Is a California employee who works consecutive overnight shifts entitled to split shift pay simply because the shifts span two separate workdays, resulting in two shifts during the same workday separated by a number of hours? On July 7, 2011, in Securitas v. Superior Court, the California Court of Appeal held split shift pay is required only when an employee’s actual work shift is split, and not simply because an employee’s shift carries over from one workday to the next.

Plaintiffs’ Complaint

Industrial Welfare Commission Wage Order No. 4 entitles employees to a potential additional hour of pay at the minimum wage for any workday they work a split shift. The Wage Order defines “split shift” as “a work schedule, which is interrupted by non-paid non-working periods established by the employer, other than bona fide rest or meal periods.”

Seeking to exploit a literal definition of this language, the plaintiffs filed a class action complaint against Securitas Services USA, Inc., alleging they should have been paid a split shift premium because they worked consecutive overnight shifts, with the result that they would be working during two periods in the same calendar day, separated by many hours. In other words, looking at one calendar day in isolation during a sequence of consecutive overnight shifts, there would be the appearance of a split shift.

In concocting this argument, the plaintiffs sought to exploit Securitas’s definition of “workday” as running from midnight to midnight. According to the plaintiffs, a security guard would work a split shift of two nonconsecutive periods on the same workday because one shift would end in the morning and the next shift would begin in the evening. Plaintiffs also alleged that Securitas failed to pay split shift pay not only when the employee worked shifts spanning midnight on consecutive days, but also when the employee worked nonconsecutive periods in the same workday, without working through midnight.

Trial Court Adopts the Plaintiffs’ Definition of Split Shift

Securitas moved for summary adjudication on the plaintiffs’ claim for split shift pay, arguing that a split shift as defined by Wage Order 4 does not include a consecutive, uninterrupted shift that spans two workdays. The trial court denied the motion, finding that a split shift occurs whenever an employee works two nonconsecutive periods in the same workday. Accordingly, the trial court denied Securitas’s motion. Securitas sought and obtained immediate appellate court review through the avenue of a petition for a writ of mandate.

Court Of Appeal Holds That a Split Shift Occurs When a “Work Schedule” is Interrupted

The Court of Appeal agreed with Securitas’s interpretation of the Wage Order’s split shift provision. The court interpreted ”work schedule” to mean “an employee’s designated working hours or periods of work,” and, based on this definition, found that work schedules were not “interrupted” simply because they spanned two workdays.

The court also found that the timing of the employer’s “workday” did not by itself create a split shift for work periods spanning two workdays. The court found the term “workday” to be absent from the Wage Order’s definition of “split shift” or “work schedule,” and recognized that workday is defined elsewhere in the regulations as “any consecutive 24-hour period beginning at the same time each calendar day.” In this case, Securitas scheduled the plaintiffs to work consecutive uninterrupted overnight shifts. As these work schedules were not interrupted, they were consistent with the purpose of the split shift provision of the Wage Order.

The court nevertheless agreed with the trial court that Securitas’s motion for summary adjudication should be denied because the plaintiffs also alleged they were required to work interrupted shifts during the same workday.

What Securitas Means for Employers

Securitas applies common sense to an interpretation of split shift in the context of a work shift that spans two workdays.

After Securitas, employers need not be concerned about paying split shift premiums to employees scheduled to work regular overnight shifts. Instead, the focus should be on whether the employees’ actual work shifts are interrupted.

Best Practices

If your employees work split shifts remember the following:

• Pay the employee one hour of pay at no less than minimum wage if there is
  more than one hour between shifts.


• If the employee earns more than minimum wage, you may use the amount over
  the minimum wage to offset, or reduce, the split shift payment, for example:
  
  
  
  • Hourly wage: $8.15 (15 cents above the current minimum wage of $8.00 per
    hour)
  
  
  • Hours worked: 11 a.m. - 2 p.m. and 4 p.m. - 9 p.m. (total of eight hours)
  
  
  • Split shift wage: One hour at $8.00
  
  
  • Offset: 15 cents x 8 hours=$1.20 (therefore split shift partially offset:
    $8.00 - $1.20=$6.80)
  
  
  • Wages due: Eight hours worked ($65.20) plus partially offset split shift
    hour ($6.80)=$72.00
  
  
  
  

By: Fred Sanderson and Peter Urias

Employees have always been prone to complain, and employees in the retail industry are no different.? What is different now though, is that your employees now have many more places to air their concerns, and they have the ability to reach a wider audience with the click of a mouse or the tap of a key.? Simply put, with the proliferation of social networking, your employees have numerous platforms from which they can bemoan their workaday frustrations.? A flurry of recent unfair labor practice cases suggest that if you discipline your employee for making disparaging comments about your Company on social media sites such as Facebook and Twitter, you may be violating his or her right to engage in “protected concerted activity” under the National Labor Relations Act (“NLRA” or “Act”).? The Board has not issued any decisionsto date, but rather all the cases have either settled or they are currently pending trial before an Administrative Law Judge.

Social Media and Protected Concerted Activity

Over the past few months, the Office of the General Counsel – the Board’s prosecutorial arm – has been issuing complaints against employers alleging either that (i) the Company’s broad social media policies violate their employees’ rights under the Act because they have a chilling effect on their right to communicate about the terms and conditions of their employment, or (ii) employers have violated their employees’ rights under the Act by disciplining employees for disparaging the Company through social media.

Previously, the General Counsel’s Division of Advice had upheld employers’ broad social media policies even when they prohibited, among other things, “[d]isparagement of company’s or competitors’ products, services, executive leadership, employees, strategy, and business products.”? In one 2009 case, the Division of Advice concluded that the policy was legal because it was part of a larger policy prohibiting egregious conduct such as discussing the employer’s proprietary information, explicit sexual references, disparagement based on race or religion, obscenity, profanity, or references to illegal drugs.? The policy also stated explicitly that it was designed to protect the employer and the employees’ interests rather than to “restrict the flow of useful and appropriate information.”? The Division of Advice determined that the policy would not “reasonably tend to chill employees” in the exercise of their rights to protest working conditions or advocate for unionization and the policy was not promulgated in response to union organizing activity or applied to deter such activity.

However, now the General Counsel’s Office appears poised to hold that employer policies which bar “slanderous or detrimental” statements about the employer violate employees’ rights because such statements might be protected by the NLRA.

Two recent cases which would have tested this issue – American Medical Response of Connecticut, Inc. and Student Transportation of America, settled before they could reach a hearing so the Board did not get a chance to rule on this issue.? In the Student Transportation case the employer had a social media policy that prohibited “[t]he use of electronic communication and/or social media in a manner that might target, offend, disparage, or harm customers, passengers or employees, or in a manner that might violate any other company policy.” (emphasis added).? We will have to stay tuned to see how the Board rules on this issue in the near future!

The NLRB has also recently cracked down on employers who discipline their employees for making disparaging comments on social media sites.? In Karl Knauz BMW, an employee complained on his Facebook page about the food and drinks BMW served to customers at an employer sponsored sales promotion, because he apparently believed that hot dogs and bottled water would inhibit sales and commissions.? After learning about the negative post, BMW fired the salesman.? When the salesman filed an unfair labor practice charge challenging his termination, the Board issued a complaint against BMW finding that the discharge might deter other employees from engaging in protected concerted activity – namely publicly complaining about sales events and their commissions.

In another recent case, Hispanics United of Buffalo, an employee in a non-union facility contended in a Facebook post that her fellow workers did not do enough to help their clients.? Those co-workers responded angrily and the employer terminated them because they were harassing the employee who had criticized them.? The Board issued a complaint against the employer alleging that the discharges were illegal because the Facebook discussion was protected concerted activity since it involved a conversation among coworkers about their terms and conditions of employment, including job performance and staffing levels.

What Does This Mean for Retail Employers?

Since none of these social media cases has resulted in a Board decision, there is unfortunately no clear guidance yet for retail employers to follow with respect to whether they can issue broad non-disparagement policies and discipline employees for violating them.? Nonetheless, there are several key points that you should take away from the NLRB’s recent spate of social media cases:

Retail employers should be aware of the General Counsel’s heightened interest in challenging social media policies if it is not clear that they do not cover complaints or statements regarding employment terms and conditions, or communications about unionization.? Common policies that are vague or overbroad are easy potential targets, regardless of the employer’s intent in implementing them.

Retail employers should proceed with caution before disciplining employees for making disparaging comments on social media sites since there is no clear directive yet about what is, and what is not, speech pertaining to terms and conditions of employment.

It is clear that the NLRB has decided to focus on social media issues in both union and non-union workplaces alike.? As the forums for online speech continue to grow, and more and more employees begin to post work-related comments on social media sites, both union and non-union retail employers should be careful before disciplining employees for such activity.

Most fundamentally, retail employers should review their policies, including those regarding confidential information, electronic media, social media, blogging, internet, solicitation, e-mail usage, customer communication, bulletin board posting, internal grievance, non-disparagement, off-duty conduct, and wage discussion policies.? That said, we do not know yet which policies will pass muster under the current Board, and we will keep you posted when the Board issues a decision in any of the pending cases.

Best Practices

If you decide to use Twitter to communicate internally with your employees
consider the following tips:

• Enact a clear social media policy. Specifically discuss issues such as
  proper usage (what employees can and cannot post), disciplinary measures for
  improper usage, and ownership of information.


• Involve legal counsel in crafting your social media policy.


• Prohibit the disclosure of trade secret and confidential information in your
  social media policy and define what those terms mean for your organization.


• Train and educate employees on how to use Twitter or any other social media
  tool.


• Determine your obligations to store comments exchanged on Twitter and how
  that information is being stored and retained by Twitter on its servers.

By: Lynn Kappelman and John Duke

Recently, the Employment Development Department (EDD) revised publication DE 1857D – Notice to Employees Unemployment Insurance Benefits.

California employers should know that most employers are not affected by this change because most California employers are required to post form DE 1857A, not form DE 1857D.

California employers must inform employees of their rights under the state unemployment insurance (UI) programs. Most employers that are obligated to contribute to the state UI program are also subject to the state disability insurance program (SDI) and the paid family leave program (PFL).

As a result, employers subject to all three programs must post notice DE 1857A in a prominent location that is easily seen by employees. This accounts for the majority of private employers in California. For more information on whether you are required to contribute to these programs visit the EDD’s website.

However, some California employers are subject to UI only -- not SDI and PFL.? Employers that are subject to UI only must post form DE 1857D, as revised. Employers subject to SDI and PFL only, not UI, must post form DE 1858.

The recent revision to form DE 1857D clarifies that the phrase “employees of educational institutions” is meant to apply to employees of both public and nonprofit educational institutions. The actual change to the 1857D poster is that the wording now includes an addition of the word “nonprofit,” as underlined below:

“Employees of Educational Institutions: Unemployment Insurance benefits based on wages earned while employed by a public or nonprofit educational institution may not be paid during a school recess period if the employee has reasonable assurance of returning to work at the end of the recess period (California Unemployment Insurance Code Section 1253.3). Benefits based on other covered employment may be payable during recess periods if the unemployed individual is in all other respects eligible, and the wages earned in other covered employment are sufficient to establish an unemployment insurance claim after excluding wages earned from a public or nonprofit educational institution(s).”

The revised form DE 1857D is available on the EDD’s website.

By: Gail Cecchettini Whaley, CalChamber Employment Law Editor/Staff Counsel

The California Supreme Court upheld a Los Angeles ordinance that forbids new owners of large grocery stores from laying off the existing workforce for 90 days after the new ownership takes over. California Grocers Assn. v. City of Los Angeles, (S176099, July 18, 2011).

The Supreme Court’s 6-1 decision reinstated the Los Angeles ordinance, which was originally enacted in 2005. The ordinance was blocked by the lower court’s earlier decision invalidating the ordinance. The ordinance, backed by organized labor, requires large grocery stores that go through a change in ownership to recognize a period of 90 days as an employee job vesting period during the ownership transition period.

This would require the new owners of large grocery stores to hire previous employees, excluding managers, for at least 90 days after the store reopens. Large grocery stores are defined as stores that are 15,000 square feet or larger. It is unknown at this time whether the ruling will be appealed to the U.S. Supreme Court.

The ordinance requires:

• The prior owner to prepare a list of nonmanagerial employees with at least six months employment.


• The new owner to hire from that list during the 90-day transition period.
  The new owner to only discharge the hired employees “for cause” during the transition period.


• The new owner to prepare a written evaluation of each employee’s performance at the end of the transition period.


• The new owner to consider offering continued employment if the employee’s performance is satisfactory.

The ordinance does state that if the workforce is unionized, the union and the employer can agree on alternative hiring arrangements.

The cities of Gardena, Santa Monica and San Francisco enacted similar grocery worker retention ordinances. Worker retention ordinances for other fields of employment are also in effect in San Jose (airport business workers), Oakland (hospitality workers), Emeryville (hotel workers) and Berkeley (marina workers).

The lower court ruled that state law and the federal National Labor Relations Act pre-empted the ordinance. The California Supreme Court disagreed.

The one dissenting judge, Justice Grimes stated that the ordinance interferes with free market forces.? Also, Grimes said, “[t]he city’s ordinance requires a new grocery employer to … function during the important initial period of its operation with a work force it deems, for entirely legitimate reasons, unsuitable for its planned operations.”

By: Gail Cecchettini Whaley, Employment Law Editor/Staff Counsel

Two San Francisco supervisors proposed amendments to the city’s minimum wage ordinance. The ordinance requires employers to pay employees who work within the geographic boundaries of the city/county of San Francisco a minimum wage that is higher than that required by state law.

Currently, the minimum wage for San Francisco is $9.92 an hour. This applies to all employers, regardless of where they are located, with employees who work in San Francisco.

The proposed amendments would add additional penalties for violation of the minimum wage ordinance and increase the enforcement and investigatory powers of San Francisco’s Office of Labor Standards Enforcement (OLSE).

Between January 1 and November 15, 2010, the OLSE?assessed employers approximately $1,267,000 in back wages and interest and collected approximately $601,000. During the same period, OLSE assessed approximately $125,000 in penalties and costs for violations of the minimum wage ordinance and collected approximately $62,000.

The proposed amendments, if passed, would:

• Require an employer to notify employees in writing when the OLSE is investigating the employer.


• Give the OLSE?more power to investigate wage claims. Currently, the agency has authority only to inspect payroll records. Under the proposed amendments, the OLSE would have the power to inspect books and records, interview employees and investigate such matters as “necessary or appropriate” to determine if there is a violation.


• Require employers to post a public notice if they fail to comply with a settlement agreement or adjudication of a wage violation.


• Allows OLSE to issue an immediate citation – without notice - upon sufficient evidence of certain violations.


• Increase the penalty for retaliating against workers who participate in wage investigations from $500 to $1000.

We will continue to track any changes to the San Francisco minimum wage ordinance and update you with current information.

By: Gail Cecchettini?Whaley, CalChamber Employment Law Editor/Staff Counsel

In a disappointing decision for California employers, the California Supreme Court ruled that California overtime laws protect non-resident employees when they perform work in California for California-based employers. Sullivan v. Oracle Corporation, (No. S170577 June 30, 2011).

Oracle is a California-based software company. Oracle employed the three plaintiffs in the case as software training instructors. None of the employees lived in California, but they performed work as training instructors in California and other states. Two of the employees lived in Colorado, and one lived in Arizona. During the three-year time period at issue in the lawsuit, one employee worked 74 days in California, another employee worked 110 days and the third employee worked 20 days.

The employees’ lawsuit claimed that the employees were not paid overtime for days that they worked in California. Oracle chose to apply the wage-hour laws of Colorado and Arizona to the employees’ work.

Strong State Interest
The employees filed their lawsuit in a federal court. However, the federal court sent three key questions to the California Supreme Court, noting strong state interest in deciding how state labor code laws are applied. The California Supreme Court ruled on the following three questions:

Question No. 1: Does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state workers, such that overtime pay is required for work in excess of eight hours per day or in excess of 40 hours per week?

Answer: Yes. The court clearly said that California’s overtime provisions apply to any employee who works in California for a California based employer. The court found that California “unambiguously asserted a strong interest in applying its overtime law to all nonexempt workers and all work performed within its borders.”

The court noted the strong public policy interest in protecting the health and safety of workers and protecting against the "evils associated with overwork." The court’s opinion emphasized that the statutory language relating to overtime did not omit non-resident employees and that the Legislature’s decision to not exclude non-residents must have been deliberate given that other provisions of the Labor Code specifically excluded non-residents.

Since daily overtime is rare in other states, this decision has a tremendous impact on the probable thousands of workers who come from out-of-state to work on assignments for California employers.

Question No. 2: Does California’s Unfair Competition Law (UCL), found in Business and Professions Code section 17200, apply to the overtime work described above?

Answer: Yes. The court concluded that UCL applies to the overtime worked performed in California by out-of-state employees. The effect of this ruling is to allow plaintiffs to use the UCL’s longer four-year statute of limitations for bringing actions, instead of the three-year limitations period that would normally apply.

Question No. 3: Does California’s UCL apply to overtime work performed outside California for a California-based employer by non-resident workers if the employer failed to comply with the overtime provisions of the federal Fair Labor Standards Act (FLSA)?

Answer: No. The plaintiffs argued that California’s UCL should also apply to FLSA violations that occurred when they worked in other states beside California. The court disagreed, ruling that nothing in the UCL’s language or legislative history indicated that it was meant to apply outside the state.

Unresolved Questions
Because the court’s decision was limited specifically to the facts of this particular case, the ruling does not resolve many related questions, and those questions will likely be the subject of future litigation. The court limited the decision’s application in these crucial respects, and left these issues unresolved:

• Limited to full days or weeks of work: The facts of the case involved only full days or weeks of work, not partial days. The court indicated that California overtime laws would apply when the non-resident employee entered the state for "entire" or "full" days or weeks of work. The court distinguished this case from the circumstances of a non-resident worker who enters California "temporarily during the course of the workday." It can be expected that employees in future cases will take the position that the reasoning of the decision should apply to both partial and full days of work in California.


• Limited to overtime claims: The court indicated that its ruling is limited only to the question of whether these non-resident workers could receive overtime. It specifically declined to address whether other wage-and-hour laws, such as meal and rest periods, pay stubs or vacation time, would also apply to non-resident workers who perform work in California. Again, it is likely that we will see future litigation arguing that these other wage-and-hour rules also apply to out-of-state employees working in California. Where other wage-and-hour rules also involve issues of worker health and safety, we may see a similar result from the court.


• Limited to California-based employers: The court limited its ruling only to California-based employers because those were the facts before the court. In all probability, out-of state employees who come to work in California for non-California employers will also argue that our state overtime laws should apply. Although it did not decide the issue, the court signaled it was inclined to agree with that position: "a company that conducts business in numerous states ordinarily is required to make itself aware of and comply with the laws of the state in which it chooses to do business."

This case will now go back to the federal court for a ruling on the remaining issues and factual disputes, including whether the workers were improperly classified as exempt.

Best Practices:
California employers should exercise caution to avoid costly wage-and-hour litigation.

• Closely track hours worked for all employees


• Abide by state overtime laws for nonresidents working in the state


• Seek legal advice on how this decision could impact the employer’s other pay practices, if at all

Source: CalChamber legal staff

On June 28, 2011, the Equal Employment Opportunity Commission (EEOC) filed a lawsuit against clothing retailer Abercrombie & Fitch. The lawsuit, filed in a Northern California federal court, claims that the company violated federal law when it fired a Muslim employee for wearing a hijab (religious head scarf).

According to the allegations, a 19-year-old Muslim woman was employed by Hollister (an Abercrombie & Fitch subsidiary) in San Mateo as an “impact associate,” primarily working in the stockroom. The employee was first asked to wear headscarves in Hollister brand colors, which she agreed to do.

Later, she was informed that her hijab violated Abercrombie’s “look policy,” an internal dress code. She was told she would be taken off -schedule?unless she removed her headscarf while at work. She refused to take off the hijab, was suspended and later terminated. The EEOC seeks back pay, compensatory damages and punitive damages and injunctive relief.

Under federal and state law, employers must reasonably accommodate an employee’s sincere religious beliefs or practices. Employers are not required to reasonably accommodate religious beliefs if doing so would impose an undue hardship on the business, though employers should remember that undue hardship is a high burden and difficult for employers to meet.

Further, valid safety-related reasons, such as hard-hat requirements, may allow employers to prohibit the religious garment. Reasonable accommodation may include modification of work practices, job restructuring, job reassignment, or allowing time off in order to avoid a conflict with religious observances.

This lawsuit is the second the EEOC?filed against Abercrombie & Fitch in the Bay Area over the company’s failure to accommodate workers who wear a hijab. In 2010, the EEOC filed a lawsuit concerning Abercrombie’s refusal to hire an applicant at the ‘abercrombie kids’ store in Milpitas due to the applicant’s headscarf.

The company’s ‘all-American look’ policy has been a focus of prior EEOC? litigation, resulting in $40 million paid in 2005 to a class of African Americans, Asian Americans, Latinos and women who were? either passed over for promotions or not hired at all.

Gail Cecchettini?Whaley, CalChamber Employment Law Editor/Staff Counsel

On July 8, California’s Employment Development Department (EDD) began distributing EDD debit cards to replace the unemployment checks for 1.2 million Californians currently receiving unemployment benefits.

The EDD already uses the Visa-branded debit card, issued by Bank of America, to deliver state disability insurance and paid family leave benefits to recipients.

The EDD debit card allows customers to transfer some or all of their benefits to their own checking or savings account by performing a direct deposit transfer once they receive the card. The card is valid for three years from the date of issue and can be used everywhere Visa? debit cards are accepted.

EDD is transitioning to debit cards to cut costs, and because the cards are a quicker, safer and easier method for customers to receive benefits. Other customer benefits may include:

• No more waiting for checks in the mail


• No more check cashing fees for those who do not have personal bank accounts


• Access to cash at ATMs, point of sale terminals and at Visa banks and credit unions


• The ability to use the card to pay bills

If a person does not use the cards properly, he/she could be charged fees by the card issuer. For example, fees may apply after you exceed the number of free transactions at non-Bank of America ATMs. A schedule of bank fees will be included with the card.

EDD is phasing in the use of the cards and started on July 8 to distribute 10,000 cards per day to unemployment claimants. Claimants will receive a notification letter shortly before their new card arrives.

EDD has been reaching out to educate those transitioning the new debit card through mailing inserts sent along with current unemployment checks. The inserts contain instructions on activating the card and avoiding fees. Information, including an instructional YouTube video, can also be found on this EDD website.

Gail Cecchettini Whaley, CalChamber Employment Law Editor/Staff Counsel

We wanted to pass along this information from the American Trucking Associations:

A United States District Court has found that a piece-rate pay system violates the requirements of California’s minimum wage law. The employees at issue were route delivery drivers who were paid based on the number of cases of product delivered, the number of miles driven, and the number of delivery stops made. It was uncontested that other duties, including pre and post shift work, were not directly compensated, but were considered by the employer to be covered under the piece rate payments. The Court concluded that “a piece-rate formula that does not compensate directly for all time worked does not comply with California Labor Codes, even if, averaged out, it pays at least minimum wage for all hours worked.” Cardenas v. McLane Foodservices, Inc., 2011 WL 2533341 (C.D. Cal. June 23, 2011

In light of this decision, motor carriers with mileage-based compensation systems are advised to review those systems to make certain that they adequately compensate employees for all work performed. At the end of the payroll period, the employee must receive at least minimum wage for each hour worked. Employers with questions about how this case affects their compensation systems are advised to consult with legal counsel.

More information about piece rate pay can be found on HRCalifornia.

Employers face more vigorous enforcement of
overtime and wage payment laws than ever before. Recently, the U.S. Department
of Labor (DOL) has

• 
  
  added 350 new wage-hour investigators;


• 
  
  launched a campaign titled “We Can Help” to
  publicize its wage-hour enforcement initiative; and


• 
  
  begun to refer claimants to private lawyers
  through its hotline “Bridge to Justice” arrangement with the American Bar
  Association.

Plaintiffs’ lawyers are energized to sue on wage-hour claims because the cases can be very lucrative. The result has been a
deluge of headlines reporting six- and seven-figure payouts, even by some of the nation’s most sophisticated employers.

What can your organization do to get ahead of this massive mobilization? The most effective course is to conduct an internal
audit before the DOL shows up at your door. An audit will enable an employer to identify compliance concerns and change any practices that might
present an unacceptable risk of liability.

Many employers have historically misunderstood—and therefore misapplied—the overtime laws. Here are three examples of high-risk areas:

1. 
   
   Assuming all “salaried” employees are
   ineligible for overtime pay. The fact is that even a salaried employee is
   entitled to overtime pay unless his or her job duties meet the specific tests
   for one of the overtime exemptions created by the Fair Labor Standards Act. If
   an employee is not receiving overtime pay simply because he or she is paid a
   salary, odds are high that the employer’s classification is wrong.

1. 
   
   Not counting all of the time that must be
   paid. Many employees do some preparatory work before their scheduled start
   time; or spend time to put on protective clothing before work; or punch out for
   unpaid “break periods;” or travel from place to place during the workday. There
   are many situations in which an employee might be entitled to be paid for time
   that is not being counted. Minutes a day might seem inconsequential, but when
   timekeeping practices apply across a large group of employees and continue for
   two or three years, the total amount of time and money involved can become
   enormous.

1. 
   
   Not counting all types of pay in calculating
   overtime. Commissions, incentive payments, and certain bonuses often must be
   included when you determine the rate to be paid for overtime work, even if the
   incentive payment is monthly, quarterly, or annual. Calculating overtime pay
   based solely on the employee’s base pay will often violate the wage-hour
   laws.

Wage-hour liability touches all industries. Employers in healthcare, insurance, banking, manufacturing, distribution, retail, and technology have faced high-profile cases involving huge liabilities due to the nuances of how the laws apply to people working in those industries.

In the face of the unprecedented public and private resources now being committed to enforcing wage and hour obligations against employers, it is simply not prudent to assume that you’re in compliance. Many employers are completely unaware of the legal errors in their classification, timekeeping, and wage payment practices. But ignorance of this law is no excuse. A claimant need not prove intent in order to establish a
violation and collect a recovery. Nor does an absence of employee complaints ensure clear sailing. The requirements of wage-hour laws cannot be waived by an employee’s expressed or silent acceptance of the pay arrangement.

Another important benefit of an internal audit is the potential availability of a legal defense in the event of a future claim. If your wage-hour practices have been established in good-faith reliance on an opinion from legal counsel, you may be entitled to a good faith defense against all or a portion of potential liability.

By: William Fallon