Posted by marykeating on July 4, 2011 under Federal wage and hour law | 
Franklin Delano Roosevelt announced his four freedoms almost two centuries after the Declaration of Independence. As with the brave rebels in 1776, the focus on independence came at a critical time in our history. In 1941, he set out an expression of basic human rights applicable to the whole human race:
- Freedom of speech and expression
- Freedom of worship
- Freedom from want
- Freedom from fear
The freedoms are all important, but in the FDR era, many minds remained focused on the freedom from want. Unemployment peaked at almost 25% during the Great Depression. (It fell to under 2% during World War II.) In 1938, FDR proposed and signed into law the Fair Labor Standards Act, imposing minimum wages and overtime pay requirements.
That law has become ingrained in our economy, but it contains some exemptions that create hardships. Late last month the Senate and House introduced bills to limit one of the exemptions. That exemption has relieved employers of the requirement to pay minimum wage to people providing home care or companionship services to disabled, sick or elderly people.
Called the Direct Care Job Quality Improvement Act of 2011, the law would allow the exemption only for occasional, casual work. Your teenage babysitter can still be paid less than minimum wage (if indeed you can find such a person), but not someone who works for a home health agency, someone who does this work for a living, or who works for someone who needs such care more than five hours a week, or more than twelve weeks in a row. (These restrictions are designed to avoid a gaping loophole in which an agency sends different people on different days.)
Congress’s findings of the needs for the new law include the statement of the expanding need for these workers (now serving 10,000,000 people), and the prediction of a serious shortage of workers able and willing, without even minimum wage protection, to take on the work. When one is not in dire want, the other freedoms are glorious parts of our nation’s heritage and hope for the future. But if our home workers can’t live, and we can’t get a worker to help us with daily living requirements, it is hard to focus on the abstractions like the freedom of speech or religion.
Happy Fourth of July.
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.
Posted by marykeating on July 28, 2009 under Federal wage and hour law, Pending legislation |
Speaking of the new minimum wage, which I did a few days ago, there are many exceptions to the requirement to pay minimum wage. One has received some attention lately, the tipped employee or waiter minimum wage, which has been stuck at $2.13 per hour since 1991. When I was in college in the 1970s, I made $2 per hour, earning slightly less than minimum wage at my dining hall drudgery job (paying college students less than minimum wage is also legal). For wait staff to make $2.13 per hour is rather shocking; unless they are in busy high-end restaurants, the minimum wage is probably a significant component of their compensation.
Representative Donna F. Edwards of Maryland recently introduced a law to increase the minimum wage gradually, H.R. 2570. In that law, dubbed the “WAGES Act,” for Working for Adequate Gains for Employment in Services, the minimum wage would be increased to $3.75 per hour three months after enactment of the law. In 2011, the minimum will again rise, to $5.00 per hour, and then keep pace at 70% of the federal minimum wage, or at least $5.50 per hour, by 2012.
According to census figures released by Representative Edwards’ office, “nearly 15% of all waiters and waitresses live below the federal poverty level, while only 5.7% of the workforce as a whole falls beneath this threshold. Minority populations are particularly hard hit by these low wages. According to the Census Bureau’s Current Population Survey (CPS), 22.3% of African-American tipped employees and 18% of Latino tipped employees live in families that are below the federal poverty level.” Women are also disproportionately affected.
Posted by marykeating on July 15, 2009 under Uncategorized, Wage and hour issues |
You have seen this posted for two years, since Congress began implementing incremental minimum wage increases two years ago. So don’t forget, as of July 24, 2009, the federal minimum wage will increase from $6.55 per hour to $7.25 per hour. You can keep the same poster until something else changes, though.
Minimum wage seems easy enough to understand, but in fact there are many ways in which an employer can make mistakes, whether on purpose or inadvertently. One thing to remember is that states are permitted to impose a minimum wage different from the federal wage. If it’s higher, the state minimum wage controls. Maryland automatically follows the federal standard, so the amount of the minimum wage is equal.
But since not all jobs are subject to the federal minimum wage, Maryland’s minimum can be important. A job not subject to minimum wage under federal law may be subject to the Maryland law. (Federal law applies to jobs affecting interstate commerce; that cuts a wide swath across the economy, but there are occasional exceptions.) In addition, Baltimore City has a minimum wage equal to the federal and state minimum per hour, and affects employers of at least two people. So, in other words, only you self-employed people are completely exempt, and can work for less than minimum wage (but you already knew that). But for certain service contracts with the City, employers must pay at least $10.19 per hour, as of July 1, 2009. A still-higher prevailing wage is payable on city construction contracts.
Under federal law, exceptions to the minimum wage exist for certain categories of workers. For example, workers with disabilities and certain students may be paid less than the minimum wage, for policy reasons supporting employment of the disabled, whose employment level is quite low, and to encourage hybrid learning/working situation. In addition, workers under the age of 20 in their first 90 days of employment may be paid a minimum of $4.25 per hour, to encourage successful first forays into the job market.
Perhaps the most widespread area of confusion and abuse relates to tipped employees. Under federal law, a tipped employee must earn a wage of at least $2.13 an hour if that amount, combined with the tips, equal at least the minimum wage. This exception also requires that the employee keeps all of the tips he receives, and that he or she gets at least $30 in tips per month. In Maryland, the minimum direct wage, paid by the employer, has to be 50% of the minimum wage.
I have occasionally seen employers try to game this exception by not permitting the employees to keep their tips, or cutting the minimum wage to nothing when tips are high. Splitting tips with others in a restaurant, for example, is a tricky area. It does not violate federal law, if it is the regular practice of the establishment, but it does require the payment of the full minimum wage to the servers.
State law may be more protective. Starbucks’ big loss in California of more than $105 million on this issue was overturned on appeal last month. Read more here.
Critical to that decision were two factors: one, that the tips were in pooled plastic tubs, and two, that shift supervisors were not really management employees, and often prepared and served coffee just like the lower level baristas. (Also, this case arose under California law, not the federal Fair Labor Standards Act.)
I’ll talk about overtime issues in another post. That area is even more complex and riddled with exceptions than the minimum wage law.
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