Posted by marykeating on February 27, 2010 under Government contractors, Wage and hour issues | 
Long a punch line, the idea that the government can step in and improve lives has its deep seated detractors. But the Obama administration is discussing using the federal government’s massive economic power to change the way workers are treated. According to a New York Times article, one in four workers is employed by a company with a federal contract.
One in four workers translates into more than a quarter of American families affected, since so many families have two wage-earners. The administration intends to scrutinize the procurement process, and favor companies with good records on labor and the environment, and those with good wage structures. Naturally this potential executive order has drawn fire. Critics contend that the cost of government contracts will increase, that union shops will be favored, and that many companies will drop out of contention. The article points out a Maryland study, however, that shows the opposite. When Maryland required contractors to pay a living wage (higher than minimum wage), more 
contractors placed bids. “Some higher-wage companies said they began seeking government bids because the new policy leveled the playing field.” In addition, the drain on government resources by the working poor would decrease. Moreover, some evidence indicates that the lowest paying contractors do not produce the same quality work as the companies that pay higher wages and provide employee benefits. No executive order has issued yet, and critics questioned whether legislation would be necessary to change the procurement process. The ramifications could be significant, however, in reversing the rising gap between the most and least affluent in this country.
Posted by marykeating on January 29, 2010 under Discrimination in employment, Wage and hour issues |
As is typical in a State of the Union address, the President touched Wednesday on a number of themes, domestic and foreign. But he specifically alluded to two employment issues that have a lot of resonance in a post-Bush era.
“We are going to crack down on violations of equal pay laws — so that women get equal pay for an equal day’s work.” Nice words; in actuality it has proved difficult for women to prevail on equal pay laws, which require the genders to be paid equal pay for equal work, where the jobs require equal skill, effort, responsibility, and working conditions. Although cases say that the jobs need to be “substantially” equal, courts have too often required women to show that the male who is making more money is doing the identical job, and has identical qualifications. There are always some differences between people. Proving that two jobs are substantially equal is nearly impossible at higher levels, like vice presidents. Yet when a woman at the same level of a corporate organization chart makes $30,000 less than her peer, there should be some redress. Let’s hope the President’s promise comes with some improved legislation.
In the inspirational department, the President said this:
“Abroad, America’s greatest source of strength has always been our ideals. The same is true at home. We find unity in our incredible diversity, drawing on the promise enshrined in our Constitution: the notion that we are all created equal, that no matter who you are or what you look like, if you abide by the law you should be protected by it; that if you adhere to our common values you should be treated no different than anyone else. We must continually renew this promise. My Administration has a Civil Rights Division that is once again prosecuting civil rights violations and employment discrimination.”
Again, nicely stated. But there are plenty of indications that the enforcement has been ratcheted up at the federal level, by both the EEOC and the Department of Justice.
Posted by marykeating on December 23, 2009 under Employment benefit issues, Maryland wage law |
Workers are entitled to be paid for the hours they work. So, even if they are fired, the employer has to pay for the time spent in its employ. If the worker was pulling a Wally in Dilbert’s company, and working harder on avoiding work than actually doing any work, the employer still has to pay for those hours, and deals with the lack of productivity by firing the “Wally.”
Things get more complicated for other types of compensation. Some people are paid entirely or in large part by commission; others get a significant portion of their annual compensation by bonus. What rights does the departing employee have to commissions for sales brought in before he left? What right does the employee leaving in November have to her year-end bonus, if her numbers were stellar until she was laid off or quit?
The best way to deal with these questions is in advance, with a contract. Highly compensated, gifted salespeople are more likely than other non-union workers to have contracts. The end of the relationship should be addressed in the employment agreement. Unless the employee leaves only because the company goes defunct, there will be some work in progress that may merit commission or partial compensation.
Without a clear provision in the employment contract, the employee should look to the commission structure and any policies that have been written about it. Fortunately, some of the more draconian policies are unenforceable under Maryland law. Consider, for example, a policy that states “no commission is payable unless the employee is currently employed on the date of payment of the commission.” The Maryland Court of Appeals rejected this policy in the case of a salesperson who had performed all of the tasks necessary to earn the commission, other than being present on the date of the payment to him. If the deal has been struck, delivery made, and the client paid the bill, the salesperson has earned that commission. In a structure like this, there will always be some uncompensated work, but when there is nothing left for the sales force to do, the whole commission should be paid. On the other hand, if the salesperson has done only a part of the work to conclude the sale, and someone else must step in to finalize the deal, he can legally be denied the commission.
Questions about bonuses can be murkier. One question is whether anyone should be paid a year-end or Christmas bonus if the worker is no longer employed; another is whether the amount of the bonus can be determined. These questions are related, and usually come down to this: how much of the bonus is based on objective numerical criteria? A court cannot enforce a deal if it has to guess how much a worker’s bonus should have been.
Often, bonuses are paid based on a handful of factors, including the company’s productivity and the worker’s specific goals. Some bonus plans allot a bonus pool to a department, and the manager has the discretion to dole out the bonus among the department members. When an element of subjectivity is allowed to define the amount of the bonus, the unhappy worker cannot mount a claim (unless there is proof that the subjective factor is an illegal one, such as the recipients’ race).
Other bonus plans are almost completely subjective. These may weigh the employee’s attitude and contribution to team spirit, for example. Moreover, they may be intended not just to reward past performance, but to provide an incentive to stay. The amount of these types of bonuses cannot be figured out until they are paid.
On the other hand, if a bonus is based solely on the employee’s performance, then an employee who reached her goals in eleven months should not be deprived of the bonus. This is akin to the commission structure, though it’s paid not on one deal but the year’s effort.
If an employer withholds bonuses or commissions without a genuine dispute about whether it has been earned, the employee is entitled to get attorney’s fees for the enforcement action, and can request the court to double or triple the amount owed, under the Maryland Wage Payment and Collection Act.
Bonus or no, enjoy your end of year holidays.
Posted by marykeating on November 20, 2009 under Federal wage and hour law, Maryland wage law |
As previously mentioned here, Maryland’s Workplace Fraud Act imposes new penalties on employers who misclassify employees as independent contractors. At a talk before the Maryland State Bar Association’s Labor and Employment Section’s annual meeting recently, representatives from the state’s Department of Labor, Licensing and Regulation explained the Department’s focus on the landscaping and construction industries. Because studies had indicated that these industries were particularly likely to misclassify employees, the new Maryland law gave additional teeth to the Department in pursuing employers found to engage in a willful pattern of classifying employees as independent contractors. The harm to employees include the lack of worker’s compensation protection, the lack of unemployment benefits, the burden of the self-employment tax on employees, and the inapplicability of anti-discrimination laws. According to the State, more investigators are on the job. Employers should expect more audits of their workforce, as well as site visits.
The federal Department of Labor recently made a similar pronouncement. Yesterday, Secretary of Labor Hilda Solis stated:
“There is no excuse for employers who disregard federal labor standards – especially those that are designed to protect the most vulnerable in the workplace. The failure to comply with these basic labor standards means that workers are not receiving the money they have earned. It is both an economic issue and a fairness issue. America’s workers should rest assured that protecting worker rights is a top priority at the Department of Labor. To make good on that promise, I have hired an additional 250 new wage and hour investigators, a staff increase of more than one third, to ensure that we promptly respond to complaints and can undertake more targeted enforcement.”
Both federal and state laws permit an employee to obtain additional damages from an employer who willfully withholds wages or misclassifies an employee. Employers now need to watch employees and the government watching their practices.
Posted by marykeating on October 19, 2009 under Uncategorized, Wage and hour issues |
The Fair Labor Standards Act requires hourly employees to be paid for time worked, and for time during which the employer “suffers or permits” the employee to work. Many disputes arise over the right to payment for time spent putting on protective clothing, reaching the workplace (for example, going through security and walking to the timeclock), and waiting time. Some rules are clear, and others still await court clarification. But today I’m going to discuss the right to be free from retaliation for complaining about a practice that may violate the law.
As defined in the FLSA retaliation means “to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter.” 29 U.S.C. § 215 (a)(3). To show that retaliation, the employee has to first establish that the complaint falls within the narrowly defined range of activities. In practical terms, this means that it is not enough to complain to human relations that employees are not being paid overtime, for example. The employee has to filed a complaint with the Department of Labor or a court.
This standard is stricter than the rules for race and sex discrimination and harassment. A victim of sexual harassment can meet the protected activity definition by complaining to management of the behavior, and stating clearly that she finds it offensive and unwelcome.
In addition to showing that the protected activity is, indeed, protected by the law, a victim of retaliation has to show “adverse action.” In our area, that is usually held to mean that the employee has been fired, demoted, or denied a promotion. In extreme circumstances the courts will consider the kind of behavior that most of us recognize as “retaliation:” ostracism, snickering, relocation to a smaller office, assignment to worse tasks (or no tasks). But beware, often the kind of treatment that makes life in the workplace really unpleasant does not suffice for a retaliation claim.
Finally, the plaintiff has to establish that the adverse action was caused by the protected activity.
Though these three burdens may appear difficult, retaliation claims often are received well in court. Sometimes employers are so outraged that someone dared to complain that the retaliation is clear and unambiguous. In addition, courts may not always agree that certain behavior indicates racial bias, for example, but they do take offense at an employer retaliating against someone exercising his rights in good faith.
Posted by marykeating on September 17, 2009 under Federal wage and hour law |
The Fair Labor Standards Act requires overtime pay for non-exempt employees who work more than forty hours in a week. A nonprofit organization in Florida is being sued for refusing to pay overtime to a worker who regularly logged more than 70 hours per week, as an “assistant manager” of a Ronald McDonald House. The article is intriguing because the lawyers are unusually candid. The plaintiff’s lawyer worries that some may criticize his client for suing a nonprofit with such a noble mission, while a management side lawyer admits that nonprofit organizations are more likely than for profit companies to violate these laws, saying that “nonprofits tend to treat most workers as exempt from overtime regulations.” The management side lawyer quoted in the article, Michael Casey III, of Becker, Epstein & Green, is not this defendant’s lawyer – the suit was just filed on September 10.
Although religious organizations have some special exemptions, nonprofits as a group are held to the same standards as other employers. Given that they often work with volunteers, too, these organizations may tend to treat their employees as freely available for off the clock work. Nonprofits need to mark a bright line between their paid workers, who should be able to choose how to spend their free time, and volunteers. The good news is that local nonprofits have reported that donations have not taken a nose-dive with this economy. Instead, it appears that people who still have jobs are even more sympathetic than ever to the plight of the less fortunate. The bad news is that costs for all employers continue to rise, affecting nonprofits and for-profits alike.
To avoid costly lawsuits, charitable organizations need to treat their employees fairly and try to fill in the funding gaps with increased fundraising, or volunteer help. Under the Fair Labor Standards Act, an employee is usually entitled to recover double the unpaid wages, as well as attorney’s fees, for wage and hour violations.
Posted by marykeating on September 4, 2009 under Wage and hour issues |
In a previous post, I commented on the steps Maryland is taking to combat the misclassifications of employees as independent contractors. While the state and federal tests are not identical, the basic tests are the same. If an employer exerts control over the place, manner, and hours of work, the person is likely an employee. Independent contractors often have their own places of business, equipment, and are hired to perform a specific function or job, not put in a certain number or hours.
In the gray areas, though, it may be tough to make the final call. You can read the IRS training manual, a 160-page report that should be able to answer most questions. The Internal Revenue Service has simpler guidelines on its website as well. You may not know, though, that IRS will give an opinion on a specific situation, if asked by the employer or the employee/independent contractor. Exercising this degree of due diligence will negate any accusation of bad faith or exploitation.
One main reason that employers may misclassify a worker as an independent contractor is to avoid paying FICA taxes, which amounts to 7.65% of the compensation. An independent contractor pays that amount as self-employmetn tax. A worker who has been misclassified can file a form with his or her taxes that shifts the responsibility for that 7.65% to the employer. The explanation is here.
Posted by marykeating on September 2, 2009 under Collective rights, Federal wage and hour law, Maryland wage law, Wage and hour issues |
Did you see this, or hear it on NPR? A new study shows that many minimum wage workers are denied wages they have earned. The study surveyed workers in the most populous three cities, New York, Chicago, and Los Angeles. It found frequent, ongoing violations of the wage and hour laws, with the worst offenders in these industries: apparel and textile manufacturing, personal and repair services, and in private households. Illegal practices included paying a wage lower than the minimum wage, forcing workers to work off the clock, and denying overtime pay. Some of these violations are easier to hide when employers pay a flat daily or weekly rate to the employees, no matter how many hours are required.
In addition to the type of industry, the study identified several other factors that linked more strongly with wage violations. Not too surprisingly, the rate of violations are higher for employers paying by cash, as opposed to company check. Smaller employers are also more likely to pay their employees too little. Finally, those companies with a package of benefits were more likely to abide by the wage laws.
The study’s authors concluded that
“Employers that offer health benefits, provide paid time off, and give regular raises are following a business model where investing in workers leads to greater productivity, lower turnover, and other benefits for the company.”
Page 38
What to do about a violation
I have seen an increase in complaints about employers denying an employee’s last paycheck, and keeping poor records, leading to denial of overtime pay. The employer has an obligation to keep records of employee hours worked, and has the burden of proof to disprove an overtime or minimum wage claim. Still, courts have difficulty with the concept that the plaintiff worker should not have to prove his claim, and often that burden of proof is not applied correctly. Employees who witness wage issues should keep a careful daily log of their work hours, and make written complaints when they are not paid.
The Maryland wage and hour division is no longer unstaffed, and will pursue claims against employers. If an employee cannot get satisfaction, contact a lawyer. Although some of these claims are not large, state law permits a court to triple the damages for a failure to pay wages without a legitimate dispute, and allows reasonable attorney’s fees. Also, if there is one violation, chances are good that many employees are being underpaid, increasing the chances that a lawyer will take the case. The Fair Labor Standards Act also permits court access to enforce wage and overtime claims.
Posted by marykeating on August 19, 2009 under Collective rights, Wage and hour issues |
President Obama may have difficulty distancing his administration’s policies from the past era in national security issues, but not so in the labor agenda. One of the President’s early executive orders (13496, issued on January 30, 2009) required companies doing business with the federal government to notify their employees of their rights under the National Labor Relations Act. The NLRA governs union activities, as well as any collective action among employees even in non-union shops.
The Department of Labor now has proposed a rule to implement the Executive Order. The rule describes the notice that federal contractors must post. The preamble highlights the shift from Bush to Obama leadership:
It is the policy of the United States to encourage collective bargaining and protect the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid and protection.
The proposed rule also determines that the posting requirement, as well as the requirement to place the wording in all contracts, applies to subcontractors of the federal contractors. . The rule applies to all federal contracts worth more than $100,000. The Department estimates this rule will reach more than 65,000 prime contractors, each of which has an average of three subcontractors. Some of these subcontractors, of course, work on more than one prime subcontractor’s job. The rule does not apply to state and local governments, which are exempt under the National Labor Relations Act.
The posting requirement expresses faith that more information is all employees need to insist on their rights. Anecdotally, I believe there is some truth to this assumption. Employees with wage and hour complaints often state that their employers did not make the required posting regarding minimum wage, or that it was inaccessible to the employees. It is easier to make a claim that an employee is not covered by the law if the law is not described in the lunchroom.
This posting does seem calculated to describe rights and to inspire employees to use them. The list of rights under the NLRA is described as follows:
- Form, join or assist a union.
- Bargain collectively through a duly selected union for a contract with your employer setting your wages, benefits, hours, and other working conditions.
- Discuss your terms and conditions of employment with your co-workers or a union; join other workers in raising work related complaints with your employer, government agencies, or members of the public; and seek and receive help from a union subject to certain limitations.
- Take action with one or more co-workers to improve your working conditions, including attending rallies on non-work time, and leafleting on non-work time in non-work areas.
- Strike and picket, unless your union has agreed to a no-strike clause and subject to certain other limitations. In some circumstances, your employer may permanently replace strikers.
- Choose not to do any of these activities, including joining or remaining a member of a union.
Perhaps even more critical to the goal of disclosing information to employees is the list of illegal activities by employers.
It is illegal for your employer to:
- Prohibit you from soliciting for the union during non-work time or istributing union literature during non-work time, in non-work areas.
- Question you about your union support or activities.
- Fire, demote, or transfer you, or reduce your hours or change your shift, or otherwise take adverse action against you, or threaten to take any of these actions, because you join or support a union, or because you engage in other activity for mutual aid and protection, or because you choose not to engage in any such activity.
- Threaten to close your workplace if workers choose a union to represent them.
- Promise or grant promotions, pay raises, or other benefits to discourage or encourage union support.
- Prohibit you from wearing union hats, buttons, t-shirts, and pins in the workplace except under special circumstances, for example, as where doing so might interfere with patient care.
- Spy on or videotape peaceful union activities and gatherings or pretend to do so.
The rule goes on to state:
It is illegal for a union or for the union that represents you in bargaining with your employer to: discriminate or take other adverse action against you based on whether you have joined or support the union.
Comments to this proposed rule are due by September 2, after which the rule will be modified or may go into effect shortly thereafter.
Posted by marykeating on August 13, 2009 under Wage and hour issues |
Both private and public employers have been experimenting with cutting back employees’ hours instead of choosing some for layoff. The benefits of this strategy include sparing some of the employees from the devastation of a full layoff, improving morale, and saving on the severance or unemployment benefits costs of laying off employees. For employers expecting to bounce back as the recession eases, keeping the employees also will make it easier to spring back into action. Employees are not likely to enjoy the cut in pay, but some may make good use of the extra time.
This practice works most smoothly for hourly employees, who must be paid for all hours worked, at least minimum wage, plus overtime pay. If an employee who used to work five full days per week is reduced to four, the employer must pay him for the four days. This strategy can backfire if the furlough is in name only. If employees actually are working on the days when they are supposed to be off, then the employer is in danger of violating the Fair Labor Standards Act and Maryland’s Wage Payment and Collection Act. Actual work includes checking email and voicemail messages, responding to customers or coworkers, and waiting on call in some instances, depending on the amount of freedom the employee has while waiting to be called into action. If the employee often works from home or from the other end of a telephone or blackberry, the employer needs to be vigilant to be sure that the employee is not responding as usual on a furlough day.
Exempt employees pose a more difficult problem. An employee exempt from overtime compensation requirements must meet responsibility requirements, as well as the salary test, in which the employee must earn $455 or more per week. If the employee does any work during a week, the entire week’s salary must be paid. An exception is made if there is a sick or personal leave policy; in that case full (not partial) days of sick or personal time, or days on which the employee does not work because of disability, may be deducted from pay, with personal/sick leave to fill in the gaps if it is available. The employee’s leave balance can also be used to supplement the employer’s “sick” time, days in which there is not enough work.
In other cases there is not enough sick or other leave time to pay for furlough days, or the employer simply cannot afford to keep so many exempt employees on full-time status. Then to furlough an exempt employee in the private sector, the employer has to cut the employee’s pay. In Maryland, employees are entitled to two week’s notice of a salary reduction. And the new pay may not be less than $455 per week. An employer risks losing the exemption when it violates the rules about deductions from pay.
