Wage-Hour Policy Tips for 2018

Pockrass Steve IndianapolisRetail employers can reduce the risks and costs associated with such lawsuits by implementing well-designed wage-hour policies, training employees to comply, and punishing violators. By Steven Pockrass

Retailers are a major target of wage-hour litigation, which can result in millions of dollars of exposure. Retail employers can reduce the risks and costs associated with such lawsuits by implementing well-designed wage-hour policies, training employees to comply, and punishing violators.

This article identifies several types of policies that retailers should have in place with respect to employees who are not exempt from the overtime compensation requirements under the federal Fair Labor Standards Act (FLSA). This is not an all-inclusive list, but highlights some of the most important policies that can reduce the likelihood of non-compliance and can bolster an employer’s position when defending against wage-hour lawsuits. To further minimize wage-hour risks, employers also must consider a wide range of other issues, including the misclassification of individuals as exempt employees or as independent contractors, understanding what constitutes compensable time, and properly calculating overtime.

Employers also must keep abreast of ever-increasing state and local statutes and ordinances that are more restrictive and/or create greater compliance obligations than the FLSA. Paid sick leave, predictive scheduling, reimbursement of employee expenses, reporting pay, and premium pay for working on certain days are among the areas where states and municipalities have been particularly active. In addition to complying with the substantive obligations that these laws impose, employers also may find it necessary to amend or broaden existing policies, or to create additional policies applicable only to employees who work in certain states or localities.

Timekeeping Policies

Employers are required to maintain accurate records of the hours worked by non-exempt employees. Thus, a strongly worded timekeeping policy is important. A well-written policy emphasizes the following:

* Non-exempt employees are to record all of their hours worked;

* Non-exempt employees are not to perform any “off-the-clock work,” such as before clocking in or after clocking out; and

* Under reporting or over-reporting hours worked is prohibited.

These policies normally prohibit employees from clocking in or clocking out for one another. They also prohibit supervisors from clocking subordinates in or out. Managers and supervisors also must be prohibited from falsifying the time of non-exempt employees, from pressuring or coercing non-exempt employees to falsify their time, and from retaliating against any employee for reporting possible timekeeping violations. If a manager or supervisor does need to correct an employee’s time entry, the employer should have a system in place to document who made the change, why the change was made, that the employee is aware of the change, and that the employee agrees with the change.

Overtime Policies

The FLSA requires non-exempt employees to be paid overtime compensation when they work more than 40 hours in a workweek. Although the FLSA does not have a daily overtime requirement, several states have wage-hour laws that require overtime to be paid when an employee works more than eight or 12 hours in a day. A strong overtime policy emphasizes the employer’s commitment to comply with its overtime compensation obligations. If an employer does not want employees to work overtime without advance approval, the employer should say this in the overtime policy. However, if an employee does work unauthorized overtime, the safest approach is to pay the overtime and discipline the employee.

Break and Meal Policies

Laws requiring breaks and meals vary from state to state. Although the FLSA does not require employers to provide breaks, other than for minors, it does require that short breaks of 15 minutes or less be treated as compensable work time. Uninterrupted meal breaks of at least 30 minutes may be treated as non-compensable under the FLSA, as long as employees are completely relieved of all duties.

Accordingly, employers who provide uncompensated meal breaks of at least 30 minutes need to include language in their policies prohibiting employees from performing any work during their meal breaks. Employees also should be informed in writing regarding the steps they need to take with respect to time reporting in the event they are unable to take a full, uninterrupted meal break.

Time and Payroll Record Review Policies

A policy requiring non-exempt employees to review and sign off on their time records every day or week is not a panacea, but having a record of such sign-offs can be very valuable during litigation. The same is true for policies requiring employees to review their paystubs or direct deposit statements upon receipt and to immediately report any errors.

Training and Training Records

Although the creation of strong policies provides a starting point, training both regular and seasonal employees on those policies is an important second step. Training should not be limited solely to onboarding. When current policies are updated or new policies are added, employers may want to provide updated training in addition to communicating the policy change/addition. Refresher training on existing policies also is valuable for litigation purposes, as it makes it more likely that employees will have attended the training one or more times.

Employers should maintain records of who attended each training, who conducted the training, and what was actually presented during the training. If employees are required to acknowledge receipt and understanding of a policy during onboarding or as part of other training, those acknowledgements need to be kept in a secure location but also need to be easily accessible in the event of litigation.

Policy Enforcement

During litigation, employers often are challenged to show that their practices are consistent with their policies. To demonstrate a culture of compliance, employers must take prompt and forceful disciplinary action against managers and supervisors who engage in any sort of time shaving practices, who pressure or encourage employees to falsely report their time, or who turn their heads when others engage in policy violations. In addition to consistently enforcing their policies, employers also should have systems in place to document such enforcement.

Steven Pockrass is chair of the Wage and Hour practice group at Ogletree Deakins, an international labor and employment law firm representing management. Pockrass may be reached at steven.pockrass@ogletree.com.

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