Some recent cases on calculating damages in OT misclassification case.
Month: November 2013
Suncor increases sand tar oil production; using rail instead of pipeline to move product
The New York Times reports that Suncor, a leading Canadian oil sands producer, will increase production in 2014. The company anticipates using rail instead of pipeline to move oil to its refineries.
The Suncor website provides a detailed description of the oil sands process.
From their website:
Near Fort McMurray, Alta., Suncor recovers bitumen from oil sands through its mining and in situ operations. The bitumen from both operations is then upgraded to refinery-ready feedstock and diesel fuel.
The in situ process uses horizontal wells to reach the oil sands ore. The top well injects steam to heat the reservoir, allowing the bitumen to flow to the lower well where it is collected and piped to upgrading facilities. Graphic:
FLSA Regular Rate Calculations Accounting for Bonuses: Part 3 of 3.
Example #2—Nurse Retention bonuses (Part 3 of 3)
A health care organization’s nursing department gives hourly paid LPNs and RNs a $2,000 bonus after being employed for 6 months to both retain and attract more nursing personnel. In this instance, the bonus will be included in the regular rate calculation during weeks in the period in which overtime was worked. The key is to know how the bonus was earned. That is, was it a one time bonus? Or was it for work that was performed over a series of months. In this example is the latter.
The $2,000 retention bonus described above was earned over 6 months or 26 weeks. Equivalently, the weekly bonus can thought of as a weekly bonus of $76.92 ($2,000 ÷ 26 weeks). If an employee works overtime during the 26-week period, the increase in the regular rate is calculated by dividing $76.92 by the total hours worked during the overtime week.
The procedure for calculating OT is the same as described in Part 2 of this series. If the employee worked 10 hours of overtime ( a total of 50 hours of work in the pay period) in their 9th week of employment, the employee would be due an additional $7.70 in overtime earning in that time period. The calculation is as follows:
1. Calculate the increase in regular rate due to the bonus
$76.92 ($2,000 ÷ 26 weeks) ÷ 50 hours = $1.54 (increase in the regular rate)
Note: The daily bonus is spread equally of all the hours worked in the time period where there is OT.
2. Calculate the increase in the half time (.5) portion of the OT premium
$1.54 x ½ = $ .77 (increase in the additional half-time premium)
3. Calculate the addition OT premium due to the individual.
$ .77 x 10 hours of overtime worked = $7.70 (increase in overtime earnings due to the bonus)
The calculation can also be performed as described in yesterday’s post. The results will be the same. The key is to recognize that the bonus is spread over the time period that the bonus was earned.
FLSA Regular Rate Calculations Accounting for Bonuses: Part 2 of 3.
Excerpted from article by: Stephen Bruce, Ph.D., PHR
Example 1: Health care workers
An health care facility for the disabled pays its employees on a biweekly basis. If employees work all the hours that they are scheduled to work in a pay period, they are given a $100 bonus. The employees must work all the hours in the pay period to receive the bonus. Employees are paid $12 per hour and work 56 hours a week. To compute this employee’s regular rate under the 40-hour FLSA overtime standard, the employer adds half of the biweekly bonus ($50) to the employee’s earnings for that week. The employers earnings are the hourly rate times the total hours worked in this example.
The resulting total compensation would be divided by the total hours the employee worked during that week to determine the regular rate. The steps are as follows.
1. Convert the biweekly attendance bonus to a weekly amount:
$100 (biweekly attendance bonus) ÷ 2 (weeks) = $50 (weekly bonus equivalent)
2. Calculate total weekly compensation:
$672 (56 hours @ $12) + $50 weekly bonus equivalent = $722
3. Calculate the regular rate:
$722 total weekly compensation ÷ 56 hours worked = $12.89 (regular rate)
Note: That the regular rate is higher than the person’s base rate in this pay period because of the additional non-discretionary bonus that they received during the pay period.
4. Calculate the overtime premium owed on the regular rate:
$12.89 (regular rate) x ½ = $6.45 (half-time premium)
Note: In this setting the overtime premium refers only to the .5 portion of the total 1.5x overtime.
5. Calculate the overtime rate based on the regular rate:
$12.89 (regular rate) + $6.45 (half-time premium) = $19.34 (overtime rate)
Note: The regular rate is used throughout the calculation and not the individual’s base rate.
6. Calculate total earnings:
40 (straight time hours) x $12.89 (regular rate) = $515.60 (straight time earnings)
16 (overtime hours) x $19.34 (overtime rate) = $309.44 (overtime earnings)
Total earnings for week one = $825.04 ($515.60 + $309.44)
Total earnings for week two = $825.04 ($515.60 + $309.44)
Total earnings for biweekly period = $1,650.08 ($825.04 + $825.04)
Regular rate FLSA calculations accounting for bonuses: Part 1 of 3.
Excerpted from: Stephen Bruce PhD, PHR
According to FLSA Overtime, at the rate of at least time and one half, must be paid on all hours worked over 40 in a workweek at the individual’s “regular rate,” not on the nominal hourly rate. FLSA requires that nondiscretionary bonuses must be included in the regular rate of pay. Non-discretionary bonuses include those that are announced to employees to encourage them to work more steadily, rapidly, or efficiently, and bonuses designed to encourage employees to remain with a facility.
The Department of Labor states that few bonuses are discretionary under the FLSA, and therefore few can be excluded from the regular rate.
So, to calculate the amount of the overtime premium, you must first adjust the pay to include the bonuses and then calculate the overtime premium. In practice, it’s often the case that you award bonuses after a paycheck has been issued, and in that situation, you must go back and recalculate the overtime and pay the difference. It’s usually a small amount, but it still must be paid. Referral bonuses paid for recruitment of new employees are not included in the regular rate of pay if they meet certain conditions (voluntary, not time intensive, after hours among friends and family).
Regular rate FLSA calculations accounting for bonuses: Part 1 of 3.
Excerpted from: Stephen Bruce PhD, PHR
According to FLSA Overtime, at the rate of at least time and one half, must be paid on all hours worked over 40 in a workweek at the individual’s “regular rate,” not on the nominal hourly rate. FLSA requires that nondiscretionary bonuses must be included in the regular rate of pay. Non-discretionary bonuses include those that are announced to employees to encourage them to work more steadily, rapidly, or efficiently, and bonuses designed to encourage employees to remain with a facility.
The Department of Labor states that few bonuses are discretionary under the FLSA, and therefore few can be excluded from the regular rate.
So, to calculate the amount of the overtime premium, you must first adjust the pay to include the bonuses and then calculate the overtime premium. In practice, it’s often the case that you award bonuses after a paycheck has been issued, and in that situation, you must go back and recalculate the overtime and pay the difference. It’s usually a small amount, but it still must be paid. Referral bonuses paid for recruitment of new employees are not included in the regular rate of pay if they meet certain conditions (voluntary, not time intensive, after hours among friends and family).
The basics of Phantom Stock issues
What is it?: Phantom stock is a form of compensation where a company promises to pay cash at some future date, in an amount equal to the market value of a number of shares of its stock. The recipent does not receive actual stock.
How does it work? The payout on Phantom Stock will increase if the stock price rises, and decrease if the stock falls, but without the recipient actually receiving any stock. Like other forms of stock-based compensation plans, phantom stock broadly serves to encourage employee retention, and to align the interests of recipients and shareholders.
Phantom stock is essentially a cash bonus plan, although some plans pay out the benefits in the form of shares. Phantom stock is favored by closely held or family-owned companies who want to provide incentives to management and other employees without granting them equity.
How is it taxed? When the payout is made, it is taxed as ordinary income to the employee and is deductible to the employer. Generally, phantom plans require the employee to become vested, either through seniority or meeting a performance target.
Sources: The National Center of Employee Ownership, http://www.nceo.org/articles/phantom-stock-appreciation-rights-sars) http://en.wikipedia.org/wiki/Phantom_stock Pictures and images: http://slgsecurities.files.wordpress.com/2012/09/incentive-phantom-stock-michae_10762769.jpg
We would like to thank @CAPA for inviting us to speak on FLSA and Wage and Hour violations! It was a great audience!
How long should it take the plaintiff to obtain comparable re-employment?
That is a central question in many wrongful employment termination lawsuits. The plaintiff’s back and front pay earnings claims revolve around the answer to this question. The length of an individual’s job search time depends on a number of factors. These factors include the individual’s work background, type of job, number of other qualified job searchers, and geographical area. The individual’s job search methods and efforts are also important factors.
In our work we study these types of job search factors in conjunction with the number of job searchers and employer demand for the relevant job position.
We have studied the labor market conditions for many job positions. In recent analyses we have studied the labor market for accountants, network computer administrators, and operations managers. The number of statewide job openings and searchers per job openings is shown in the table below. Searchers per job openings ratios that are less than 1.0 indicate that there are more job openings than job searchers for the particular job. Job searcher per job openings ratios greater than 1.0 indicate that there are more job searchers than job openings for the particular job..
Methodology
Number of job openings (Labor demand by employers): Based on the distribution of specific job openings in an industry, city and occupational classification. Data sources include U.S. Bureau of Labor Statistics databases: JOLT, CPS, and LAUS.
Number of job searchers (Labor supply by individuals): Based on geographical area(s) labor force, percentage of the labor force in each occupation, unemployment rate, and an unemployment rate adjustment factor associated with the occupation. Data sources include U.S. Bureau of Labor Statistics databases: JOLT, CPS, and LAUS.
Learn more read the article.
Dr. Sandra Black’s work on lifetime earnings and school starting age.
Dr. Sandra Black, UT-Austin economics professor, looks at the impact of school starting age and family background on work earnings. From her work:
We find that if you enter the labor market later, as a result you have less experience and so you get paid less than the people who are the same age who started earlier, but by age 30 you’ve caught up. – Dr. Sandra Black
