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Mythbusting: Wage and hour legal issues

by Mark Bakker, Wyche Law Firm

On occasion, my family will take in an episode of "Mythbusters," a popular television show broadcast on the Discovery Channel. The show's hosts use the scientific method to test the validity of popular beliefs, Internet rumors and other myths. This inventive show is surprisingly entertaining. I can't speak to the science, but I can help debunk popularly held, but misconstrued, beliefs about wage and compensation law.

Myth #1:  My small municipality does not have to worry about wage claims.

Think that overtime doesn't apply to municipal employees? Or that your city is protected from the growing number of unpaid wage claims? Think again. Public employees are generally covered under the federal Fair Labor Standards Act and the South Carolina Wage Payment Act. Both are in play for most wage and hour legal disputes. Most employers-including municipalities-must abide by the FLSA and SCWPA.

Myth #2:  My salaried employees are not entitled to overtime.

Many employers confuse a "salaried" position with exempt status, assuming "no overtime responsibility."  However, the "salary test" is only the first prong to determine if employees are exempt from the FLSA's overtime requirements. The second prong is determining if employees are classified correctly according to the duties they perform. For example, employees may be exempt from overtime if they are properly classified as bona fide executive, administrative or professional employees. If the FLSA exemptions are not met, even salaried employees may be entitled to overtime.

Myth #3:  I can dock an exempt employee's pay.

If you have determined that a position is exempt from overtime, don't imperil that status by improperly docking an exempt employee's pay. To meet the "salary test," an employer must pay an employee's full salary for any week in which any work is performed regardless of number of days or hours worked unless there is a "permitted deduction." Usually, employers must pay employees their full salary if they have worked any portion of a workweek, though public employers have more flexibility than private sector employees to trim salaries for partial day absences or furloughs.

Myth #4:  "Hours worked" are only actual, authorized hours worked.

For employees not exempt from the FLSA's overtime requirements, employers must pay for hours worked-including accumulation of overtime-even if such work or overtime was not authorized or requested. An employee performed tasks prior to or at the end of a workday or during lunch? An employee is "on-call" after hours to respond to work-related needs? An employee works remotely over the weekend by responding to emails and calls? All of these scenarios are red flags that may affect hourly pay and overtime entitlement. Nonexempt employees must be paid (or credited) for all hours worked, which is broadly defined as any work "suffered" or "permitted."

Myth #5:  Get free help by employees who volunteer and unpaid interns.

It is true that individuals can volunteer services to public sector employers. But public sector employers may not allow their employees to volunteer additional time without compensation to do the same work for which they are employed. The Department of Labor has also reiterated that there are standards to properly classify "unpaid interns." While public sector employers have more flexibility in getting volunteer labor and unpaid interns than private sector employers, they still must be certain they are correctly applying appropriate standards and laws.

Myth #6:  Avoid overtime issues by providing "comp time."

This is a fact! Unlike the private sector, public sector employers may use "compensatory time" as an alternative to paying out overtime. Under certain prescribed conditions, local government employees may receive compensatory time off, at a rate of not less than one and one-half hours for each overtime hour worked, instead of cash overtime. Employees must be permitted to use compensatory time as requested unless doing so would unduly disrupt the operations of the employer.

Wage and hour law is not intuitive. Moreover, application of these laws is subtly different for public sector employees. Don't rely on myths-make sure your payroll and compensation practices are rigorously analyzed for legal compliance.

Mark Bakker presented on the topic of compensation law at the Municipal Human Resources Association's Spring Meeting in April.