Wage-and-hour issues arise in a number of contexts, ranging from the straightforward to the complex. Radford Scott LLP provides representation to companies and workers in all aspects of wage-and-hour law. For more than a decade, Justin Scott, an Atlanta wage-and-hour attorney, has litigated and provided advice regarding a wide variety of wage-and-hour matters.
Nearly all companies are covered by the federal Fair Labor Standards Act (“FLSA”), which mandates that employers pay their non-exempt employees a minimum wage (currently $7.25/hour) for all time worked and time-and-a-half for all time worked in excess of 40 per week. States may impose additional and more stringent requirements on companies with employees in their jurisdictions. Many states and municipalities have their own minimum wages. For example, the minimum wage in California is substantially higher than the FLSA requirement, and there are a multitude of cities that require higher wages. Some states also have different rules for when and how much overtime is required and which workers qualify for “exempt” and “employee” status. It is therefore imperative to consider all wage-and-hour laws that may apply to a particular worker when assessing compliance.
Frequent issues that arise in the wage-and-hour arena include:
- Misclassification of employees as exempt from overtime and minimum wage requirements;
- Misclassification of workers as independent contractors;
- Off-the-clock work in which non-exempt employees are not paid for all time that they spend working for the employer; and
- Errors in calculating the “regular rate” for purposes of determining and paying overtime.
Merely paying an employee a salary and calling her an “executive,” a “manager” or an “IT Technician” does not confer exempt status. In order for an employee to qualify as exempt under the FLSA, the employer must ensure, and prove at trial, that specific requirements of one of the defined FLSA exemptions are met.
The most commonly relied upon FLSA exemptions across different industries include:
- Executive exemption
- Administrative exemption
- Professional exemption
- “Computer employees,” and more specifically “computer systems analysts,” “computer programmers,” and “software engineers”
- Highly compensated exemption
With some limited exceptions, the above exemptions have (1) a compensation component and (2) a duties component. Both elements must be satisfied for the exemption to apply. If, for example, an executive assistant is paid an annual salary of $95,000 but does not exercise discretion and independent judgment with respect to matters of significance, he will not qualify for the administrative exemption. Note, however, that under the highly compensated exemption in its current form, if an employee earns total annual compensation of at least $100,000 (this amount may be changing soon), which must include a base salary at the requisite level, the employee is exempt provided that she “customarily and regularly” performs “any one or more” of the exempt duties and responsibilities identified for the executive, administrative or professional exemptions.
Another commonly invoked exemption is the outside sales employee exemption, which requires that (1) the employee’s primary duty is making sales or obtaining “orders or contracts” and (2) the employee “customarily and regularly” performs his work away from the employer’s place of business.
There are also industry-specific FLSA exemptions, such as, for example, certain recreational establishments, fishermen, interstate truck drivers, agricultural workers, and, as to overtime, taxi drivers. This list is by no means exhaustive. As with the exemptions above, each of these exemptions have specific requirements that must be met for the particular exemption to apply.
Note again that states may impose different requirements for exemptions from their wage-and-hour laws, may not recognize certain FLSA exemptions, and may have unique exemptions of their own. Justin Scott is an experienced Atlanta wage & hour attorney who can help you navigate these laws.
Independent Contractor Misclassification
With the advent of the “gig” or on-demand economy, one of the most hotly litigated wage-and-hour topics over the past five years has been the classification of workers as independent contractors as opposed to employees. Because an independent contractor is not an employee, she is not covered by the FLSA, among numerous other consequences of that non-employee status. Should a court or jury find that an employer misclassified a worker, or perhaps an entire class of workers, as independent contractors, a whole host of damages can be awarded, including, but certainly not limited to, allegedly unpaid minimum wage and overtime.
Under the FLSA, most courts use the “economic realities” test to determine whether an individual is properly classified as an independent contractor or employee. The ultimate question is whether the individual can truly be said to be in business for him or herself, or instead “depends upon someone else’s business for the opportunity to render service.” To answer that question, the economic realities test provides that the following factors should be examined:
- The extent to which the services rendered are an integral part of the principal’s business.
- The permanency of the relationship.
- The amount of the alleged contractor’s investment in facilities and equipment.
- The nature and degree of control by the principal.
- The alleged contractor’s opportunities for profit and loss.
- The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
- The degree of independent business organization and operation.
Recent court opinions have stressed that these factors are only material to the extent they help the trier of fact decide the ultimate question.
Employers must pay non-exempt employees for all time worked; this includes all time that employees are required to work and all time that employees are allowed to work. While this seems like a straightforward concept, problems can be manufactured in a number of ways, including:
- Employees performing work before or after they clock in;
- Automatic time deductions for meals or breaks;
- Employees working away from the office, particularly given the ubiquity of smartphones and the ease with which supervisors can email, call or text their employees;
- Supervisors pressuring their employees to not report, or to underreport, their time in order to accomplish tasks within budget.
Regular Rate of Pay
To the extent employees are eligible for and work overtime, they must be paid at the correct overtime rate, which, in turn, requires the proper calculation of the regular rate. As a general rule, in calculating the regular rate, the employer must include all compensation paid to the employee except for the express statutory exclusions set forth in 29 U.S.C. section 207(e). Issues can arise in this area when, for example, employers fail to include non-discretionary bonuses in the total compensation numerator when calculating the regular rate.
Contact Radford Scott LLP at (678) 780-4880 for assistance with wage & hour issues, or contact the firm online here.