"Florida is a hotbed of wage-and-hour litigation,” is repeatedly quoted in one report after another over the past year, and this trend is expected to continue throughout 2014. Here is a quick roadmap of compliance questions and topics to audit.
- Are You Paying Minimum Wage?
The current federal Fair Labor Standards Act (“FLSA”) rate is $7.25 an hour. As of January 1, 2014, Florida’s minimum wage was increased to $7.93 an hour (with a minimum wage of at least $4.91 an hour for tipped employees, in addition to tips).
- Are Deductions Lawful?
Make sure that any deductions to wages are permitted by law and do not unlawfully reduce a non-exempt employee's pay to below the required minimum wages or overtime compensation. Common deductions include uniform costs, damages to equipment, and cash or inventory shortages. In short, if you are reducing an employee’s compensation based on a deduction, make sure the practice is legal.
- Accurately Recording All Work Time?
Wage-and-hour litigation frequently arises from alleged “off the clock” work or failure to record all working time. Make sure you capture all work time for non-exempt employees, including work that is performed outside of the workplace or “after scheduled hours.” For example, watch out for employees working outside of the workplace through smartphones, or working at home to start or finish their job assignments. Travel time, company sponsored events “after regular working hours”, and employee training are also “gotcha” areas for wage-and-hour violations. Also, employers should take measures to guard against claims of unpaid overtime, even though the overtime work was allegedly unknown to the supervisor or to supervisors who offer “comp time,” which is illegal. Additionally, stay alert for situations where the employee worked “5-10 minutes” before or after their scheduled shift or worked through lunch time but was not paid for the work time.
- Are overtime exempt employees really exempt?
Misclassification of overtime exempt employees is common and litigation claims are rampant. There are several legal tests to consider, which is beyond the scope of this client alert, but in general, be careful with any exempt classification for employees who are not paid a substantial salary or the job is not higher level management or operations when looking at the company hierarchy. Auditing the exempt classification on an annual basis is helpful to ensure legal compliance.
- Do you pay commissions, vacation, and sick leave upon termination?
Florida has an unpaid wages statute, which is frequently used to recover payments allegedly owed to terminated employees for commissions or unused vacation or sick leave. Is the employer legally required to pay the commission if the employee generated the sale or loan before termination, but the sale or loan closed after the termination? What happens if the employee has unused vacation and sick leave at the time of termination, but the employer policy is ambiguous as to pay out of vacation or sick leave? Employers should have a carefully drafted policy or agreement in place which clearly spells out the terms for payment during employment and after termination.
- Do you use independent contractors?
Independent contractor often file for unemployment compensation, which triggers investigations, substantial liability, and fines for misclassification. Florida and federal agencies have made independent contractor misclassification a top priority to prevent and punish. The Affordable Care Act will likely generate even more litigation in this area, as employers don’t provide health care insurance to independent contractors, but must for certain employees. Although employers face significant liability for misclassification, there is nothing illegal about using independent contractors if the classification is proper. Legal agreements and strategies can be implemented to reduce liability exposure for misclassification.