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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