Wage and Hour Laws–They are Here, There and Everywhere Part 4

In my first blog in this series, October 23, 2019, I started discussing the complexities of compliance with wage and hour laws.  Which apply…federal or state?  What areas are covered?  When these questions do arise, where do you find the answers? Can a payroll professional simply check the Fair Labor Standards Act (FLSA) to find the answer with a quick verification of any state requirement? Or is the state the main source to go to first with the FLSA as the fall back? The answer is not simple.  In this blog series I will be discussing 23 areas where payroll professionals need to ensure compliance by researching wage and hour laws. In Part 2, I covered the first six areas. In Part 3 I discussed the next four areas.  This time I am reviewing the next set of four areas that may require research to ensure compliance: which includes posting requirements, frequency of payments, methods of payments, and termination requirements.

11. Posting Requirements
Many states have posting requirements in addition to the ones required by the FLSA.  The state may have its own minimum wage poster.  It may require a payday notice or copies of the wage and hour laws be posted or given directly to the employee. State with payday notice regulations include California, Montana, Minnesota, Texas, Tennessee and New York For those states who have them, including California, Connecticut, Colorado, Massachusetts, New Jersey, and New York, wage orders are usually required to be posted as well.

 

 

12. Frequency of Payments
Federal laws do not specify when an employee must be paid, only that they must. However, most states have a requirement that not only must employees be paid but that they must be within a certain frequency, such as semi-monthly or weekly.  Arizona requires that the employer designate two or more days in each month to pay employees and the days cannot be more than 16 days apart.  New York bases its requirements on whether the employee is a manual worker, a clerical worker or other type of worker. Most states require either biweekly or semimonthly paydays.  These include California, Illinois and New Mexico. Other states permit monthly payrolls including Alaska, Delaware and Washington. Be sure when researching to also check into the amount of time permitted between closing the payroll (collecting the timesheets) and paying the employees.  States do have requirements on what can be called “payroll processing time” or “lag time”.

13. Method of Payment
There is no requirement under the FLSA as to the method to pay an employee. Almost all the states do address this issue. The common requirement is the employee be paid by U.S. currency or check.  The federal government does regulate the paying of employees via direct deposit under the Electronic Funds Transfer Act. The Act was recently updated to include the newest method of payment of employees—payroll debit cards. The states are updating their regulations for payroll debit cards.  The payroll professional must determine if the state allows this form of payment if it intends to begin a pay card payment program and what restrictions may be in place.  These restrictions include limiting fees and voluntary participation.

14. Termination Requirements

Again the FLSA is silent when it comes to requirements on paying an employee who terminates.  States that address this issue vary greatly. For some states it can even depend on whether or not the employee quit or was discharged.  For example, if an employee is discharge Colorado requires that the employee be paid immediately.  But if the employee quits the check is due on the next regular payday. As to whether or not vacation pay must be included with the final paycheck will be discussed in the next segment of this blog.

 

In Part 5 I will be covering the next four areas that may require research including vacation pay requirements, compensatory time off, reporting time or show up pay and call back pay.

Wage and Hour Laws–They Are Here, There and Everywhere Part 3

In my previous blog, October 23, 2019, I discussed the complexities of compliance with wage and hour laws.  Which apply…federal or state?  What areas are covered?  When these questions do arise, where do you find the answers? Can a payroll professional simply check the Fair Labor Standards Act (FLSA) to find the answer with a quick verification of any state requirement? Or is the state the main source to go to first with the FLSA as the fall back? The answer is not simple.  In this blog series I will be discussing areas where payroll professionals need to ensure compliance by researching wage and hour laws. In Part 2, I covered the first six areas. This time I am reviewing the next set of four areas that may require research to ensure compliance: which includes on call or stand by pay, providing holiday/sick/vacation benefits, statements and payday notices and what is hours worked.

7. Hours Worked-General

The definition of hours worked under the FLSA was is quite broad. By statutory definition the term “employ” includes “to suffer or permit to work.” The workweek ordinarily includes all time during which an employee is necessarily required to be on the employer’s premises, on duty or at a prescribed workplace. What is the state’s definition on what is an hour worked?  Most follow the FLSA. The difficult task is applying the rules to a specific type of hour. One example that comes up frequently is travel time.  If an employee travels for business is it hours worked?  Can a different wage be paid to employee traveling?  If a nonexempt employee travels out of town on business overnight is the entire time considered hours worked including sleeping or just the employee’s normal day?  Compliance here requires that each type of “hour worked” an employee performs must be researched to determine the proper payment.

8. On Call or Stand by Pay

The FLSA and court cases address the issue of on call pay on the federal level.  An employee who is required to remain on call on the employer’s premises is working while “on call.” An employee who is required to remain on call at home, or who is allowed to leave a message where he/she can be reached, is not working (in most cases) while on call. Additional constraints on the employee’s freedom could require this time to be compensated. However, the states may view it differently.  In most states the degree of control the employer has over the employee’s time and whether the employee is free to use his or her time for his or her own purposes is the guiding factor in whether or not the time is compensable.

9. Holiday/Sick Leave/Vacation Pay

The federal government does not require an employer to provide benefits such as these to the employee and does not count them towards hours worked for overtime.  But the state, county or even city could have a different rule in that area. More and more states or local governments are now requiring paid sick leave or paid leave.  The most recent is Nevada. Massachusetts and Rhode Island both have rules concerning mandated holidays. However, none require that it be included in regular rate of pay.

10.Statements and Payday Notices

The FLSA does not require that an employee be given any type of notification upon hire or when being paid.  But the states generally do have such requirements. These requirements could include giving the employee or posting certain notices regarding benefits and wages.  It may require that the date and time of distribution of paychecks be posted.  One common requirement in 42 states is the employee receive a statement or “paystub” with each payment explaining the breakdown of the check. This statement requirement may be as simple as listing only the deductions made from the check as in Idaho or listing everything including the gross to net wages and all rates and dates. The latest area of compliance concern for payroll is providing electronic pay stubs. Most states with this regulation require a written pay stub to be provided and have not yet allowed “written” to be by electronic means.

 

In Part 4 I will be covering the next four areas that may require research including posting requirements, frequency of payments, methods of payments, and termination requirements.

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