Answers to Common Compensation Questions

Answers to Common Compensation Questions

Wage and Hour Compensation IssuesA large number of the questions we receive from our employer clients have to do with compensation.

Our website statistics show that articles on this subject draw many visitors to our site.  It’s not unusual for us to field questions from workers about pay issues either.

It’s not surprising!  Wage and hour laws vary from state to state, and federal laws conflict with state laws.  No wonder employers and employees are often confused!

What should you do when state and federal wage & hour laws conflict?

Washington’s laws often conflict with federal wage and hour laws, creating more confusion for employers.

It’s important to remember that you cannot depend on just complying with state or federal laws, but must compare the two.

Always remember this: when there is conflict between laws, employees are entitled to the protection of whichever law is more in their favor

Which employees must be paid overtime?

There are very specific laws about which employees must be paid overtime.  If you have questions about whether you have classified an employee correctly, Labor & Industries has an online tool which compares state and federal laws.

Here’s a handy overtime breakdown for you:

  • Our state’s wage and hour laws require that non-exempt employees be paid overtime if they work more than 40 hours during a work week.
  • You, as the employer, define the work week.  It doesn’t matter if you pay monthly, bi-monthly or weekly, the overtime is still based on a 7-day period of time, which is predefined and cannot vary.
  • Employees can work more than eight hours in a day and not be eligible for overtime.  They can work every day during the week, and not receive overtime.
  • Unless company policy states otherwise, paid time that isn’t worked (such as vacation and sick days) also doesn’t count towards overtime.

Employees just must be paid overtime if they actually work more than 40 hours in a week

When can you provide comp time?

Whether or not companies can offer comp time is a question that arises frequently, and is again an area where state law differs from federal law.

Washington state law allows comp time if the employee requests it.  Employees that work overtime can bank the overtime hours at time and a half and take it later as paid time off.

However, the Fair Labor Standards Act (FLSA) prohibits comp time, except for public agencies that are a state, a political subdivision of a state, or an interstate governmental agency. 

Ironically, even though comp time is something employees often request, and Washington State says it is “considered a benefit to the employee,” federal law trumps it — which means that in Washington, only public employees legally have this privilege!

Time-keeping tips for employers:

Many companies are utilizing technology or professional services to record and reconcile timekeeping.  Whatever your systems, whether manual or streamlined with technology, there are a few things to keep in mind.

First of all, keep good records, and keep them for a sufficient period of time.  Be sure that you have access to the records.  If you use an outside service, make sure that you will have all of the records available to you down the road, even if you change providers.

Review your internal processes periodically to be sure that you are in compliance with all wage and hour laws.  For instance, if you round hours, you want to ensure that the rounding process is unbiased and doesn’t benefit the employer more times than it benefits the employee.

Technology & compensation issues:

The onslaught of technological advances in our world has allowed the virtual workplace to overspill the edges of the timecard.

Employees who are technically off the clock may find themselves picking up their smart phones and checking work emails, making quick work related phone calls, and listening to work voice mails — without realizing that they are technically back on the clock.

What are the implications to you, as an employer, when your 8 – 5 employees are suddenly available 24/7 thanks to smart phones and home computers?  It can mean that you owe them some overtime pay!

There have been lawsuits in the last couple years alleging that overtime pay was due to employees who were given cell phones, laptops, or other devices, and allowed to utilize them for company purposes off hours.

  • Whether or not the employer instructed or required the employee to utilize the device off hours for company work is not the issue, but rather whether they permitted it.  If the work has been done, you must compensate the employee for it.

An exception could be made if the work was de minimis, as defined under the FLSA. Basically, this applies when the work is performed for an insubstantial or insignificant period of time, and couldn’t be precisely recorded for payroll purposes

One example of de minimis, for instance, would be if an employee were to view one short work email from home.  But if that employee spends 15 minutes every day viewing emails at home — which amounts to 1.75 hours of work per week — that might constitute overtime.

Tips for managing use of company technology outside of work:

If you want to limit the potential for your employees to accrue unwanted overtime due to their use of company tech outside of work, there are several steps you can take:

  • If employees have access to employer-provided mobile devices, these should be accompanied by specific policies.  For instance, require employees to get permission prior to working any overtime hours.  (Remember that you still have to pay them for overtime worked, regardless of whether permission was sought, but it then becomes a discipline issue that you can act on.)
  • Consider only providing mobile devices to exempt employees, avoiding the overtime issue entirely.
  • If the mobile device is for use during working hours only, require them to leave it on work premises at the end of the work day.
  • If employees do take their mobile devices home, require them to accurately record all hours worked outside of the office.

Don’t forget that these policies will apply regardless of whether the employee performs the work on an employer-provided device, or on a device the employee owns.

Get advice from a professional:

It can prove very costly to a business to be on the wrong side of a wage and hour dispute!

An employee may go to L&I with a wage complaint, and if L&I investigates and finds the employer owes the wages, they may assess penalties and interest.  Even worse, the employee has the right to bypass L&I and go to small claims court, where they may collect double the wages and attorney fees.  Therefore, it’s definitely in our best interest to be on the right side of the wage and hour laws from the beginning!

These laws can be complex and vary depending on what your worker does, the wages you pay, and the industry you are in.  Sometimes it’ll take a phone call to L&I to get their guidance.

But, be aware that if you rely on L&I’s rules, orders, advice, opinions, interpretations or determinations, and they’re wrong, you’re still on the hook as the offending party. 

During the past couple years, the Legislature has considered bills that would create a good faith defense for certain minimum wage and overtime compensation complaints for businesses that relied on the advice of the Department of Labor & Industries.  Unfortunately, this legislation has not been passed. Evidently, the laws are so complex that even the people administering them can’t be depended on to understand every aspect of them.

When in doubt, make an attorney happy and give one a call!

Got your own compensation questions?

Ask them in our comment section below!

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