Category: Wage and hour cases

Regular rate FLSA calculations accounting for bonuses: Part 1 of 3.

paycheckExcerpted 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).

Olgetree Deakins attorneys discuss new California wage and hour legislation

Betsy Johnson, Office Managing shareholder in the Los Angeles Office of Ogletree Deakins discusses new California wage and hour and employment legislation in a multi-part series.

AB 10:  State Minimum Wage Increase: AB 10 amends section 1182.12 of the Labor Code to increase the minimum wage to $9 per hour as of July 1, 2014 and to $10 per hour as of January 1, 2016.

AB 241:  Domestic Worker Bill of Rights: B 241 adds section 1450 to the Labor Code and requires that individuals in household occupations (such as nannies, housekeepers, and individuals providing care for the elderly or disabled within a household) be paid overtime compensation at a rate of 1.5 times their regular rate for hours worked in excess of 9 hours per day or 45 hours per week. 

AB 442:  Liquidated Damages for Unpaid Wages: 

SB 435:  Recovery Periods: SB 435 extends requirement to pay an additional hour of pay to situations in which employers fail to provide any “recovery” periods required by Division of Occupational Safety and Health (DOSH also known as Cal/OSHA) regulations. A “recovery” period is a cool down period afforded to employees who work outside to prevent heat illness.

 

 

 

SHRM question of the day: What is the difference between a discretionary and non-discretionary bonus

 

12/11/2012  From SHRM

In order for a bonus to be considered discretionary, it should be at the sole discretion of the employer to award it, not an expectation by the employees. A discretionary bonus is a form of variable pay; the amount, requirements, timing and announcement of the bonus should not be disclosed in advance, as this may appear to be a motivator or incentive implying that meeting certain levels would guarantee a bonus or reward. In a discretionary bonus, the employer determines after the fact that there is a reason for awarding a bonus, such as reaching company and financial goals, or chooses to reward an individual employee after exceptional performance.

A nondiscretionary bonus is the opposite of a discretionary one. The employer from the outset determines the standards that are required to receive a bonus based on meeting specific criteria. The employees expect to earn the bonus if they meet the standards. An employer’s incentive pay plan that provides additional compensation for exceeding performance or productivity goals is an example of how nondiscretionary bonuses are executed in the workplace.

 

Wage and hour time records analysis tools: Cluster Random Sampling

Random sampling of time records is often necessary in wage and hour cases.  Some employers maintain handwritten or machine produced records that are not efficiently converted to an electronic format.   It is not always possible to convert these types of records in a timely and cost effective manner.

Random sampling is a tool that is frequently called upon in these situations.  For instance,  it is common to randomly sample a population of employees and then randomly sample a time period from that sample of employees.  This type of cluster random sampling is common in these situations.

See for example: Sharon Lohr, Sampling: Design and Analysis, 2nd Edition, Brooks/Cole, 2010.

Statistical random sampling messing time records in wage and hour litigation

Many employer time records are still in paper format that is not easily machine readable.  Analyzing these data in a wage and hour case typically requires manual entry of the records.  However, entering in all the time records is not always feasible.  In these situations a statistical random sampling of records can be useful and informative.   A solid statistical sampling alows the researcher to calculate error rates which are useful when making inferences concerning the time records.

SHRM discusses two interesting Calif. wage and hour cases

SHRM:

 

Leyva v. Medline Industries Inc., 9th Cir., No. 11-56849 (May 28, 2013), Individualized damages http://www.shrm.org/LegalIssues/FederalResources/Pages/Individualized-Damages-No-Obstacle-Class-Action.aspxno obstacle to wage and hour class action

 

Urbino v. Orkin Servs. of Calif. Inc., 9th Cir., No. 11-56944 (Aug. 13, 2013),  PAGA claims cannot be aggregated for removal to federal court

http://www.shrm.org/legalissues/stateandlocalresources/pages/calif-paga-claims-aggregated-federal-jurisdiction.aspx