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Legal Clinic

Puzzling Out Pay Issues

The thorny issue of correctly compensating employees receives more analysis as questions answered include those involving unpaid employee job orientations and a nursing supervisor who filled in for hourly workers when necessary.

Monday, December 3, 2007
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Wage-and-hour issues seem to be a recurring concern for many employers. Employers sometimes ask employees to perform tasks outside regular work hours, without recognizing that such tasks may be compensable. 

Also, employers (and their managerial staffs) are not always confident of the parameters of the wage-and-hour exemptions or the circumstances in which a manager may be asked or expected to perform nonmanagerial tasks without additional compensation. 

This month's column provides some guidance on these thorny issues.

Question: I wondered whether companies in the retail and food service industry have unpaid orientations (to review job expectations and complete paperwork) prior to the employee's first day of work?

Answer: It may be that companies in the retail and food service industry, or in other industries, have unpaid orientations. Employers conducting such orientation programs, however, should consult with legal counsel because they may be running afoul of the wage-and-hour laws by failing to compensate their new hires for their attendance at such programs.

The federal wage-and-hour laws require employers to pay covered employees who are not otherwise exempt at least the minimum wage for all compensable hours worked. Fair Labor Standards Act (FLSA), 29 U.S.C._§§ 201 et seq. 

Compensable hours include all hours an employee is required to be on the employer's premises, on duty or at a prescribed place of work, and any time that an employee is "suffered or permitted to work." FLSA, 29 U.S.C._§ 203(g) (2006); Dept. of Labor, 29 C.F.R._§§ 785.6, 785.7 (2007); Anderson vs. Mt. Clemens Pottery Co., 328 U.S._680, 690-91 (1946). 

As the Supreme Court explained, employees subject to the FLSA must be paid for all time spent "in physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business." Tennessee Coal, Iron & R.R. Co. vs. Muscoda Local 123, 321 U.S._590, 598 (1944). 

Generally, time spent attending employer-sponsored meetings and training programs is compensable. 

There is an exception to this rule when the activity meets all of the following four criteria: (1) attendance is outside the employee's regular working hours; (2) attendance is voluntary; (3) the course, lecture or meeting is not directly related to the employee's job; and (4) the employee does not perform any productive work during such attendance. Dept. of Labor, 29 C.F.R._§§ 785.27 -- 785.32 (2007). 

The third criterion is satisfied if training is designed to make the employee handle his/her job more effectively, as distinguished from training an employee for another job, or for new or additional skills. Dept. of Labor, 29 C.F.R._§ 785.29 (2007). 

Thus, regardless of industry, a covered employee should be compensated for time spent at an orientation at which the employee is asked to review job expectations and complete paperwork because the orientation is directly related to the employee's job and attendance is mandatory.

Question: When a nursing supervisor is required to cover a shift for a floor nurse resulting in overtime hours for the supervisor, must the supervisor be paid OT even though s/he is a salaried employee? The employee whose shift is being covered is hourly. 

Answer: Fundamentally, the concern seems to be whether having an exempt managerial employee perform nonmanagerial work will destroy the exemption or otherwise subject the employer to additional overtime liability. 

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In general, the exemption will not be destroyed, provided the employee continues to meet the regulatory requirements for the relevant exemption.

While there are various elements to the FLSA exemptions, the one that is most at issue here is the primary duties test. This test is met if an employee spends more than 50 percent of his/her time doing "management work," including the supervision of other employees. 29 C.F.R._§§ 541.100; 541.102; 541.106 (2007). Work that is "directly and closely related" to the performance of managerial and supervisory functions also falls within the definition of exempt work. 29 C.F.R._§ 541.703 (2007). 

In a case analogous to that of the nursing supervisor, a federal circuit court held that a facilities maintenance supervisor was an exempt executive employee even though, due to staffing reductions, the supervisor performed an increasingly large amount of the office's clerical work. Demos vs. City of Indianapolis, 302_F.3d 698 (7th Cir. 2002). 

The court reasoned that although the supervisor was clearly burdened by a lack of support staff, shouldering such burden did not, by itself, render him a nonexempt employee, in part because the work he was asked to absorb was directly related to management and supervision of employees. Id. Similarly, if a nursing supervisor's primary duty is managerial, she/he will not be entitled to overtime for covering a shift for a floor nurse. 

It is important to note, however, that some state wage-and-hour laws differ from federal law. Therefore, employers are advised to consult with local counsel on wage-and-hour issues.

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