The host, Stephanie Thomas, interviews Jose Gaona of Qqest, talking about “time and attendance recordkeeping requirements, wage and hour compliance, essentials for a time and attendance policy, what ‘red flags’ to look for when reviewing your time and attendance data, and the most common mistakes employers make with respect to time and attendance and how to avoid them.”

If you’re interested in weekly updates on topics such as employment and HR best practices, EEO compliance, self-auditing and risk management, you can listen to previous podcasts and subscribe via iTunes, Google, MyYahoo, Zune and other channels at The Proactive Employer website.

Related posts:

1. FLSA Self-Audit Checklist

If you run a hotel, motel or resort in the U.S., better listen up! I hear the Department of Labor (DOL) is focusing on the hospitality industry for their next round of compliance reviews to begin in October.

Reportedly, the DOL considers hospitality to be another “high risk” industry for violations of the Fair Labor Standards Act (FLSA), like other industries such as food service, car washes and retail. In addition to reviewing businesses for compliance with minimum wage, overtime and employee classification, the DOL will also reportedly be checking immigration compliance, such as documentation and pay for H-2B temporary workers.

A Reprieve? Don’t Count On It.

Apparently, the American Hotel & Lodging Association is urging its members to contact their Congressional representatives in an attempt to thwart the DOL’s plans. Personally, in light of the National Employment Law Project’s January 2010 report Broken Laws, Unprotected Workers, revealing substantial numbers of workers in low-wage jobs — like many of those in the hospitality industry — are cheated out of pay by employers who fail to pay minimum wage and/or proper overtime… and in light of DOL chief Hilda Solis’s declaration of a renewed DOL focus on compliance after the relative lax enforcement of the Bush years… and the fact that those 250 new Wage & Hour Division examiners need to have something to work on… well, let’s just say if I were a hotel manager, I wouldn’t be holding my breath waiting for the AHLA effort to work.

What To Do… What To Do?

So, assuming you’re a conscientious manager / owner, you could start by reviewing the DOL’s Fact Sheet #45: Hotel and Motel Establishments Under the Fair Labor Standards Act (FLSA). Make sure your business is complying with all the points outlined.

If you or your overtime-eligible employees have gotten slack about the use of your time and attendance system, or — worse — you don’t have a good time and attendance system in place to start with, now’s the time to remedy that situation.

Handwritten timesheets are better than nothing and traditional punch clocks are still a good option in many situations, but for the best accuracy and bonus cost savings I recommend an automated system. You can find badge-based or biometric time tracking systems for very reasonable prices… depending on how big your facility is and how many employees you need to track, you could set up a workable employee time system for as little as around $500.

Since any good automated time and attendance system will export employee time records to popular payroll software and services, with an automated system you’ll end up saving a lot of time and money on payroll preparation. Some time and attendance vendors say you can save enough to pay for the system in just a matter of months. For instance, Acroprint Time Recorder has posted an easy savings calculator you can use to figure up how much money you could save with the more accurate time records and more efficient processing of an automated system.

You should also consider contacting your employment law attorney and having him or her conduct a wage and hour audit, to make sure your operations are in compliance with all applicable local, state and federal wage and hour laws. Among other things, you’ll want to make sure you’re paying people correctly (including overtime), that you’ve got proper documentation for any foreign nationals in your employ and that you’re following applicable child labor laws. (Having your attorney conduct the review may allow attorney-client privilege to protect their findings from “prying eyes” in the event of a subsequent DOL audit.)

Related posts:

1. Restaurateurs: Finding Wage and Hour Confusing?
2. Tip Your Hat to the Hard Working Waitstaff

It’s coming up on time for National Payroll Week 2010 — this year it’s scheduled for September 6–10. And once again, the National Payroll Association is running a survey.

Every year, the survey tracks interesting stats about payroll: how comfortable employees are that their paychecks are correct, how often they get paid, what percentage get direct deposit, and so forth… plus a few fun questions about things like celebrity pay.

All those who complete the survey by 5:00pm (Eastern) on September 10, 2010 will be entered in a drawing to win cash and a 5 day / 4 night trip to Las Vegas. The cash amount is equal to a biweekly paycheck (gross amount), based on the average weekly wages of all workers covered by state and federal unemployment insurance laws for the fourth quarter of 2009.

You can find out more about National Payroll Week by visiting the website, and click the link to take the survey (and get your chance at the prizes).

No related posts.

What’s the motivation?

Well, for businesses, labor costs are much lower for a contractor than for an employee. No withholdings, no unemployment insurance, no benefits… there are powerful incentives for businesses to classify everyone possible as an “independent contractor.”

On the other hand, the government would prefer as many people as possible be classified as employees. It’s a lot easier (and less paperwork) to collect tax withholdings from one employer than to rely on potentially hundreds or thousands of individuals to make estimated tax payments.

So in order to classify someone as an independent contractor, the job they’re doing must meet certain criteria.

Thus, the crackdown.

Conflicting Criteria

The problem is, everybody seems to have their own ideas about what makes someone an independent contractor. The federal Department of Labor (DOL), the states, the IRS… and the criteria they use aren’t necessarily the same. Or even compatible with each other.

It’s possible, for instance, for somebody to be an independent contractor for the purposes of paying state unemployment tax, but an employee for the purpose of federal income tax withholdings.

Stepping Up Enforcement

These days, with our current economic issues, government agencies at all levels are trying to maximize their revenue. Many states and the IRS seem to be convinced they’re losing money from employers improperly classifying employees as contractors.

So they’re doing something about it.

Beginning in February 2010, the IRS launched a three-year audit initiatve, targeting small businesses for (among other things) compliance with the employee vs. independent contractor rules. They’ll be sharing information with several states and with the DOL.

The DOL has likewise targeted the classification of contractors as part of their Semiannual Regulatory Agenda for 2010. They propose to expand the recordkeeping requirements when you classify someone as a contractor. Under the new rules, which could go into effect as early as August, you’ll have to perform a formal classification review, document the results, share them with the worker and keep everything on file in case a DOL inspector wants to see them.

At the state level, Colorado, Illinois, Maryland, Massachusetts, New Jersey and New Mexico have passed laws targeting misclassification in designated industries. Iowa, Michigan, New York, Washington and Wisconsin have announced enforcement initiatives or created task forces charged with uncovering employee misclassification. Connecticut, Illinois, Maryland, Minnesota, Nebraska and New Jersey have enacted statutes increasing both civil and criminal penalties on employers for misclassifying employees as contractors.

So what’s a small business to do?

While each agency and government body seems to have somewhat different criteria, there are some general guidelines to keep in mind.

• Independent contractors are intended to be temporary workers. The longer someone works for you, the more likely it is that they will be classified as a common-law employee in an audit.
• Independent contractors generally are hired because of their specialized knowledge or skill to help you out with a particular issue. The more their work corresponds to the core function of your company, the more likely it is they’re an employee.
• Independent contractors are supposed to be, well… independent. (Duh!) The more control you exert over when, where and how they do their work, the more likely it is they’ll be considered an employee.

Federal legislation has been introduced that is intended to help standardize the classification critiera. That would be a good thing, because it would make it easier for businesses to get it right when it comes to worker clasification.

On the other hand, the downside is that the proposed legislation would also increase the penalties for businesses that get it wrong.

In the meantime, if you have any contractors working for you now, and before you hire any additional contractors, consult with your labor law advisor. Make sure you thoroughly document all the factors that went into your classification decision so you have backup in case of an audit.

What about you? Do you employ contractors now? Has any of the news recently scared you away from hiring a contractor?

Related posts:

1. Head of the Class(ification)
2. New Business Blues
3. 19-Jan-2010: FLSA Webinar

Of course, you don’t have to specify non-exempt employees’ compensation as an hourly wage. Many clerical-level office employees, for instance, are paid a salary — or at least, it’s called a salary. And if they work their usual 40 hours a week, they get that “salary”… but if they work more, they get time-and-a-half overtime based on their equivalent hourly rate… and if they work less, they probably find their pay docked for the hours they were gone. Which, in the final analysis, makes their pay more like hourly and less like an actual salary, since in reality they are paid based simply on the number of hours they work.

Did you know there’s an alternative?

The Fluctuating Work Week

In a dark, seldom-visited corner of the Fair Labor Standards Act (FLSA) lurks a provision commonly known as the “fluctuating work week” method of calculating overtime (FWW).

In order to use the FWW for calculating overtime, you and your employees have to follow certain criteria:

• The employee’s hours must fluctuate from one week to the next. The law doesn’t specify what exactly this means, but it does say typically this would apply to workers who do not have a set schedule of hours from one week to the next. If someone has a regular assigned schedule but occasionally works some overtime, they may not be eligible. (You’ll want to check with your employment law advisor to make sure your employees qualify.)

• You must pay the worker a straight salary for all the hours they work in a week, regardless of how many (or how few). For instance, you can’t dock their pay if they leave early one day for a doctor’s appointment. As with your salaried exempt workers, as long as they work even part of a week, you have to pay them their full salary for the week. This is one of the downsides of a FWW arrangement: you have to pay the employee the entire week’s salary whether they worked a full 40 hours or not.

• The salary must be enough that the employee earns the equivalent of minimum wage or more. In other words, assuming your state uses the Federal minimum wage and the employee can work as much as a 55 hour week, their weekly salary must be at least $398.75 (before withholdings). (That’s the current Federal minimum wage of $7.25 an hour multiplied by 55 hours. Note, however, the actual minimum wage in your state may be higher.)

  You’ll want to make sure your salary covers this minimum wage requirement based on the maximum number of hours the employee might reasonably work during a week. Allow some leeway; it’s probably best to not play it too close to the line or you risk slipping below minimum if the employee puts in a particularly long week.

• You and your employee need to both understand and agree to this compensation arrangement.

So what about overtime?

The employees covered by a FWW arrangement are still overtime eligible. So what do you do about overtime pay when they do work over 40 hours in a week?

That does require a bit of calculation — and this is another one of the downsides of the FWW method: the extra calculations you have to go through whenever one of these employees works over 40 hours a week.

In most states, for someone who’s paid by the hour, you pay them their regular hourly rate for the first 40 hours. Then you take their hourly rate and multiply by 1.5, then pay them that amount for all hours worked over 40 in that week. (Note that some states have slightly different rules for how to calculate overtime.)

For someone covered by a FWW agreement:

• Divide their salary by the number of hours they actually worked that week. This gives you their “equivalent hourly rate.” Note this must be no less than $7.25 an hour (or more, depending on the minimum wage effective in your locale).

• Multiply one-half of this equivalent hourly rate by the number of hours worked over 40 that week. This is the employee’s overtime pay.

So why would anybody adopt this crazy scheme?

Given the fact you have to pay the employee a full week’s salary regardless of how few hours they work… and give the extra calculations you have to go through to figure overtime when they work over 40 hours… you may be wondering why on earth any employer would agree to such a cockamamie arrangement.

There are a couple of reasons:

• It can be important for some employees’ morale to be considered “salaried” or “white collar” workers, but because of the nature of their work they are not exempt from overtime regulations. This allows you to pay them on a salaried basis, but still keep on the right side of the law. It’s a win-win: good employee relations and compliance with overtime regulations.

• If these employees typically work 40 hours or more a week, this method of overtime calculation can represent a potentially significant cost savings to you. Since they’re paid a fixed salary for all hours worked, their equivalent hourly rate goes down the more hours they put in. And their overtime pay is simply one-half that equivalent hourly rate.

  (Of course, you need to balance this against the fact that if they work less than 40 hours a week, their equivalent hourly rate goes up. If the calculated equivalent rate turns out to be more than what you would have paid them on an hourly basis, it will cost you more than if they were simply paid by the hour. A FWW arrangement is probably not for you if your employees often work fewer than 40 hours a week.)

• It’s a way to limit your exposure if you have employees you consider salaried (and who otherwise meet the eligibility criteria for FWW), but whose job duties are “borderline” for overtime exemption — without having to pay a full time-and-a-half overtime. In the event a DOL audit determines they truly are not exempt, they’ve already been paid overtime by an acceptable method of calculation.

Not for everybody

As noted, this is probably not the best arrangement for you if your fluctuating-hours employees often work less than 40 hours a week. And your employees may not be eligible under the rules, so you might not be able to use this method even if you want to.

Worse, set up an FWW agrrangement incorrectly, and your employees could be reclassified as hourly — potentially making your liable for hefty additional overtime payments, fines and penalties.

But for those who meet the criteria and implement an FWW arrangement correctly, it can represent a cost savings as well as an employee morale-booster.

As always, check with your employment law attorney to make sure you are eligible and you’ve set things up right. A little bit of time spent with your advisor now can save you significant money, time and headaches on down the road.

Related posts:

1. Creative Accounting
2. Calculating Overtime: Feb. 10 Webinar

Let’s say, just for instance, that you scheduled Chris, an overtime-eligible employee, to work eight hours on Wednesday. Early that morning, you get a call: Chris is sick and won’t be in. As a result, Chris doesn’t get paid for that day.

I can hear a bunch of y’all from here. “Well, duh!” you say. “Of course I’m not paying Chris for not working.”

Commendable! Except that many of you do, every day.

Pay for Not Working

Okay, maybe you don’t pay people an entire day’s pay when they don’t show up at all. But a distressing number of business owners take what seems to be the easy way out for time and attendance tracking every day — and end up paying people for time they didn’t work.

Let me ’splain.

At many companies, both part-time and full-time employees have standard work schedules. You’re supposed to be there from 8:00am until 5:00pm, or from 3:30pm until midnight, or from 12:30pm until 4:30pm, or whatever. So far, so good.

A problem arises, though, when the business simply assumes each employee arrives on time and departs on time unless the business is informed otherwise.

I can hear you again… “But we would never just assume that! We have our employees fill out timesheets!” Except that’s exactly the consequence of using hand-written timesheets — you assume people are working to their schedule unless either they tell you otherwise, or you catch them in the act. And if you don’t even have hand-written timesheets, you’re completely flying blind.

Seriously — how many hand-written timesheets have you seen where an employee actually records they arrived at (say) 8:03am, or departed at 4:53pm, versus how many you’ve seen where they claim they arrived promptly at 8:00 and stayed all the way until 5:00, each and every day? For those of you who don’t have timesheets, how often have employees let you know they arrived three minutes late, or that they took an extra five minutes for lunch that day?

I’m told the American Payroll Association estimates as much as 10 minutes per day per employee is “lost” due to late arrivals, long breaks and early departures. Over the course of a year that equates out to over a week per employee — time you’re paying for, but your employees aren’t working.

The issue can cut the other way, too. You may have some overtime-eligible employees who are staying over five, ten or 15 minutes extra every day to take care of last-minute issues and wrap up their work. These people are working unpaid overtime — which (even if they don’t mind and are doing so willingly out of a sense of company loyalty) can turn into a big issue for you in the event of a wage and hour audit.

Time and Attendance Matters

The solution, of course, is to have in place a robust, accurate time and attendance tracking solution. What’s best to use depends on your business environment and needs. A fancy computer-based time and attendance system with sleek biometric terminals might be just the thing for an office setting, but frankly most such systems wouldn’t last a month in a cement factory before the dust clogged up the sensitive electronics.

Fortunately, nowadays you have a choice. From heavy-duty traditional employee punch clocks — you know, the kind where you insert a timecard and the clock prints the time on the card — to the aforementioned computer-based systems with their snazzy badge or biometric terminals, there’s a time and attendance solution for just about everybody.

• Need a solution to stand up to harsh environmental conditions (cold, heat, grease, etc.)? a heavy-duty mechanical time clock can take almost anything you can dish out. Prefer a traditional punch clock and timecard solution, but need more versatility? There are all sorts of electronic clocks to choose from, including some that can double as document stamps and even some that will automatically total your employees’ time worked.
• Want to save some big money (and lots of time) on payroll processing? Get a software-based time and attendance system that automatically totals time and exports to your payroll processing software or service. Most of these systems offer options for badge or biometric terminals or other data collection methods, as well. For instance, if you’re concerned about buddy punching, you might want to consider a time and attendance solution with biometric terminals.
• Need maximum flexibility in your solution because you have remote workers, multiple locations or a seasonally-fluctuating workforce? Want the time and money savings of a software solution, but concerned you don’t have the IT resources to install and maintain one? A subscription to an on-demand web-based time and attendance service might be just what you need. Many of these also offer a variety of clock-in options, including web punch, badge and biometric terminals, telephony options and other alternatives.

The point is, there really are solutions that can work for you, no matter what your situation might be. There’s really almost no excuse for NOT having a time and attendance tracking solution in place.

Remember, your work schedule is just a plan. You want to pay people based on what they actually work. And the only way you’ll know their actual work time is if you track it.

Related posts:

1. It Only Works If You Use It
2. Too Small for Time and Attendance?
3. The Street Runs Both Ways

So, the question was: how long does an employer have once they withhold a 401(k) contribution from an employee’s paycheck before they have to deposit those funds in the employee’s 401(k) account?

Time is of the essence

As you probably already knew, the Department of Labor is in charge of regulating employee retirement plans. Turns out, on this particular issue, though, their regulations could be characterized as “fairly vague.”

Used to be, all they said on the matter was that the employer needed to deposit the money as soon as they were sure what the amount of money to be deposited was. Which should have been pretty much within moments of when they processed payroll, one would think. I mean, at that point you’ve already got the gross pay and the withholdings for each individual… seems to me it’s just a matter of simple addition (easy-peasy for a computer) to tell you the total amount needed. Deposit the total, allocate to the individual employee accounts (again, easy-peasy with a computer), et voilá!

Shouldn’t have thought it would be much of a brain strain for anybody. The answer to “how long” is… “right away.”

But “government regulations” and “fairly vague” make uneasy bedfellows, especially where people’s paychecks are concerned, so in due time a clarification was forthcoming.

Nowadays, I’m given to understand, a company can get in trouble if it’s gone later than the 15th business day of the month after the contributions were withheld and the money still hasn’t been deposited.

(Note, this is hardly a draconian requirement. Fifteen business days is at least three calendar weeks, which should allow plenty of time to accomplish a simple addition problem, even without a computer.)

However, in practice, the Department of Labor apparently tends to take a dim view of employers who wait until the last possible moment to deposit those employee contributions. If the DOL auditors get the idea the employer is deliberately dragging its feet on making the deposit in order to “play the float,” the company — and possibly the business owners or senior executives — could still be in trouble even if the company met the 15-business-day deadline.

Now, it’s probably also important to note I believe this only applies to how quickly the money needs to be deposited to the employees’ 401(k) accounts, not how soon the money needs to be allocated to the specific funds, stocks or bonds the employees have designated as their investment choices. Honestly, I’m not sure at this point what the rules are about how soon the money needs to be actually invested, once it’s been deposited to the employee’s 401(k) account.

For more info

If you’re an employer or employee with questions about 401(k) contributions, you can contact the U.S. Department of Labor directly. If you prefer to chat with someone closer to home, they provide a list of the DOL District Office locations, too.

I’ll keep following up on this issue, and if I find out any additional information, I’ll be sure to let y’all know.

No related posts.

Rant warning – read at your own risk

I just came across an article over at Human Resources Executive Online, quoting some employer-side attorneys about the new DOL announcement where they’re going to discontinue issuing specific Opinion Letters in favor of broader Administrator Interpretations.

To hear these guys carry on, this signals the end of civilization as we know it.

Malarky. Pure, unadulterated malarky.

Look, I understand plaintiff attorneys have been trolling for clients among disgruntled employees (and, in this time of massive layoffs, ex-employees) for some time now — and winning some high-profile cases, much to the chagrin of both the employers and their legal teams. And now these guys on the employer side are also trying to generate more business for themselves. Bully for them. Sauce for the goose, sauce for the gander and all that. But in my opinion, their extreme level of fear-mongering hyperbole is uncalled for.

It’s just Tea Party Lawyering. Don’t let pesky details like facts stand in your way; the important thing is to stir up unreasoning, hysterical panic by any means necessary.

For Pete’s Sake, Man, Get a Grip

For instance, James M. Coleman, a partner with Constangy, Brooks and Smith, when commenting on the discontinuation of Opinion Letters, is quoted as saying, “It’s a big move to end a practice that HR has engaged in for as long as the ages.”

Oh, really? As long as the ages?

Yeah, OK, so the DOL has been issuing Opinion Letters for awhile, but honestly, get a grip. It isn’t as though the first Opinion Letter was issued by the Founding Fathers or anything.

Look, as far as I know I’m about the same age as the practice of issuing Opinion Letters. And if anybody tries to claim I’ve been around “as long as the ages,” this vintage babe is fully prepared to go all medieval on them.

Besides, the DOL are not ending the practice of providing specific advice to employers. They’re just shifting it to the local Wage & Hour Division (WHD) offices — where it probably should have been all along. In fact, the announcement from the DOL specifically says:

Of course individuals with questions about the application of wage and hour laws to their particular situation may also talk to a Wage and Hour Division representative by contacting the office nearest them listed at http://www.dol.gov/whd/america2.htm or by calling the Division’s toll-free help line at 1-866-4USWAGE (1-866-487-9243) Monday-Friday 8 a.m. to 8 p.m. Eastern Time.

Hardly sounds as though they’re (in the words of the same lawyer) “slamming the door shut” on employers, does it?

Just Doin’ Their Job, Sir

Paul DeCamp, head of Jackson Lewis’ wage-and-hour practice group, is quoted in the same article as warning this “breaks with more than half a century of practice and amounts to an enormous power grab” on the part of the DOL.

[Aside: I should probably note Mr. DeCamp was a 2006 recess appointment of former President Bush as administrator of the WHD of the DOL. He was in charge of the Division during pretty much the same time period the Government Accountability Office says the Division mishandled many overtime and minimum-wage complaints and delayed investigating hundreds of cases for a year or more. But I digress.]

Breaking with practice? Sure, they absolutely are. And the point is…?

Look, when a practice is no longer workable, breaking with that practice is a wise move, not an “enormous power grab.”

I’m told the DOL had a backlog of something like 400 opinion letter requests. While I’m sure these attorneys would love to see the DOL tie up resources answering through a formal Opinion Letter every nit-picky question they or their clients sent over, regardless of whether it was actually a point of contention or (as often happened) simply a CYA maneuver on the part of the employer… the fact is, spending that kind of time and resources at the national level on answering a single employer’s query is not a good use of taxpayer dollars.

Besides, to the best of my understanding, Opinion Letters were simply a courtesy extended to employers, not codified into law — and, like any free courtesy practice, subject to discontinuation at any time. Just as, oh say for instance, offering a free initial consultation to prospects now wouldn’t obligate a law firm to offer free consultations to all prospects, now and forever more, right?

Or is this guy seriously claiming a procedure, once set in motion, can never be changed or stopped?

As to an “enormous power grab”? Puh-leeze.

The DOL’s job is to enforce labor laws. During the Bush administration, according to the GAO report, resources were actually being actively directed away from that task. Redirecting resources back toward enforcement is hardly a “power grab” on the part of the DOL. It just means they’re finally getting back to doing their job.

Again, as the DOL announcement itself says, this change offers “a much more efficient and productive use of resources than attempting to provide definitive opinion letters in response to fact-specific requests.” Efficient? Productive? Doesn’t sound like such a bad thing to me.

And Maybe Opinion Letters Weren’t So All That After All

The WHD’s acting administrator during the final years of the Bush administration, Alexander J. Passantin, is now an attorney with employer-side law firm Seyfarth Shaw. According to the article, he’s posted an alert on the firm’s website, suggesting lawyers and their clients flood the DOL with Freedom of Information Act requests related to these new Interpretations.

I’m not sure how wasting taxpayers’ money on frivolous FIA requests just because you’re pissed off is supposed to be a good thing. Speaking as the mom of an elementary-aged child, this sounds to me more like a kindergarten temper tantrum than a reasoned, mature response. Sort of a grownup version of lying down on the floor in the breakfast foods aisle and screaming until Mom buys the Glazed Sugar Bombs cereal you want.

Reportedly, he notes (one assumes “with approval,” as he’s advocating using the same tactic now) this tactic was used against some Opinion Letters, back in the day, whenever employers didn’t like the Opinion expressed. Yep, hold your breath until you turn blue. Good one.

Now, waitaminnit.

I thought Opinion Letters were the best thing since sliced bread, the cat’s pyjama’s, the bee’s knees, all that jazz. Isn’t that why we’re supposed to be incensed, all up in arms and ready to storm the castle — because the DOL dared to discontinue them?

But now it turns out these legal eagles used spurious FIA requests against Opinion Letters, too?

Hmm. Could it be it’s not the format in which the information is communicated, but rather the content that’s the problem? One cannot help but wonder if the reaction would have been this hysterical had the first Interpretation come down in favor of the employers’ point of view.

I’m just saying.

A Foolish Consistency is the Hobgoblin of Little Minds

Some employer-side lawyers complain this particular Interpretation appears to overturn an Opinion Letter issued back in 2006. Which might be a valid complaint… if it were not for the fact that in the past Opinion Letters sometimes contradicted each other without raising these sorts of dire warnings of the imminent collapse of free enterprise, capitalism and the whole of modern society.

I mean, that’s the whole point of (and problem with) Opinion Letters. They’re so specific to the individual situation, they can’t necessarily be applied to any other situation except in the most general sense. With even minor differences in the specifics, two Opinion Letters might reach what seem to be contradictory conclusions.

As a result, it’s entirely possible the Opinion Letter in 2006 was appropriate for the specific situation described, and the 2010 Interpretation is correct for a broader, more general audience. In other words, maybe they don’t actually contradict each other. (Or maybe the 2006 Opinion Letter was wrong to start with — after all, let’s not forget that was squarely during the time the GAO says the department was busy falling down on the job. Your call.)

This has always been true: because of their specificity, Opinion Letters written for others should never be relied upon as a guarantee what you’re doing is acceptable. Even these lawyers know that, despite their apparent reverence for the suddenly-sacred Opinion Letters.

In an age when many seem to be up in arms about what they see as wasteful government spending, it seems to me more than just a little disingenuous for anyone to excoriate the DOL for taking steps to make better, more efficient use of taxpayer dollars. Even if you’re just doing it to try to scare more people into becoming your clients.

Thus endeth the rant for the day.

Related posts:

1. No More DOL Opinion Letters?

Now it looks as though the DOL will no longer be issuing detailed opinion letters in response to specific situations. Instead, they’ll issue “Administrator Interpretations” — in their words, “a general interpretation of the law and regulations, applicable across-the-board to all those affected by the provision in issue.”

To that end, they’ve issued the first such Administrator Interpretation, reaffirming the Division’s long-standing position that mortgage loan officers are not administrative exempt employees.

Here’s what the DOL has to say about their reasoning behind moving away from opinion letters to these new broader “Interpretations”:

In order to provide meaningful and comprehensive guidance and compliance assistance to the broadest number of employers and employees, the Wage and Hour Administrator will issue Administrator Interpretations when determined, in the Administrator’s discretion, that further clarity regarding the proper interpretation of a statutory or regulatory issue is appropriate… Guidance in this form will be useful in clarifying the law as it relates to an entire industry, a category of employees, or to all employees. The Administrator believes that this will be a much more efficient and productive use of resources than attempting to provide definitive opinion letters in response to fact-specific requests submitted by individuals and organizations, where a slight difference in the assumed facts may result in a different outcome.

Going forward, if you request an opinion letter, they’ll point you to the relevant laws and regulations, but won’t provide specific advice. They also say they’ll retain those opinion letter requests to help them determine which topics are confusing a lot of people and might need an “Interpretation.”

If you still want more specific answers and advice, the DOL advises you can talk to a Wage and Hour Division representative personally, either by going to the nearest WHD office, or by calling the Division’s toll-free help line at 1-866-4USWAGE (1-866-487-9243). Telephone help is available weekdays from 8:00am until 8:00pm (Eastern).

Related posts:

1. Hyperbole in Lawyer Land

Consider the case of the Husky Energy Corporation, of Lima, Ohio. Some time ago, they changed from a standard eight-hour shift to 12-hour shifts for some of their workers. As a result, these employees began working a schedule of 60 hours one week, 24 hours the next.

The company decided to get creative, and instead of paying time-and-a-half overtime for 20 hours every other week, the company established an “adjusted” hourly rate so all hours were paid at the same rate.

I’m guessing the “adjusted” rate was enough of a raise over the old hourly rate that at least most of the employees found their new paychecks acceptable. And I’m willing to bet it made payroll accounting easier for Husky. A real win-win situation, right?

Unfortunately, not under federal wage and hour law. The law says employees can’t negotiate away their wage and hour rights. The idea, as I understand it, is employers generally wield enough power in the employee-employer relationship that they can coerce their workers into making “voluntary” agreements, even if those agreements might not be in the workers’ ultimate best interests. So to protect the workers, the law is the law, and neither the employees nor the company can change it, even by mutual agreement. For instance, workers can’t “decide” to work for less than minimum wage — and they can’t “decide” to forego overtime pay that’s due to them.

(As an aside, note this places in jeopardy many “comp time” programs for overtime-eligible employees. I know some people would probably rather have the time off than the extra pay, but under the law, that isn’t allowed for overtime-eligible employees. On the other hand, if a business wants to offer comp time to salaried exempt employees, they can… because the law says they don’t have to pay those employees any overtime in the first place. Anything the company does to compensate salaried exempt employees for extra time worked is above and beyond the legal minimum already. But I digress.)

In this case, the federal law is very clear. For any work week in which an overtime-eligible employee puts in more than 40 hours, the employer is liable for paying time-and-a-half overtime for all hours over 40. (Some states, such as California, require time-and-a-half for any hours worked over eight in any given work day. Check with your lawyer to find out if this applies to you.)

The fact that over the two week pay period the employees were only working 84 hours (a total of four hours of overtime over the course of a standard two-week, 80-hour pay period) didn’t matter. It’s work week, not pay period, that determines how overtime pay should be calculated. Because these workers were paid by the hour, they must be paid at the overtime rate for all hours worked over 40 in a work week — in other words, 20 hours of overtime (at time-and-a-half) every other week.

Of course, in the weeks when they only worked 24 hours, they only had to be paid for 24 hours…

(Another digression: for salaried workers there is something called the “fluctuating work week” method of calculating overtime. Note, however, it only applies to overtime-eligible salaried workers, and it is merely an alternate way of calculating their overtime pay, not a way of getting out of paying overtime entirely. We’ll talk about it soon.)

So, bottom line, Husky ended up having to fork over $969,182 in back wages for unpaid overtime to 173 workers. And they had to establish new hourly rates (more likely, go back to somewhere in the vicinity of their old hourly rates before the work-week change… but I digress yet again.) that they will use for calculating time-and-a-half overtime for the 60 hour weeks going forward.

What makes this particularly relevant is that there are lots of companies out there trying “creative solutions” these days to cut labor costs, hopefully without laying off employees. They need to make sure their inventive cost-cutting moves don’t end up costing them a lot more in the end in back wages and penalties.

How about you? Have you ever gotten burned by trying a great new idea for payroll without vetting it with your labor law attorney first? Do you think employers and employees should be allowed to voluntarily negotiate work and payroll rules that don’t conform to the law?

Related posts:

1. What Is A Fluctuating Work Week?
2. Calculating Overtime: Feb. 10 Webinar