Wages and Hours:
Critical Issues
Raymond L. Hogge, Jr.
Hogge Law
500 E. Plume Street
Norfolk, Virginia 23510
(757) 961-5400
www.VirginiaLaborLaw.com
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Disclaimer: This presentation is for informational
purposes only, and does not constitute legal
advice
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Wage Hour Legal Requirements
• Minimum Wage
• Overtime Compensation
• Prevailing Wage Rate
• Child Labor
• Recordkeeping
• Nondiscrimination
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Sources of Requirements
• Federal Laws
• Fair Labor Standards Act
• Davis Bacon Act, Service Contracts Act
• Executive Orders
• State Laws
• Virginia Payment of Wage Law
• Contract Clauses
• Government Contracts
• Collective Bargaining Agreements
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA: Coverage
• Enterprise
• Individual
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA: Coverage
• Enterprise Coverage
• Enterprise engaged in interstate commerce with
annual gross revenue at least $500,000
• Hospitals
• Institutions primarily engaged in the care of the
sick, aged, mentally ill, or disabled who reside on
the premises
• Schools for mentally disabled or gifted children
• Preschools, elementary schools, secondary
schools, colleges
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA: Coverage
• Individual Coverage: Individual workers who
are "engaged in commerce or in the
production of goods for commerce.“
Examples:
•
•
•
•
Employees who produce goods that will be sent out of
state
Employees who regularly make telephone calls to
persons located in other states
Employees who travel to other states in their jobs
Employees who do janitorial work in buildings where
goods are produced for shipment out of state
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA: Employment Relationship
• FLSA covers only employees
• FLSA does not apply to independent
contractors
• Beware misclassification of independent
contractors as employees
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Minimum Wage
• FLSA: Currently $7.25/hour
• Many states have their own minimum wage
• Virginia follows FLSA
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Minimum Wage: FLSA - Tipped Employees
• Tipped employee may be paid $2.13/hour
direct wages if the employee regularly receives
more than $30/month in tips
• “Tip credit” equal to amount employee
actually receives in tips
• Direct wages plus tip credit must meet normal
minimum wage rate; employer pays any
deficiency
• Issues: tip pooling; large group service
charges
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Minimum Wage: FLSA - Young Workers
• $4.25 minimum wage for workers under 20
years old for first 90 days of employment
• Normal minimum wage applies after reaches
age 20 or 90 days or employment (whichever is
first)
• Displacing other workers prohibited
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Minimum Wage: FLSA - Full Time Students
• 85% minimum wage
• Full-time students employed in retail or service
stores, agriculture, colleges and universities
• Maximum 8 hours/day; maximum 20
hours/week when school in session; maximum
40 hours/week when school not in session
• Requires DOL certificate
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Minimum Wage: FLSA - Student Learners
• High school students at least 16 years old who
are enrolled in vocational education
• Can pay 75% minimum wage while student
enrolled on vocational education
• Requires DOL certificate
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Minimum Wage: FLSA - Workers with Disabilities
• FLSA section 14(c)
• “Special minimum wages” for workers whose
earning or productive capacity is impaired by a
physical or mental disability
• “Commensurate” wage rates based on worker's
individual productivity
• Requires DOL certificate
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Minimum Wage: Exec. Order 13658
• Issued February 12, 2014
• Applies to Federal contracts and subcontracts
• Establishes minimum wage of $10.10
beginning January 1, 2015
• Beginning January 1, 2016 amount will be
determined by DOL annually
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Minimum Wage: Exec. Order 13658
• Applies to construction contracts exceeding
$2,000 (Davis Bacon Act)
• Applies to service contracts exceeding $2,500
(Service Contracts Act)
• Applies to micro-procurement contracts
exceeding $3,000 (FLSA)
• Applies to concession contracts (FLSA)
• Applies to contracts in connection with
offering services on Federal lands
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA
• Overtime compensation paid for all hours in
excess of 40 in any “workweek”
• Workweek is 7 consecutive 24 hour periods
• Can start on any day of week, but cannot
change from week to week
• Overtime compensation rate is 1.5 times the
employee’s “regular rate”
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Regular Rate
• “Regular rate” is effective hourly rate paid to
employee for all hours worked during
workweek
• Regular rate includes all compensation paid hourly wages; commissions, piece rate; salary subject to statutory exceptions
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Exclusions from
Regular Rate
• “Premium pay” for work performed outside
contractually established daily or weekly
hours, or because work is performed on days
such as holidays and weekends
• Exclusion does not apply to extra pay for night
shift; hazard pay; extra pay for difficult or
unpleasant work; incentive pay for quick work
• Premium pay can be credited toward overtime
compensation owed
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Exclusions from
Regular Rate
• Discretionary bonuses
• Employer must retain complete discretion to pay
or not pay
• Gifts, Christmas and special occasion bonuses
• Prizes, contests and suggestion systems
• Cannot be directly related to job duties
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Exclusions from
Regular Rate
• Contributions to health Insurance, life
Insurance, retirement, cafeteria, and other
employee benefit plans
• Contributions to Profit Sharing, Trust, Thrift, or
Savings Plans
• Stock Option Grants, Stock Appreciation Rights
Plans, Employee Stock Purchase Plans
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Exclusions from
Regular Rate
• Payments for time when no work performed
• Holidays, vacation, sick leave, other paid
time off, pay for periods of lack of work
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Exclusions from
Regular Rate
• Reasonable payments for work-related
expenses
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Exclusions from
Regular Rate
• Show-up minimum payment
• Call-back minimum payment
• Others specific payments for nonproductive
hours, e.g., lunch period pay, salary advances,
etc
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Overtime
Calculation
• Hourly rate employees
• Regular rate = hourly rate
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Overtime
Calculation
• Piece rate employees
• Regular rate = piece rate compensation
divided by hours worked
• Overtime compensation = regular rate x
number of overtime hours x .5
• Employee has already received full
payment of non-overtime wages
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA: Overtime Compensation
• Overtime calculation
• Day rate employees
• Regular rate = day rate divided by hours
worked
• Overtime compensation = regular rate x
number of overtime hours x .5
• Employee has already received full payment
of non-overtime wages
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Overtime
Calculation
• Commissioned employees
• Must allocate commission to workweeks or
hours worked
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Overtime
Calculation
• Non-exempt salaried employees
• Regular rate = salary divided by number of
hours the salary is intended to compensate
• Overtime pay = regular rate x number of
overtime hours x 1.5
• Salary for period longer than workweek
must be converted to workweek equivalent.
• Example: monthly salary x 12 / 52
• Example: semimonthly salary x 24 / 52
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Overtime Compensation: FLSA - Overtime
Calculation
• Nonexempt salaried employees - fluctuating
workweek
• Overtime compensation = total hours worked
/ salary x .5
• Requirements:
•
•
•
•
fixed salary
effective hourly rate never below minimum wage
clear mutual understanding that salary covers all
hours worked
Employee’s hours fluctuate week to week
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Hours Worked: FLSA - “Suffer or permit to work”
• Work time is compensable if employer knew
or had reasons to know it was being
performed
• Adopting rule against unauthorized work is not
enough; management must enforce the rule
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Hours Worked: FLSA - Waiting Time
• Issue: was employee engaged to wait
(primarily for the benefit of the employer compensable) or waiting to be engaged (time
primarily for the benefit of the employee - not
compensable)
• If employee can use waiting time for his own
purposes, then usually not compensable
• On-call time can present issue
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Hours Worked: FLSA - Rest and Meal Periods
• Rest period must be at least 20 minutes
• Meal periods must be at least 30 minutes
• Rest and meal periods may be compensable if
employee not relieved of all work duties
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Hours Worked: FLSA - Sleeping Time
• 29 CFR 785.21: Employees on duty for less than
24 hours must be paid for all on-duty time even if
permitted to sleep
• 29 CFR 785.22: Employees on duty for 24 hours
or more can agree with employer to exclude a
regular sleep period of up to 8 hours, provided
employer provides sleeping facility and employee
can sleep up to 5 hours uninterrupted
• Similar rules for public sector employees under
FLSA section 7(e)
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Hours Worked - FLSA: Preliminary and
Postliminary Activities
• Excluded from hours worked under Portal to
Portal Act (1947)
• IBP v. Alvarez (US SCt 2005): PTP Act does not
apply to activities that are part of “continuous
workday,” which starts at first “principal activity”
and ends at last principal activity; principal
activities include activities that are “integral and
indispensable” to “principal activities” of the job
• Examples: “Donning and doffing”; preparing
equipment; transporting tools and equipment to
job site; security screenings; shift changes
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Hours Worked: FLSA - Lectures, Meetings and
Training Programs
• Normally compensable unless
• Attendance outside employee’s regular
work hours
• Attendance voluntary
• Not directly related to employee’s job
• Employee does not perform any productive
work
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Hours Worked: FLSA - Travel Time
• Ordinary travel to and from work at beginning
and end of day: not compensable
• Travel from company to job sites:
compensable
• Travel between job sites: compensable
• Travel from last job site at end of day to
company: compensable
• Travel from last job site at end of day to home:
normally not compensable
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Hours Worked: FLSA - Travel Time
• Travel from home to work on special one day
assignment In another city: compensable
work time, except for the time spent in
commuting to the place of departure, and the
usual meal time
• Travel away from home community:
compensable on off-duty days for the same
number of hours as on-duty days
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Hours Worked: FLSA - De Minimis Time
• Small amounts of time at beginning or end of
day may be deemed noncompensable where
tracking time is administratively difficult
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Executive Employees
• Salary basis, not less than $455/week
• Primary duty is managing the enterprise, or
managing a customarily recognized
department or subdivision of the enterprise
• Customarily and regularly direct the work of at
least two or more full-time employees
• Authority to hire or fire, or recommendations
concerning hiring, firing, advancement,
promotion or any other change of status of
employees given particular weight
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Executive Employees - Business
Owners
• Business owner deemed exempt executive if
20% or more equity interest and actively
engaged in management
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Administrative Employees
• Salary or fee basis, not less than $455/week
• Primary duty is office or non-manual work
directly related to the management or general
business operations of the employer or
customers
• Primary duty includes exercise of discretion
and independent judgment regarding matters
of significance
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Administrative Employees in
Schools
• Salary or fee basis, not less than $455/week or
equal to teacher entrance salary
• Primary duty is performing administrative
functions directly related to academic
instruction or training in an educational
establishment
• No separate requirement for Primary
discretion and independent judgment
regarding matters of significance
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: “Learned Professionals”
• Salary or fee basis, not less than $455/week
• Primary duty is work requiring advanced
knowledge - predominantly intellectual and
requiring consistent exercise of discretion and
judgment
• Advanced knowledge in field of science or
learning
• Advanced knowledge customarily acquired by
a prolonged course of specialized intellectual
instruction
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: :Creative professionals”
• Salary or fee basis, not less than $455/week
• Primary duty is work requiring invention,
imagination, originality or talent in a
recognized field of artistic or creative
endeavor
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Computer Employees
• Salary or fee basis, not less than $455/week or
hourly not less than $27.63/hour
• Employed as a computer systems analyst,
computer programmer, software engineer or
other similarly skilled worker in the computer
field
• Primary duty is systems analysis, computer
systems or programs, based on system design
specifications or operating systems (or some
combination requiring same skill)
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA: Exemptions: Highly Compensated
Employees
• Salary or fee basis, at least $100,000 annually
and not less than $455/week on salary or fee
basis
• Customarily and regularly performs duties of
executive, administrative or professiona
employee
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Outside Sales Employees
• No minimum compensation threshold
• Makes sales away from employer’s place of
business
• Makes sales in person
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Companionship and Live-In
Domestic Service Workers
• In 1974 FLSA was extended to cover all
domestic service workers
• At same time, exemption to minimum wage
and overtime requirements of FLSA created for
certain domestic service workers
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Companionship and Live-In
Domestic Service Workers
• FLSA section 13(a)(15) exempts from minimum
wage and overtime “any employee employed in
domestic service employment to provide
companionship services for individuals who
(because of age or infirmity) are unable to care
for themselves.”
• FLSA section 13(b)(21) exempts from overtime
(but not minimum wage) “any employee who is
employed in domestic service in a household and
who resides in such household.”
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Companionship and Live-In
Domestic Service Employees
• DOL new final regulations issued 10/1/13 went
into effect 1/1/15
• Under the new regulations, home health care
agencies cannot claim the exemptions for
workers they place in the homes of their
clients; the exemptions may be claimed only
be service recipients hiring workers directly
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Companionship and Live-In
Domestic Service Employees
• Companionship exemption limited under the
new regulations
• Generally limited to “fellowship and protection”
• Excludes home care workers who spend more
than 20% of their work hours performing “care”
services
• Excludes all time spent providing “medically
related services”
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Companionship and Live-In
Domestic Service Employees
• Conditions placed on live-in exemption
• Written agreements strongly suggested regarding
exclusion of sleep time, meal time, and duty-free
time
• Direct-hire employers required to maintain
records showing exact number of hours worked
• Payment of minimum wage required
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions: Companionship and Live-In
Domestic Service Employees
• New regulations have been challenged in at
least one court
• New regulations present significant challenges
for home care agencies
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
FLSA Exemptions
• Many other exemptions applicable to workers
performing specific job duties.
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Common Mistakes to Avoid
• Misclassification of employees as exempt
• Before applying exemption, make sure it
applies under interpretations of DOL and
courts
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Common Mistakes to Avoid
• Absence of window of correction policy
• Window of correction policy allows
employer to voluntarily correct
misclassification of employees
• Employers should include window of
correction policy in employee handbook
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Common Mistakes to Avoid
• Salary
• Just paying on employee by salary does not
make the employee exempt
• Employee must meet all the requirements
for an exemption
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Common Mistakes to Avoid
• Improper deductions from salary of exempt
employees
• Can result in loss of exemption
Wages and Hours: Critical Issues
Raymond L. Hogge, Jr.
Common Mistakes to Avoid
• Compensatory time
• Compensatory time is allowed only for
public sector employees; not available in
private sector