Board Converting News, May 17, 2021

Dealing With Changing Wage & Hour Regulations: Avoiding Overtime Penalties BY PHILLIP M. PERRY Wage and hour law has long bedeviled employers. Who is exempt from overtime rules? How do you calculate time-and-a-half when employees

work off the clock and fail to record their hours? And how about those remote workers, spending a few minutes here and there tackling business emails? The wrong answers can spark costly penal- ties. “Employers who fail to correctly pay over- time must make up back wages plus ‘liquidated damages’ equal to an equivalent amount,” says Douglas E. Witte, who represents businesses in

Phillip Perry

labor and employment law matters at Madison, Wisconsin based Board- man & Clark ( boardmanclark.com ). “If the Department of Labor (DOL) thinks an employer willfully violated the law the statute of limitations gets bumped up from two to three years. And employers may also have to pay attorneys’ fees for those who have brought successful lawsuits.” Workplace observers expect compliance to get tougher as the feder- al government starts tightening regulations. “Part of the Biden platform was to empower workers,” says Ann F. Kiernan, an employment law at- torney and lead trainer at Fair Measures, a management practices con- sulting firm in Denver ( fairmeasures.com ). “I expect a lot of pro-employ- ee activity, to include increased enforcement by the DOL.” Among the likely regulatory steps over the coming months: boosting the overtime salary threshold and rewording exemption parameters. Many states are also passing legislation aimed to protect and expand overtime. The Exemption Puzzle Smaller businesses often believe they are exempt from overtime law, since the Fair Labor Standards Act (FLSA) covers enterprises engaged in interstate commerce. In reality, any local enterprise is considered so en- gaged if it performs seemingly innocuous tasks such as making phone calls or sending emails to customers or vendors in other states, trans- acting credit card payments with distant entities, or receiving goods or services from beyond state borders. “It’s the rare business that is not in- volved in some way with interstate commerce,” says Matthew C. Heerde, Principal at Heerde Law, New York City ( heerdelaw.com ). Businesses may also believe they are exempt from overtime law be- cause their revenues are under the $500,000 level at which the FLSA normally kicks in. Yet even the smallest operation will fall under the FLSA umbrella on a so-called “per-employee basis” if even a single worker spends a substantial amount of time performing the tasks enumerated in the previous paragraph. Finally, state and local overtime laws often mim- ic FLSA regulations and apply to the smallest of employers, regardless of interstate commerce status. It follows that all employers should make a point of correctly catego- rizing workers as either exempt or non-exempt from overtime. Errors are easily made. “Employers most often get into trouble for misclassifying employees as exempt,” says Witte. Ignorance of the law is no excuse, he adds, and wise businesses keep paperwork to support their decisions. “The burden of proving exempt status is on the employer.” Employers must be able to convince regulators that exempt person- nel fall into one of the so-called “white collar” categories labeled exec-

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May 17, 2021

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