Violations of Wage Laws are Rampant

Posted by marykeating on September 2, 2009 under Collective rights, Federal wage and hour law, Maryland wage law, Wage and hour issues | Be the First to Comment

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.”
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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.

The Intersection of Furloughs and Wage Laws

Posted by marykeating on August 13, 2009 under Wage and hour issues | Be the First to Comment

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.