Delaware Employment Law Blog

Bringing babies to work is a bad idea.  Please, don't do it.  Think of your colleagues and their hectic workdays at the office, where the phone rings about every 32 minutes, where the new-email alert pops up more than 200 times each time, and where the space just outside of their office door could easily be mistaken for La Guardia airport--everyone's circling, waiting for a space on the runway to open up so they can land and unload their passengers. 

There is no sanity for your colleagues who have to deal with constant chaos--even if it's well-managed chaos.  Crying babies, cute babies, either one would be too much. 

Yet, in an article on the NYT blog, Motherlode, Lisa Belkin interviews Carla Moquin, the founder of the Parenting in the Workplace Institute, who claims that the bring-your-baby-to-work concept is a good one.  Thankfully, I am not alone. The bloggers at Ask the Manager agree, well, mostly, in the post, bringing babies to work.

Of the many ways to screen job candidates, using set standards for resume reviews, behavioral interviewing, and pre-employment testing, there is one fundamental that cannot be overlooked--reference checks.  Don't be fooled into believing that no one gives reference information.  Not true.  At the very least, verify academic credentials. 

The reality is that people lie on their resumes.  I recently heard that it is estimated that as many as 62% of resumes contain "inaccuracies."  And those "inaccuracies," in large part, are related to the individual's employment and education histories.  So check the history stated on the resume against the real history. 

Don't believe me?  Just ask the Iranian President Ahmadinejad, whose Minister of the Interior, Ali Kordan was impeached for dishonesty when he admitted that he'd falsely represented that he held a law degree Oxford University.  The revelation has caused major political turmoil, as reported in detail by the Washington Post.

[H/T to Employee Screen IQ University]

Can your color preferences provide an indication of your ideal job?  Seems unlikely, I know.  But try the Color Career Counselor at careerpath.com and maybe you'd reconsider.  In short, you are presented with several color swatches (on the screen, of course), and asked to choose the color you like to look at the most, the least, etc.  Now, this is not the same thing as which color you'd paint your bedroom in or what color you'd never be caught dead wearing--it's a more purist angle.  Simply, which one feels right when you look at it? 

After you take the 5-minute-or-so test, you are e-mailed a summary of your results.  I was positive that the test showed nothing.  I couldn't even say that I had a certain response for many of the choices--I was hesitant on most. 

Well, lo and behold, I was wrong.  I cannot attest to the "science" behind the test but I was shocked at how dead-on the results had me pegged!  It identified my "best occupational category" as a "creator" because I am "nonconforming, impulsive, expressive" and others.  A lawyer, believe it or not, in in that category.  As are corporate trainer, author, and editor, all of which I do and enjoy regularly. 

Ok, so maybe it's a coincidence.  But let's look at the "2nd Best Occupational Category."  Persuader.  No, really, I'm not kidding.  The key personality traits associated with this category include "witty, competitive, sociable, talkative, ambitious, argumentative, and aggressive."  I would agree strongly with each one except for competitive, which I tend to have a deficiency in.  But the rest?  Yes, that's me in a nutshell.  As you can imagine, lawyer certainly falls within this category. 

The most striking part of the report, though, was the last sentence.  It described me and others with similar color preferences as:

They enjoy working with others inside organizations to accomplish goals and achieve economic success.

Ummm, hello? That, in a nutshell, is exactly what I do for a living!  So does this mean that the employee-placement test of the future will involve fabric swatches or paint chips? 

 

William W. Bowser will be presenting at the DELPELRA Fall Conference next week. 

The Conference is targeted specifically to public-sector human resources and labor-relations professionals.  The half-day conference will include presentations on sexual harassment, ADA and FMLA developments, as well as return-to-work strategies for injured employees.  And, at lunch, we are honored to have Delaware Insurance Commissioner and Lt. Governor-Elect Matt Denn will be the featured speaker. 

The conference is being held Tuesday, November 12, 2008, from 8:30 a.m. to 12:30 p.m. at New Castle County Police Headquarters in New Castle.  Tours of this beautiful facility will be offered following the program.

The cost of the seminar is $70 for DELPELRA members and $90 for non-members.  The brochure and registration form are available in PDF format, below. 

Human Resources departments of Delaware employers will soon face a new and more challenging day once the initial excitement dies down and the new administrations in Washington and Dover turn to official business. 

The State of Unions

In Washington, one of the first items on the agenda will surely be the Employee Free Choice Act, which is designed to revitalize the union movement. It will substitute card checks for secret ballot elections, establish strict bargaining deadlines, and introduce interest arbitration to impose a first contract if the parties are unable to reach agreement in 90 days. Interest arbitration is a concept already familiar to Delaware public employers.

Of note, Delaware public employers have won every interest arbitration case decided to date, but the concept itself changes the bargaining landscape. It requires employers to, in essence, bid against each other by proving they are keeping pace with comparable employers. The Act would also increase the power of the NLRB to obtain injunctive relief and impose increased back-pay damages for unfair labor practices committed by employers during bargaining campaigns.

Another law designed to assist unions is the RESPECT Act, which would overturn an NLRB decision (Kentucky River) that labeled many employees as supervisors and removed them from the coverage of the National Labor Relations Act. Passage of that Act would add many exempt supervisors to the rank and file.

On the Agenda

President-Elect Obama has also supported a proposed law that would ban the permanent replacement of strikers.  And he will be appointing at least 3 new members of the NLRB, and it is virtually guaranteed that the majority will be sympathetic to unions. Passage of this cornucopia of union-favoring legislation would put a heavy thumb on the union side of the organizing scale.

Another change that seems certain is the reversal of the Supreme Court’s Ledbetter decision. The plaintiff in that case, Lilly Ledbetter, was featured in an Obama ad, so he certainly owes her. That case held that the time for filing a charge of discrimination based on unequal pay begins to run from the time the initial unequal wage was established. The new law would permit a charge to be filed every time a new paycheck is received.

President-Elect Obama also has expressed support for expanding FMLA coverage from companies with 50 or more employees to those with 25 or more employees, and to require at least 7 days of mandatory paid sick-leave per year.

Delaware's Political Landscape

In Delaware, it is harder to predict what might come to pass. Governor-Elect Markell, though a Democrat, is a former businessman and will, likely, approach game-changing labor and employment legislation cautiously. But the General Assembly, with many union members and advocates, could pass several bills that have been proposed previously but have never seen the light of day.  Among these are the expansion of the state discrimination statute to include sexual orientation, and the elimination of the employment at-will doctrine. Depending on what happens in Washington, there might also be efforts to add a Delaware FMLA law and a Delaware analogue to the WARN Act.

Fasten your seat belts, it is going to be a bumpy ride.

The Family Medical Leave Act (FMLA), is heavily abused and burdensome to administer.  Put together, this combination can mean a major headache for employers.  There are numerous questions that remain unanswered when it comes to what to do when an employer suspects an employee is abusing his FMLA rights.  Many employers have been subject to painful litigation as a result of the FMLA, especially as a result of their well-intentioned but improper attempt to regulate these frequent abuses.  There's no guaranteed way to avoid FMLA errors but sample scenarios help illustrate some of the most common traps for employers.

Requesting Recertification During Leave

If the employer has good, objective evidence that abuse is taking place, the employer may require that the employee be recertified before the end of leave.  If an employee requests an extension of leave, the circumstances since the last certification have changed significantly, or the employer has received information that casts doubt on the continuing validity of the certification.

Possible Options

The Department of Labor (DOL), issued an administrative ruling saying that "the FMLA does not prohibit an employer from including a record of an employee's absences along with the medical certification form for the health-care provider's consideration in determining the employee's likely period of future absences."  The employer may ask the provider whether the employee's absences are consistent with the stated serious medical condition. 

Layoffs was one of the topics discussed at a meeting of a local HR organization I attended last week.  Attendees from different organizations participated in a round-table discussion of the issues they'd each been facing since the last quarterly meeting. Not surprisingly, several raised layoffs as a "hot topic." There was some discussion about how they were handling layoffs and the potential of more cuts in the future.

But not all organizations were laying off.   Some still were hiring as normal and others' hiring needs had recently increased, for various reasons.  What was most interesting trend was also the most surprising.  Many of the attendees who were still hiring new employees regularly said that lots of candidates had been laid off by the previous employer.  Nothing new or surprising there. 

What was so striking was the observation, which was repeated by several individuals, that the applicants didn't seem to be in any hurry to become reemployed.  A Recruiting Director commented that the candidates who'd been let go were looking for "the best job," not just "a job."  And, to be frank, they are being pretty damn picky.  The recruiters and hiring managers admitted to being taken aback by the demands of the unemployed candidates.

So what does this say about our current workforce?  It sounds like Baby Boomers have adopted the Gen Y mentality of, "I'd rather be broke than suffer all day in a job I hate."   Revolutionary.

White-collar exemptions from the minimum wage and overtime requirements are the most common exemptions under the Fair Labor Standards Act (FLSA).  The second of the three tests used to determine whether an employee is covered by the white-collar exemption is the Salary Basis Test.  If exempt employees' pay is subject to improper deduction, the exemption may be lost and the employer could be liable for unpaid overtime wages. 

Deductions from the employees' predetermined salary are improper when 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. 

Payroll Practices that Constitute Improper Deductions

Some examples of improper deductions include:

• Deduction for a partial-day absence to attend a parent-teacher conference;
• Deduction of a day of pay because the employer was closed due to inclement weather;
• Deduction of three days of pay because the employee was absent from work for jury duty, rather than merely offsetting any amount received as payment for jury duty;
• Deduction for a two-day absence due to a minor illness when the employer does not provide wage-replacement benefits for such absences.

Payroll Practices that Do Not Constitute Improper Deductions

There are some exceptions from the no-pay-docking rule.  In these situations, the employer will not lose the exemption by deducting pay from the employee's salary:

• The employee is absent from work for one or more full days for personal reasons, other than sickness or disability;
• The employee is absent from work for one or more full days due to sickness or disability if deductions made under a bona fide plan, policy, or practice of providing wage-replacement benefits for these types of absences;
• To offset any amounts received as payment for jury fees, witness fees, or military pay.*
• Penalties imposed in good faith for violating safety rules of "major significance;
• Unpaid disciplinary suspension of one or more full days imposed in good faith for violations of written workplace conduct rules;
• Proportionate part of an employee's full salary may be paid for time actually worked in the first and last weeks of employment.

*Note that, in some states, employers are prohibited from offsetting wages for these items.

Some additional payroll practices that do not violate the salary basis test include:

• Taking deductions from exempt employees' accrued leave accounts;
• Requiring exempt employees to keep track of and record their hours worked;
• Requiring exempt employees to work a specified schedule; and
• Implementing bona fide, across-the-board schedule changes.

Effect of Improper Deductions

An actual practice of making improper deductions from salary will result in the loss of the exemption.  To determine whether an actual practice exists, some of the factors include:

• The number of improper deductions, particularly as compared to the number of employee infractions warranting discipline;
• The time period during which the employer made improper deductions;
• The number and geographic location of both the employees whose salaries were improperly reduced and the managers responsible; and
• Whether the employer has a clearly communicated policy permitting or prohibiting improper deductions.

If an actual practice is found to exist, the exemption will be lost only:

• during the time period in which improper deductions were actually made
• for employees in the same job classifications
• working for the same managers responsible for the actual improper deductions.

Using the organization chart above as an example:

• If Manager A has docked the pay of Engineer A on each of 12 days when Engineer A arrived late to work during the last 3 months,
• The exemption could be lost only for Engineer A and Engineer B and
• The exemption could be lost only during those 3 months
• But the exemption could not be lost for Chemist or for Engineers C or D.

This is because the exemption can be lost only  (1) during the time period when improper deductions were made (the 3-month period); (2) for employees in the same job classification (which is why Chemist's exemption would not be lost); and (3) who work for the same manager as was responsible for the improper deductions (which is why Engineers C and D do not lose their exemptions).

The Safe Harbor Provision

If no actual practice is found to exist, the employer may be able to take advantage of the Safe-Harbor provision.  Isolated or inadvertent improper deductions will not result in the loss of exempt status if the employer reimburses the employee in accordance with the Safe Harbor provision.  The Safe Harbor provisions provides that the exemption will not be lost if the employer:

• Has a clearly communicated policy prohibiting improper deductions and including a complaint mechanism;
• Reimburses employees for any improper deductions; and
• Makes a good faith commitment to comply in the future
• Unless the employer willfully violates the policy by continuing to make improper deductions after receiving employee complaints.

Recently, I was discussing a company's internal training program with its HR Director.  Administrative professionals are required to earn a certain amount of "credits" per year through the internal program.  Full classes are offered in the Fall and Spring and a partial class schedule during the Summer.  The topics are varied and include general software training, such as how to use styles in Microsoft Word, job-specific applications, such as how to write a certain report in more quickly and efficiently, and soft skills, such as organization and time management.  More than 70% of the training, though, falls into the first category, software-specific. 

As we discussed this in more detail, I learned that some of the problems with the program was the unequal results it seemed to produce.  Some of the attendees felt that the courses were far below their skill set and that it was truly painful to sit through the same Microsoft Excel course year after year without learning anything new.  Yet, the HR Director had come to find out that some employees, who had been with the organization for years, did not possess even the most basic software skills.  

The HR Director wanted to know how this had happened and what could be done to correct it?  After the time and energy the organization had devoted to creating and implementing the program, which had been in place for a number of years, it was fair to say that the return on the company's investment was zero, at best.  If anything, the program was actually a loss.  They paid for instructors, both high-cost outside trainers and internal IT staff whose time could have been spent on other things.  The employees were taken away from their "real" work for at least 12 hours a year (the minimum number of credits each employee has to earn per year).  And, the lost potential of having an entire workforce who had actually learned the materials and who should have been performing at a much higher level. 

Turning to the first question--how had this happened?  Certainly, there are a lot of ways to point fingers.  The employees didn't take the classes seriously; they didn't have the initiative to develop their professional skills; and they didn't speak up if they were not able to grasp the material or follow along during the instruction.  And what about the trainers?  Shouldn't they have known that their students had drifted out in space 5 minutes after the class began; shouldn't they have seen the dazed look in the students' eyes; shouldn't they have questioned why the same, advanced-level employees were returning to a class they'd already taken several times; shouldn't they have pushed for a more advanced curriculum offering?

Should've, could've, would've.  Yes, all of those things should have happened.  But they didn't.  There is one other thing, though, that didn't happen.  And this, in my opinion, was the root cause of the program's dysfunction. 

There was no assessment.

Students get credit regardless of whether they left with any increased knowledge. Students couldn't test out of programs that were below their skill level.  Basically, so employees could play Scrabble on the computer during the class, as long as they showed up to 12 hours of classes each year. 

This, in my opinion, was the fatal flaw of the program.  As Stephen Covey said:

"Accountability breeds response-ability."

There were no checks in place to make employees accountable for the knowledge they'd just been given.  And employees who did take the knowledge were rewarded with a big, fat, nothing.  There was no "A+" or gold star at the end of the tunnel.  They just returned to their desks and hoped that the information they'd just learned would help them in some way.  Wow, what a waste!

So, how can it be fixed?  Easy!  Require attendees to take and pass a skills assessment at the end of the class before they will be awarded credit.  If a large percent of the class fails the assessment, the training and the trainer need to be reevaluated--it's likely that the lesson was not well communicated.  But if most do pass the assessment test, the ones who do not should not be awarded credit.

But they should be given another chance.  Because, remember, the goal is to get the students to actually understand the material--not to trick them into passing or failing a test.  So, if a student does not pass the assessment test, they (and all students) should be given take-away materials that they can reference and, when ready, try again.  The take-away should be detailed instructions--probably more detailed than the actual class and used as a reference for later.  Or video tutorials can be made available for students to watch.  Videos can be created internally with a product such as Camtasia Studio, or purchased from a commercial site, such as Lynda.com.  The videos can be hosted by the company's SCORM system, an internal server or intranet, or even YouTube.  The point is to get the information to the students for them to study and then to retest--successfully.

Tuition assistance is used as a talent-management strategy. The idea is that employees will not stay unless they are challenged. They will be challenged only if they are learning new skills. So employers assist employees in obtaining the new skills. In the economic downturn, though, some employers are struggling to justify the capital cost these programs can require. I had the pleasure of attending a meeting of the HR Committee of a local industry-based organization. The meeting was hosted by Right Management. Kathleen Voss, the speaker, is a Right Management consultant and spoke on employee retention. During the meeting, she referred us to a report on the same topic.

The report, Strategies for Talent Management 2008, was prepared by the CEO Council for Growth in partnership with the Council for Adult and Experiential Learning. The report looks closely at the successful ways organizations are developing and managing their talent and, in particular, how tuition assistance is part of their talent-management initiatives.

The survey identifies 11 exemplary practices and profiles several companies in the Greater Philadelphia Region using the practices as criteria. The 11 exemplary practices in the use of tuition assistance as an effective employee-retention strategy include:

1. Prepay tuition for employees
2. Provide tuition assistance to part-time employees
3. Re-evaluate tuition caps
4. Form partnerships with educational institutions
5. Provide assistance for individual courses and for degree programs
6. Provide assistance for certificate programs
7. Promote assessment before the education program begins
8. Recognize the academic achievements of employees in the program
9. Provide educational advising to employees
10. Establish metrics
11. Communicate impact

None of the five employers reported that they were recognizing the successes of employees in the educational program. None had established metrics to measure the success of the tuition-assistance program and, as a result, none had been communicating any results of the program.

But 4 of the 5 did extend tuition assistance to part-time workers, as well as permitting tuition reimbursement or individual courses.

Drafting Your Employee Handbook is the title of an employment-law seminar I presented to two Delaware employers earlier this week.  The materials and PowerPoint slides from the seminar are linked below for your reference.

The

includes a number of policies, separated into various categories.  The first three categories specifically address common issues faced by Delaware employers.

• There are 10 of the policies I consider to be the "must-have" policies.  There are 5 pay-related policies because, in Delaware, that information must be provided to employees in writing at the time of hire. 
• The required pay information includes pay rate, pay period, place of payment, method of payment, any other benefits, including sick and vacation time, and the name and phone number of the individual who can be contacted with questions.  As a back-up, you can put most of this information in the handbook. 
• There are also 5 technology policies that have been issues for so many employers but that still seem not to be included in most employee handbooks.

The rest of the policies are grouped by general category type.  Under each category type are some of the most commonly used policies.  Often I hear that employers just don't know what kinds of policies are out there and they need to see some samples to get ideas for what they may and may not want to include in their own handbooks.  The seminar handbook should help.

Human Resource professionals must be familiar with a vast vocabulary, spanning from the legal world to psychology and sociology terms.  At a professional organization meeting I attended this morning, I had the pleasure of listening to an organizational consultant speak about employee retention and engagement--a very important topic in my world.  Her presentation was filled with a variety of factoids of which I hadn't been aware.  One little tiny piece of constructive feedback I have, though, is that she got the Generations wrong.  

During her talk, she referenced the challenges presented to employers by Generation Y employees.  But what she meant was Generation X and Generation Y.  She stated that Gen Y includes employees just entering the workforce (i.e., 18 years old), through individuals aged 31.  This is not quite accurate.  Here's what she probably meant to say:

Traditionalists are actually two generations ("Matures" and "Silents") who share similar values and behaviors who were born between the start of the 20th century and the end of World War II (1900-1945).  This generation is characterized by rigidity, privacy, and loyalty.

Baby Boomers, who were born between 1946 and 1964 during the Post-World War II baby boom,  the largest generation ever born in the U.S.  This generation is known for its love affair with rock 'n roll, Woodstock, and its experiences with the civil rights movement and Watergate.

Generation X includes individuals born between 1965 and 1980 grew up with celebrity figures that included Madonna, Oprah, and Michael Eisner.  Because the Baby Boomer parents of Gen X included working mothers, Gen X was left to fend for itself and the concept of the latchkey kid became prevalent. As a result, this generation is particularly independent and resilient.

Generation Y (also known as "Millennials") represent the youngest workers in today's workplace, being born between 1981 and 1999.  Raised by Baby Boomers, who coddled and protected in a way that they'd not been cared for by their own parents, Gen Y believes that it really can do anything and, as a result, tends to see very low penalty associated with frequent job changes and even career changes.  Gen Y engages in "real-time learning" as a result of constant digital access to resources such as YouTube and Google.  One defining feature of this generation is their general lack of awareness of the concept of a chain of command--something that can put a Baby Boomer or Traditionalist into a tailspin. 

For other posts on Generational Issues in the Workplace, see:

Why Recruiters Need to Understand the Helicopter Parent

How to Use Reverse Mentoring as a Retention Tool for Gen Y Employees

Gen Y Demands Employers Open the Checkbook for Technology Requests

The Connection Between Training and Employee Retention, According to Gen Y

What Makes a Good Leader? If You Lead Gen Y's, You'd Better Find Out.

Knock It Off, Gen Y: 3 Ways You're Driving Your Boss Crazy

Employees must be paid wages for all time worked.  Period. That's the law.  It seems simple enough but the seeming simplicity of that statement can be deceptive.  What constitutes "time worked" has remained an elusive concept for many employers.  As a result, the issue of what should be included in a calculation of the total time worked for compensation purposes, has generated a great deal of case law on the issue--some making clearer and others making the issues even more complex.

Work "suffered" is time worked.  Work that was not requested by the employer but that was "suffered" or "permitted" is considered time worked.  Then, of course, the question becomes when has an employee "suffered work."

Waiting time is counted as time worked when the employee is unable to use the time effectively for his own purposes and the time is controlled by the employer.   Waiting time is not counted as hours worked when the employee is completely relieved from duty; and the time is long enough to enable the employee to use it effectively for his own purpose.

On-call time is time worked when the employee has to stay on the employer's premises or the employee has to stay so close to the employer's premises that he cannot use that time effectively for his own purposes. But, simply being required to wear a pager or to leave word at home or with the employer about where the employee can be reached, is not considered "on-call" time that constitutes "work suffered."

Meal periods are not hours worked when the employee is relieved of duties for the purposes of eating a meal.  But rest periods (include smoking breaks, if permitted), lasting 5 to 20 minutes are counted as time worked and must be paid accordingly. 

When traveling between work and home, employees are not considered to be working and the time spent traveling is not working time.  Travel during the normal working day between job sites is considered working time.

Time employees spend in meetings, lectures, or training, is considered hours worked and must be paid unless:

• attendance is outside regular working hours;
• attendance is voluntary;
• the course, lecture, or meeting is not job-related; and
• the employee does not perform any productive work while attending.

For more about the basics of the FLSA, see:

FLSA 101: Who Is Covered Under the Fair Labor Standards Act?

FLSA 102: Minimum Wage Requirements of the Fair Labor Standards Act

Pregnancy discrimination complaints have been on the rise for a very long time.  In 2007, working women in the United States filed 65 percent more complaints of pregnancy discrimination with the Equal Employment Opportunity Commission (EEOC) than they filed in 1992.  A new study analyzing pregnancy discrimination claims (pdf) was released today by the National Partnership for Women & Families at a symposium to commemorate the 30th anniversary of the Pregnancy Discrimination Act (PDA), enacted on October 31, 1978.

To conduct the study, the National Partnership for Women & Families analyzed the most recent pregnancy discrimination charge data, as well as detailed pregnancy discrimination charge data from a ten-year period – FY1996 to FY2005. They also reviewed recent demographic data on women’s labor force participation and childbearing trends, and data about stereotypes and attitudes confronting pregnant women on the job.

The study reaches some interesting conclusions:

1. The growth in pregnancy discrimination claims during the time period was fueled largely by charges filed by women of color. Claims by by women of color jumped 76 percent, while claims overall increased by 25 percent.

2. Female-dominated industries may be no less likely to have discriminatory practices than industries with women in non-traditional jobs. More than half the claims filed with the EEOC during that period (53 percent) were filed in service, retail trade and the financial services, insurance and real estate industries – where some seven in ten women work.

3. Pregnancy discrimination charge filings increased in almost three-quarters of the states, with 38 states recording an increase in charges.

4. There is no single cause for the rise in pregnancy discrimination suits. The study posits that longstanding stereotypes and attitudes about gender, coupled with increasing numbers of women in the workplace, are among the key reasons for the rising numbers.

The Fair Labor Standards Act ("FLSA"), provides that covered employees must be paid no less than the current state or federal minimum wage, whichever is greater, for all hours worked. The Delaware minimum wage is $7.15 trumps the current federal minimum wage of $6.55. 

Although the concept of minimum wage is not a complicated one, there are some issues that can blur the obviousness of the hourly wage amount.  One such issue is what exactly should be included as compensation when determining whether minimum wage has been paid for all time worked.  Included in the definition of compensation are:

• Wages (salary, hourly, piece rate);
• Commissions;
• Certain bonuses;
• Tips received by eligible tipped employees (up to $4.42 per hour); and
• Reasonable cost of room, board , and other "facilities" provided by the employer for the employee's benefit.

The fifth type of compensation, "board and lodging," presents some nuances of its own.  For example, it cannot exceed the actual cost of the facilities provided and cannot include a profit for the employer.  The employer must follow good accounting practices when determining the reasonable cost.  And, if no cost is incurred, the employer may not take a credit.

Deductions from pay can present major problems when they bring an employee's hourly wage below the minimum wage.  Deductions are illegal if:

• Made for an item considered primarily for the benefit or convenience of the employer; and
• Reduce the employee's earnings below the required minimum wage.

Some of the most common examples of illegal deductions include:

• Tools used for work;
• Required uniforms;
• Damages to employer's property;
• Cash-register shortages.

Tipped employees are not as problematic as illegal deductions but can be complex.  To be considered a "tipped employee" under the FLSA, the employee must work in an occupation in which he customarily and regularly receives more than $30 per month in tips.  Tipped employees must be paid at least $2.13 per hour in cash by the employer, who may claim a "tip credit" for the rest of the minimum wage.  The employer may claim the "tip credit" only if:

• The employer informs each tipped employee about the tip-credit allowance, including the amount to be credited before the credit is utilized;
• The employer can document that the employee received at least enough tips to bring the total wage paid up to minimum wage or more;
• All tips are retained by the employee and are not shared with the employer or other employees, unless through a valid tip-pooling arrangement.

An example of the FLSA's minimum-wage requirements in action:

Employee receives $9 per hour for 40 hours plus $5 in commission and $20 in reasonable cost of room and board. 

Total earnings = $360 + $5 + $20 = $385

Total earnings / total hours = $385 / 40 = $9.63

 

See also:  FLSA 101: Who Is Covered Under the Fair Labor Standards Act?