A Waging War
Have you ever played darts? I’ve played a time or two, and I can’t tell you how many times I’ve gotten so close to hitting the target. I swear though, when I get close, it’s like the dart board moves. At least, that’s my story and I’m sticking to it.
As odd as it sounds, if you’re an employer, I’m sure you’ll agree with me that trying to comply with wage and hour laws is like trying to hit the target on a dart board. It’s tough. And right now, it’s a constantly moving target.
The Stats about Wage and Hour Laws
Would you believe that wage and hour law violations is one of the fastest growing areas in employment-related litigation? It’s true. Data from Advisen shows cases of wage and hour law violations have increased 58 percent from 2013 to 2015.
Misclassification of employees (exempt/non-exempt), minimum wage, donning and doffing (the practice of putting on [donning] and taking off [doffing] protective gear, clothing, and uniforms), off-the-clock work (think about employees answering emails on their mobile devices outside of scheduled work hours), etc., are all issues affecting the employers.
Salary and Duties Changes
And now, add to the mix the Obama administration’s proposed changes with regard to white collar exemptions. The exemptions rely on a 2-part test — salary and duties.
Duties don’t appear to change, but the salary threshold will potentially double to a projected $50,440 annual salary (and has an escalator component built into to it to increase over time). This brings the number up to the 40th percentile of weekly earnings for full-time salaried workers. Basically, this increase will put a significant amount of burden on companies to comply with these changes and reclassify employees.
Many companies will have to start paying overtime to employees they formerly considered salaried. The alternative is to bump these folks’ salaries up to comply with the salary threshold or face possible fines and penalties for non-compliance. Regardless, your company’s bottom line will be affected.
Restaurants and Wages
The restaurant industry has also recently been the victim of allegations of paying (or rather, not paying) employees adequate wages. Employees who would normally be tipped are being asked to handle the duties/functions of non-tipped positions (for example: hostess duties, bussing tables, washing dishes, etc.).
Since tipped employees can figure their tips into their hourly wages, restaurants are allowed to pay them a lower hourly wage. Currently, that rate is $2.13 per hour. There’s currently a 20 percent threshold of time allowed for these duties that’s in question.
If an employee handles non-tipped duties for an amount of time greater than 20 percent of his or her shift and is paid at the hourly rate of a tipped employee the whole shift, there’s opportunity for wage and hour issues.
Understanding Risk with Wages
These changes and issues affect nearly every industry, and all of it is rapidly developing. Plus, the Department of Labor (DOL) is ramping up its efforts to ensure businesses are in compliance with these matters. It’s imperative you understand how this will affect your company and ways you can mitigate exposures and transfer risk.
We have expertise in employment practices liability and helping our clients find the right coverages. We have many carriers that can offer solutions for these potential expenses. You don’t have to go at it alone — we can help.
Let us know how. Ask a question below or contact us. Don’t feel like you’re in the middle of a “wage” war…or that you’re aiming at a moving target. We work on these issues daily and can help!
Published on: 05.16.16