Do I Have to Pay My Employees for That? Common and Not-So Common Workplace Scenarios

HR. Payroll. Benefits.
Do I Have to Pay My
Employees for That?
Common and Not-So Common
Workplace Scenarios

Today’s Presenters
Richard Allaway, MBA
Richard is General Manager and
VP of ADP’s Specialty Products
Group. His tenure at ADP spans
11 years across several business
units and functions.
Renee is a certified HR Specialist
with over 10 years of HR
experience in the small business
arena.
Renee Maher, SPHR

This information is the property of ADP, LLC (ADP). It may not be distributed,
reproduced, modified, sold or used without the written permission of ADP.
The information is provided “as is” without any expressed or implied warranty, is
based on generally accepted HR practices and is advisory in nature.
This content provides a high level overview and practical information concerning
the subject matter covered and is provided with the understanding that neither the
publisher nor the writers are rendering legal advice or other professional services.
Employers are encouraged to consult with their in-house legal counsel or with an
experienced employment law attorney for legal advice regarding specific facts
concerning the organization’s compliance with applicable legislation.
Welcome to the Webcast
© 2015 ADP, LLC. This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice or other professional services.3

Logistics and Resources

 Fair Labor Standards Act (FLSA) Overview
 Exempt vs. Non-exempt Classifications
 Independent Contractor vs. Employee
 Workplace Scenarios
 Timekeeping Best Practices
Agenda
5 © 2015 ADP, LLC. This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice or other professional services.

Fair Labor Standards
Act (FLSA) Overview
PART ONE

What is the Fair Labor Standards Act (FLSA)?
 Governs minimum wage, overtime
and other wage and hour issues
 State minimum wage rates:
http://www.dol.gov/whd/minwage/america.htm

Nearly every business is covered by the FLSA.
 Businesses that gross $500,000 or more
 Hospitals, schools, and public agencies
 Employees engaged in interstate commerce

In 2013, the DOL collected more than $130 million in back
overtime wages and $38 million in minimum wage violations
Source: www.dol.gov/whd/statistics

Worker Classifications
PART TWO

Non-exempt Employees:
• Paid for all hours worked
• Paid overtime
• Typically paid on hourly basis
Exempt Employees:
• Paid a set salary each week
• Not entitled to overtime
• Must meet specific criteria
Exempt vs. Non-exempt Employees

12
Classifying Exempt Employees
Administrative
Exemption
Executive Exemption Professional Exemption
• “Learned Professional”
• “Creative Professional”
© 2015 ADP, LLC. This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice or other professional services.

13
Classifying Exempt Employees (Cont’d)
Computer Employee
Exemption
Outside Sales Exemption Highly Compensated
Employees

Proposed regulations expected in 2015: revisions to “White
Collar” exemptions and increases in salary thresholds.

Self-employed individuals who
offer their services to the general
public under terms specified in a
contract
What is an Independent Contractor?
15
Factors to consider:
 Employer control
 Relationship permanency
 Type of work performed
“
” See IRS website for more
information on Common Law test

Workplace Scenarios
PART THREE

Independent Contractors vs. Employees
A worker is presumed to be an
employee unless he or she
satisfies certain independent
contractor requirements.
Check your state and federal law to
apply appropriate tests.

18
Scenario: Independent Contractor or Employee?
 Work arrangement is indefinite
 Paid a set salary each week
 Reports to the office daily
 Uses the company's computers
and attends meetings
 Is Joe an Independent
Contractor or an Employee?

Behavioral Control
• Reports to the office
daily
• Uses company
computers
• Attends company
meetings
Financial Control
• Paid a set salary
each week
• Provided a
computer and
workspace
Type of
Relationship
• Working for firm
indefinitely
• Job is a key aspect
of the business
Solution: Independent Contractor or Employee?

Time worked in excess of 40
hours in a workweek. Paid at a
rate of 1.5x the regular rate.
Certain state laws require overtime
under other circumstances.
Overtime

 Nick is a non-exempt employee
 Paid a weekly salary of $400
 Normally works 40 hours per week
 Last week, he worked 43 hours
 How should Chip calculate Nick’s
overtime payment?
Scenario: Overtime for Salaried Non-Exempt

Step 1: Calculate regular rate of pay
$400.00 weekly salary ÷ 40 hours = $10.00 per hour
Step 2: Calculate overtime premium pay
$10.00 regular rate of pay x .5 x 3 overtime hours = $15.00
Step 3: Calculate total compensation for week
$400 + (3 overtime hours x $15.00 overtime pay) = $445.00
Solution: Overtime for Salaried Non-Exempt

Do you have to pay employees
for time worked outside of the
office?
How can you account for that time?
What if it wasn’t authorized?
Off-the-Clock Work

Scenario: After Hours Work
 Employees are replying to work
emails after hours
 Does Joan have to pay the
employees for the time spent
replying to emails?

Non-exempt employees must
be paid for all time worked
(both during and after their
scheduled shift)
Joan can:
• Establish a clear policy on
after hours work
• Train supervisors and
employees on policy
Solution: After Hours Work

Scenario: Early Clock-Ins
 Company policy prohibits clocking in
early
 Employee violated this policy by
clocking in a half hour early
 Can Holly refuse to pay the
employee for the time before the
start of his shift?

If the employee performed
work during this time, he
must be paid
Holly can:
• Establish a clear policy on
timekeeping
• Train supervisors and
employees on policy
Solution: Early Clock-Ins

Rounding employees’ starting and
stopping time to the nearest 5, 10,
or 15 minutes.
Both federal and state laws establish
limitations on an employer’s ability to round
an employee’s hours.
Time Rounding

Scenario: Time Rounding
 One of the stylists clocked in at
7:55AM, before her 8AM shift
 Is Sally allowed to round her
time to 8:00AM?

Solution: Time Rounding
Best Practice:
• Track time to the nearest
minute worked
Under the FLSA:
• Employers can round to a
maximum of 15 minutes
• Must account for all time
worked
• Cannot consistently round in
the company’s favor

Working Interviews & Training

Scenario: Working Interviews
 Jaime wants to use “working
interviews” to assess candidates’
skills
 Is she required to pay candidates
for time spent working?

Candidates must be paid for
any pre-employment time
worked
Jaime should:
• Pay candidates at least
minimum wage
• Withhold taxes
• Comply with all applicable
employment laws
Solution: Working Interviews

Scenario: Training
 Employees are required to participate in
sexual harassment training
 The training will take place before the
restaurant opens
 Does Michael have to pay employees for
time spent in training?

 Since the training is mandatory, Michael must pay employees
 Training time must be paid, unless:
– Attendance is voluntary and outside regular working hours; and
– It’s not directly related to the employee’s job; and
– The employee does not perform any productive work.
35
Solution: Training

What is donning and doffing?
Putting on (donning) and taking off
(doffing) protective gear, clothing, or
uniforms. Sometimes these activities are
subject to pay.
Donning and Doffing

 Employees are required to wear safety
equipment when working
 It takes 10 minutes to put on and take off
 Must be done on the premises
 Does Priya have to pay employees for
time spent putting on and taking off
equipment?
Scenario: Donning and Doffing

The work gear is required
and employees must put it
on and take it off at work
Priya must pay employees
for this time
Solution: Donning and Doffing

Meal and Break Periods

 Employees are provided two 10-
minute breaks
 Some employees extend those
breaks without permission
 Does Violet have to pay the
employees for the extra time?
Scenario: Rest Break

Solution: Rest Breaks
 Rest breaks that last 20 minutes or less must be paid
 Unauthorized extensions don’t require pay if it is made clear:
– Breaks may only last a specified duration; and
– Unauthorized extensions are prohibited; and
– Violations are subject to disciplinary action

 Josh provides employees a 30-
minute lunch period
 One employee was on her lunch
break when Josh asked her to help a
client
 Does Josh have to pay her for the
full meal period?
Scenario: Lunch Break

Solution: Lunch Breaks
To be unpaid:
• Meal periods must be at least 30
minutes without interruption; and
• The employee must be fully
relieved of all duties
A meal period is
subject to pay if:
• It’s interrupted for the company’s
benefit; or
• The employee is not free to use
the time as they wish

The nature of an employee’s
work, or extenuating
circumstances, can make
their schedule unpredictable.
When there is no work available,
employers still may be required to
compensate employees.
Reporting In and Waiting Time

 Due to the weather, Melanie
sends employees home after
they arrive for their shift
 Does Melanie have to pay
employees a certain number of
hours?
Scenario: Report In, But No Work

Under federal law:
• It’s not required to pay non-
exempt employees for
reporting in when no work is
available
• Employees who report to work
and must stay until a decision
is made, must be paid
Melanie should check her
state or local law
Solution: Report In, But No Work

 An employee’s tool breaks and he
is unable to work while waiting for
repairs
 He remains on the premises while
he waits
 Does Roger have to pay him for
the time he spent waiting?
Scenario: Waiting Time

Time spent waiting may be unpaid only if the employee is:
– Completely relieved from duty;
– Able to use the time for their own purposes;
– Told in advance that they can leave while they wait; and
– Told what time to report back
48
Solution: Waiting Time

Time spent traveling for
business purposes.
Under the FLSA, certain time spent
traveling may be compensable.
Travel Time

 Elizabeth sends two employees who
typically work in the office to a seminar
two hours away
 Does Elizabeth have to pay these
employees for the time spent
traveling?
Scenario: Travel to a Different City

Time spent traveling to and
from a special one-day
assignment must be paid
Elizabeth can:
• Subtract the employee’s
normal commute time
• 4 hours of travel minus 30
minutes of normal commute
time = 3.5 hours
Solution: Travel to a Different City

 Thomas’ employees spend several
hours during their workday traveling
from worksite to worksite
 Does he have to pay the employees
for time spent traveling to each
jobsite?
Scenario: Travel Among Job Sites

Time spent traveling between
job sites during the workday
is considered hours worked
Thomas must pay employees
when they arrive to their first
job site
Solution: Travel Among Job Sites

 Abby asks an employee to take an
overnight business trip
 The flight is at 9AM on a Sat.
 The employee's regular work hours are
8AM to 5PM, Mon. – Fri.
 Does Abby have to pay the employee for
the time spent on the flight? What if the
employee wants to drive instead?
Scenario: Overnight Travel

Pay is required for the time
that cuts across the
employee's regular working
hours
Abby can either count:
• Time spent driving the car
(12 hours roundtrip); or
• Time spent traveling by
plane (2 hours roundtrip)
Solution: Overnight Travel

Key Takeaways &
Timekeeping Guidelines
PART FOUR

 Ensure workers are properly classified
 Pay non-exempt employees for all hours worked
 Pay exempt employees a fixed salary each week
 Maintain records of all hours worked and pay calculations
 Ensure you have an accurate and reliable timekeeping process
57
Key Takeaways

Thank you for attending
The information contained in this Webcast is based on generally accepted
HR practice and is advisory in nature. This content provides a high level
overview and practical information concerning the subject matter covered
and is provided with the understanding that neither the publisher nor the
writers are rendering legal advice or other professional services.
For more information contact your ADP Associate or visit
http://sbshrs.adpinfo.com/hrsolutions

Do I Have to Pay My Employees for That? Common and Not-So Common Workplace Scenarios

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