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Jul17

7 Minute Rule

What is the 7 minute rule and do we have to apply it to our employees?

The federal Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.

Under the FLSA, employees are classified as either non-exempt or exempt.

Non-exempt employees must be paid for all hours worked and are subject to overtime and minimum wage requirements prescribed by the FLSA. Non-exempt employees need not be paid for time not actually worked.

Conversely, exempt employees receive a fixed predetermined salary for any week during which work is performed regardless of the quantity or quality of such work. Deductions from exempt employees’ salaries are only permitted in limited circumstances.

Employers are required to maintain complete and accurate records of hours worked for non-exempt employees under the FLSA. Rounding to the nearest five minutes, or to the nearest one-tenth or to the nearest one-quarter of an hour (often referred to as the 7 Minute Rule) is permitted in accordance with industry standards. But, employers must ensure doing so will not result in failure to pay non-exempt employees for all hours worked. A practice of always rounding down or one that fails to average out over time is unlawful.

Just to be clear, there is no requirement to use rounding. But, it’s common practice and if you choose to round employee time then it must be done in a fair and uniform manner.

July 17th, 2017, 1:55 PM |  Posted in: Compensation |
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Jul17

Pay for Training

We have hourly employees that are required to take training for their job. We already pay for the training. Do we have to pay the employees for their time spent taking the classes?

The federal Fair Labor Standards Act (FLSA) establishes compensation requirements for employees in the private sector and in Federal, State, and local governments.

Under the FLSA, non-exempt employees must be paid for all hours worked.

Attendance at trainings need not be counted as working time only if four criteria are met, namely: it is outside normal hours, it is voluntary, not job related, and no other work is concurrently performed.

Since trainings are mandatory and job related, the time spent taking the trainings is considered hours worked. Thus, non-exempt employees must be compensated for their time.

July 17th, 2017, 1:50 PM |  Posted in: Compensation |
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Jul13

FMLA and PTO for Exempt Employee

We have an exempt employee going on intermittent FMLA. Can we require her to use PTO for the time on FMLA?

The federal Family & Medical Leave Act (FMLA) entitles eligible employees of covered employers up to 12 weeks of unpaid, job protected leave for certain family and medical reasons. Leave can be taken intermittently or on a reduced schedule under certain circumstances.

The FMLA only requires unpaid leave. However, employees may choose to use, or employers may require the employee to use, accrued paid leave to cover some or all of the FMLA leave taken. Employees may choose, or employers may require, the substitution of accrued paid vacation or personal leave for any of the situations covered by FMLA. The substitution of accrued sick or family leave is limited by the employer’s policies governing the use of such leave.

Keep in mind, FMLA regulations require that employees be notified in advance of the requirement to use their PTO and any conditions related to the use of such time.

Usually, exempt employees must receive their full predetermined salary for any workweek during which work is performed. However, an employer is not required to pay an exempt employee his/her full salary for weeks in which he/she takes unpaid leave under the FMLA.

So, if the exempt employee exhausts her PTO accruals, then it’s permissible to pay the employee a proportionate part of their full salary for time actually worked. For example, if the employee normally works 40 hours per week and uses four hours of unpaid leave under the FMLA, 10 percent of the exempt employee’s normal salary may be deducted for that week.

HTH!

July 13th, 2017, 10:15 PM |  Posted in: Benefits |
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Jul13

Form I9

For Section 2 on Form I-9, what date is used for the employee’s first day if the employee accepted the job offer but doesn’t start for a month?

Many employers include both a hire date and start date in employee records. Usually, the hire date is when an employee accepts a job offer while the start date is when an employee actually begins working in his/her position.

However, for the purposes of completing the I-9, the hire date means the first day the employee works for pay. When the employee accepted the job offer has no bearing on the completion of the I-9. Employers must complete and sign Section 2 of Form I-9 within 3 business days of an employee’s hire date.

HTH!

July 13th, 2017, 10:07 PM |  Posted in: Hiring and Staffing |
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Jul13

Commission Salesperson: EE vs IC

Can a sales person working in California paid strictly on commission with no benefits be considered an employee under California law?

Under the federal Fair Labor Standards Act (FLSA), an employee is broadly defined as one who engages in or is permitted to engage in work for an employer. Basically, if an individual acts either directly or indirectly in the interest of the employer and the employer has the right to direct and control the manner and means by which the individual’s work is performed, then the individual is an employee.

The IRS has a 20 factor checklist for employers to use as a general guide to determine whether a worker is an employee or independent contractor:

  1. Instructions: If the person for whom the services are performed has the right to require compliance with instructions, this indicates employee status.
  2. Training: Worker training (e.g., by requiring attendance at training sessions) indicates that the person for whom services are performed wants the services performed in a particular manner (which indicates employee status).
  3. Integration: Integration of the worker’s services into the business operations of the person for whom services are performed is an indication of employee status.
  4. Services rendered personally: If the services are required to be performed personally, this is an indication that the person for whom services are performed is interested in the methods used to accomplish the work (which indicates employee status).
  5. Hiring, supervision, and paying assistants: If the person for whom services are performed hires, supervises or pays assistants, this generally indicates employee status. However, if the worker hires and supervises others under a contract pursuant to which the worker agrees to provide material and labor and is only responsible for the result, this indicates independent contractor status.
  6. Continuing relationship: A continuing relationship between the worker and the person for whom the services are performed indicates employee status.
  7. Set hours of work: The establishment of set hours for the worker indicates employee status.
  8. Full time required: If the worker must devote substantially full time to the business of the person for whom services are performed, this indicates employee status. An independent contractor is free to work when and for whom he or she chooses.
  9. Doing work on employer’s premises: If the work is performed on the premises of the person for whom the services are performed, this indicates employee status, especially if the work could be done elsewhere.
  10. Order or sequence test: If a worker must perform services in the order or sequence set by the person for whom services are performed, that shows the worker is not free to follow his or her own pattern of work, and indicates employee status.
  11. Oral or written reports: A requirement that the worker submit regular reports indicates employee status.
  12. Payment by the hour, week, or month: Payment by the hour, week, or month generally points to employment status; payment by the job or a commission indicates independent contractor status.
  13. Payment of business and/or traveling expenses. If the person for whom the services are performed pays expenses, this indicates employee status. An employer, to control expenses, generally retains the right to direct the worker.
  14. Furnishing tools and materials: The provision of significant tools and materials to the worker indicates employee status.
  15. Significant investment: Investment in facilities used by the worker indicates independent contractor status.
  16. Realization of profit or loss: A worker who can realize a profit or suffer a loss as a result of the services (in addition to profit or loss ordinarily realized by employees) is generally an independent contractor.
  17. Working for more than one firm at a time: If a worker performs more than de minimis services for multiple firms at the same time, that generally indicates independent contractor status.
  18. Making service available to the general public: If a worker makes his or her services available to the public on a regular and consistent basis, that indicates independent contractor status.
  19. Right to discharge: The right to discharge a worker is a factor indicating that the worker is an employee.
  20. Right to terminate: If a worker has the right to terminate the relationship with the person for whom services are performed at any time he or she wishes without incurring liability, that indicates employee status

California’s labor laws on the matter generally mirror the FLSA with a focus on the level of control the company has over the way the individual accomplishes their work.

It’s ultimately up to employers to closely examine the details of the relationship and determine an individual’s classification based on a number of factors. A commissioned salesperson can be either an employee or independent contractor depending upon the “control” factors in the relationship.

HTH!

July 13th, 2017, 10:03 PM |  Posted in: Labor Laws |
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