Despite federal guidance provided under the Fair Labor Standards Act and Portal-to-Portal Act, roughly 80 years later, employers remain confused about what time is compensable.
“Every day, there is something in the news about an employer who didn’t pay correctly, and it’s not just the little mom-and-pop shop down on the end of the corner,” said Hope Williams, CPP, director of payroll training for the American Payroll Association. “These are major companies even that can make mistakes about how they can pay employees,” she told an audience May 17 at the APA’s Congress, held in National Harbor, Md.
In 2017, according to Labor Department statistics, various companies paid out $270 million in back wages, which translates to more than $1 billion in back wages and penalties that have been paid over the last four years, said Andrew Garboden, CPP, who joined Williams and also serves as a director of payroll training at the APA.
The FLSA put a floor under wages, a ceiling over hours, and regulate children working in factories by establishing the minimum wage, and overtime and defined hours worked as all the time a worker must be on duty, regardless of whether the worker is on the premises, Garboden said. The FLSA only says we have to pay employees for the time they actually work, Williams said. It sounds simple, but it is a lot more complicated than that, she said.
Knowing about the Portal-to-Portal Act of 1947 is critical insomuch as it provided answers to issues left unaddressed after the Fair Labor Standards Act was issued in 1938.
“The Portal-to-Portal Act deals with door to door, it is your commuting time, the travel time it takes you to get from your home to your work site,” Garboden said.
The reason the Portal-to-Portal Act was written to begin with was employees said “you need to pay me for my time to come to work,” Williams said.
From the FLSA to the Portal-to-Portal Act, the Labor Department started to have an understanding of real-world situations and said that where you choose to live is your choice and getting to work on time is your responsibility, she said. Home-to-work travel is not compensable under the act, even if it is to a different work site.
“Some people think that as soon as they hit the door in the morning at work, they are at work and deserve to be paid for it, and to some extent that is true, but we need to be careful, and our employees, I think, don’t always understand what time worked means,” Williams said.
Compensability of Activities Varies
Some states and all the unions have requirements for show-up pay, Williams said. But, on the federal level, workers who show up to work but aren’t given work that day must be paid only for the time from when they showed up to when they are told to go home, she said, noting that show-up pay is not includable for overtime premium calculations.
At the federal level, wait time is compensable if an employer tells an employer it has nothing for the worker to do but that it needs the worker to say because something is going to happen, and the worker needs to be ready for it, Williams said, offering the example of a car-wash worker who may sit down and find little tasks while waiting for cars to arrive.
Wait time is not compensable if a worker comes in and is sent home because a bad storm resulted in a power outage that can’t be fixed until noon, so the worker should come back when called, Williams said. In that case, the worker is free to shop, sleep, or conduct personal business.
Time spent waiting for the day to begin, such as when workers arrive to the worksite early, does not need to be paid, nor does minimal time spent preparing to work, such as insignificant periods of time spent straightening up after the previous shift, Williams said.
However, time spent waiting for work to begin is compensable if it is beyond the employee’s control and they are at their work station at the appointed time, she said.
Meal and rest breaks are not required under the FLSA, but to not pay someone for break time, they must be relieved of all responsibilities, Williams said. Employers also should check applicable state laws. Unions also more than likely have requirements, she said.
“With a nonexempt employee traveling, be very clear with them before the travel what your expectation is,” Williams said.
Seminars and meetings may be noncompensable if four conditions are met: the events are outside normal work hours, attendance is voluntary, it is not job related, and there is no productive work done, Williams said.
Employers need to keep good track of time, Garboden said. It doesn’t need to be electronic, but that is probably a good idea. If an employer does not keep time accurately, and an employee complains to the Labor Department, the employees’ time records would be used to determine hours worked, he said.
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