FLSA Round-Up
Posted on 13-Jul-09 by The Timekeeper
Every now and then, I find myself wandering over to peruse the Opinion Letters section over at the Department of Labor website. (Yes, I am a wage and hour geek!) I think it’s fun to see what sorts of issues are on the minds of employers, and what the DOL has to say about them. Here are a few related to the Fair Labor Standards Act (FLSA) that caught my attention:
Mandatory use of vacation for exempt employees
An employer asked if they could require exempt employees to use accumulated vacation time during a plant shutdown, for periods of less than a week, without getting into trouble regarding employee classification.
The DOL answers: yes, they can — as long as the employee continues to receive his/her normal salary every week, regardless of whether they have sufficient accrued vacation time to cover the time off or not.
Basically, as an employer, you’re not required by law to give anybody paid vacation, so if you choose to do so, you’re within your rights to require them to take that vacation time on certain days. What you can’t do, though, is vary the amount you pay to exempt workers based on how many hours they work.
So, if you want to require employees to use up their vacation balances in order to reduce your balance sheet liabilities, you can do that… but once those balances are used up, you still have to pay your exempt employees their full salary, or you risk having them reclassified as non-exempt (and having to pay them overtime).
Time off and exempt employees
In a related issue, an employer wanted to know if they would be staying on the right side of the law with a plan they had. There were a lot of details given, but in a nutshell, when work was slow, they wanted to be able to send exempt employees home. Employees sent home could use accrued leave to “cover” their time off, if they chose. If an employee elected to not use leave, or if they didn’t have enough leave accrued to cover all the time off, however, their pay would be docked for the time they weren’t working.
The DOL answers: nope, can’t do it that way — at least, not for exempt employees. Exempt employees are paid a regular salary, regardless of the number of hours they work, and varying their pay based on worked time pretty much immediately reclassifies them as non-exempt (or maybe even hourly).
An employee is not paid on a salary basis if deductions from the employee’s predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.
Now, what the employer could do is reduce the number of hours in a standard workweek, and reduce the rate of pay of the exempt employees accordingly. As long as they’re still making over $455 a week, they would still meet the requirements for being classified exempt. But the employer can’t come along every week changing the required work hours — otherwise it’s liable to be ruled an attempt to do an end-run around the salary basis requirement.
Recurrent changes in the normal scheduled workweek . . . more likely would appear to be designed to circumvent the salary basis requirement.
Bottom line, you can’t vary the compensation of salaried exempt employees based on the amount of time they work on a week-by-week basis.
On-call = on the clock?
A company wants to know if they have to compensate on-call employees for the time they spend on call, even if they don’t get any emergency calls, and if they have to compensate the on-call employees for travel time spend responding to any calls they do get.
The DOL answers: it depends.
As to whether employees need to be compensated for time spent on-call, it depends on the restrictions the employer places on their use of time during the on-call period. For instance, if an employee is required to remain on premises or otherwise can’t use the time effectively for his own purposes, that employee is working and has to be compensated.
If, on the other hand, the employee just has to leave a phone number or wear a pager so she can be reached if needed, but is otherwise free to do what she wants to do, that employee is probably not required to be compensated.
As to travel time, it depends on whether the employee has to travel a “substantial distance” in order to respond to the call. From my reading of the opinion letter, it appears that the DOL considers travel to any regular work site or regularly-visited client site does not constitute “substantial,” so they don’t enforce payment for such travel.
As always, in cases where the answer is “it depends,” you want to consult with your labor law expert to make sure you’ve got your bases covered. Don’t just assume you’re OK.
So, any other wage and hour geeks out there? Have any of y’all ever written to the DOL seeking an opinion? Did you get the answer you were looking for?
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