Understanding the Wage and Hour Compliance Puzzle
The future of wage and hour compliance is a complex puzzle.
Lori Alexander and Paula Anthony, office managing shareholder and shareholder at Littler Mendelson PC, put together the pieces at CBIA’s 2023 Human Resources Conference.
“There have been a lot of changes all over the HR landscape, and in wage and hour, those changes have been changes in the law as well as changes in the workplace,” Anthony said.
“The purpose here is to help you spot issues, be proactive, and recognize potential minefields in the wage and hour arena.”
Exempt vs. Non-Exempt
The first topic was exempt employees—those exempt from minimum wage and overtime pay requirements—and how to avoid misclassification.
Anthony encouraged HR professionals to review the federal Fair Labor Standards Act and Connecticut’s wage and hour laws.
“FLSA is the floor,” Anthony said. “If there is state law that offers more protection or more benefit, that’s going to prevail.”
Anthony highlighted three common mistakes employers make in exempt employee classification:
- Always classifying a salaried employee as exempt
- Always classifying supervisors as exempt
- Making improper deductions from exempt employees’ paychecks
“The overall arching theme here is your job title and the way an employee is paid are not determinative of their classification,” Anthony said.
Alexander said hourly worker rules are the same for remote workers, “but they’re more complicated.”
“When you have remote workers, you don’t see them,” she said. “How are you going to manage what time they’re working?”
The biggest challenge with remote workers is tracking off-the-clock work, she added.
Alexander noted that some workers will complete eight hours of work over a 12-hour period due to interruptions throughout the day, and will ask for 12 hours of pay.
“Make sure that you have a very strong policy, and that your employees understand their scheduled hours if they’re working at home,” she said.
The speakers recommended a telework policy and agreement to make expectations to employees clear.
“That policy serves two functions: it serves to educate the employee about what the expectations are, and it serves as the enforcement tool when they don’t abide by that,” Anthony said.
For a non-exempt employee’s telework policy, Alexander recommended including:
- Hours worked and a timekeeping policy
- Specification of what constitutes work
- A defined work schedule
- A prohibited work outside schedule policy
- Authorized breaks, including meal and rest breaks
Alexander also recommended reading the U.S. Department of Labor’s field assistance bulletin 2020-5 for compensation guidance.
“It basically says that your responsibility as an employer is to pay for all hours worked that you have actual or constructive knowledge of,” she said.
Alexander said actual or constructive knowledge is based on timesheets, when an employee is communicating with you, or when they indicate they are working.
While pay disparities originated between genders, society has gone beyond that, Anthony said.
“Disparity exists not just between gender, but it’s also manufactured on age, race, and intersectionality,” she said.
“It trickles down, and so there are multiple layers of pay equity that pay equity legislation aims to address.”
In Connecticut, employers can make distinctions in pay based on a seniority system, a merit system, education, training, or production metrics.
“When making distinctions between pay, make sure you’re addressing these potential factors,” Anthony said.
“And if there’s a justifiable business reason to distinguish pay between candidates or employees in the same position, make sure that you have clearly spelled out why there is that difference, so that it’s defensible.”
The presenters finished by looking at future policy priorities and initiatives, including:
- An increase in the minimum wage
- Challenging the independent contractor status of workers in the on-demand economy
- Broadening what it means to be a joint employer
- Increasing overtime salary thresholds for exempt employees
Both speakers focused on the step increases for Connecticut’s minimum hourly wage, which will hit $15 an hour June 1.
However, that is not the last time the minimum wage will rise in the state.
There will be an automatic annual minimum wage increase Jan. 1, 2024 based on inflation and the Employment Cost Index, Alexander said.
“If inflation is high, the minimum wage will go up more, if inflation is low, it will go up less,” Alexander said.
“But stay tuned until those numbers are published.”
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