriott
April 9-10, 2014
Human Resources — The Basic Course
Courtyard by Marriott
May 7, 2014
Human Resources — The Advanced Course
Courtyard by Marriott
(SESCO has partnered with one of our valued clients, Virginia Community Healthcare Association, to host our Richmond Seminar Series.)
For more information click HERE
