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overtime pay lawyer

New Overtime Rules Go Into Effect in 2020

As of January 1, 2020, the rules are changing regarding employees who are considered exempt from overtime pay. The US Department of Labor (DOL) released its highly anticipated changes to the overtime provisions of the Fair Labor Standards Act (FLSA) in mid-2019, and they go into effect on the first of the New Year. Failing to pay overtime to non-exempt employees is a common wage violation that many organizations engage in, and these types of violations are likely to become even more prevalent after the new standards become effective.

Background

The FLSA requires most employers to pay non-exempt employees a premium for working overtime. According to federal law and the laws of most states, overtime is defined as exceeding 40 hours of work in a given week, as opposed to working more than 8 hours in a single day.

For example, if you work three consecutive 12-hour days but you do not work any other days during that week, you would not qualify for overtime pay, because your total hours for the week would only be 36. If a non-exempt employee does work more than 40 hours in a week, their employer is required to pay them an overtime premium of 50%, also commonly known as “time and half.”

Nearly all employers are required to pay overtime. Businesses that are covered by FLSA standards include those that have $500,000 or more in annual sales, and businesses that do not meet the $500,000 threshold but that engage in what Congress calls “interstate commerce”.

Interstate commerce is so broadly defined that it would even include businesses who make phone calls or send mail to and from another state.

Even the smallest entities would most likely meet the overtime pay standard, and you would be hard-pressed to find any organization that did not. It is also important to note that tax-exempt and/or nonprofit organizations are required to comply with overtime rules as well.

While it is highly likely that an organization is obligated to pay overtime, there has always been a question about which employees they are required to pay overtime to. These are what we have been referring to as “nonexempt employees”. There have always been certain employees that are exempt from the overtime rules based on their job title, job duties, and salary level. And this is where the DOL is making changes.

What is Changing with the Overtime Rules in 2020?

Here are the key changes in the final DOL overtime rules that go into effect in 2020:

Increase in the Standard Salary Level Threshold

Currently, the threshold for a salaried employee to be exempt from overtime pay is $455 per week or $23,600 annually for administrative, professional, and executive (a.k.a. “white collar”) positions. This means that under the previous rules, and organization did not have to pay overtime to an employee in this category who earned more than $455 per week. Under the new rules, this threshold is being increased to $684 per week, or $35,568 annually, which will include a lot more employees than the previous threshold.

Inclusion of Nondiscretionary Compensation in Minimum Salary Requirement

The DOL is introducing a new provision that allows employers to use nondiscretionary bonuses, commissions, and incentive payments to satisfy up to 10% of the standard salary level threshold for white-collar employees, as long as these forms of compensation are paid at least annually. This gives employers additional flexibility to meet the salary threshold for a nonexempt employee.

Increase in the Highly Compensated Employee Salary Threshold

The salary threshold for highly compensated employees is raised under the new rules from its previous level of $100,000 per year up to $107,432 per year. For highly compensated employees, at least $684 must be paid to them on a weekly basis, and the rest can be paid in nondiscretionary bonuses, commissions, incentives, and other forms of nondiscretionary compensation without the 10% cap that is in place with the standard salary threshold.

Questions about Overtime Violations and Other Employment Law Issues? Contact Attorney Kira Fonteneau for Assistance

The DOL estimates that 1.3 million workers will become eligible for overtime pay under the new rules. And as mentioned earlier, many organizations are already violating overtime pay rules in various ways, and the number of these violations is likely to increase.

If you believe you are entitled to overtime pay under the new rules but your Alabama employer did not pay you, there are legal avenues available to you, which may include monetary damages over and above what you are owed. To review your legal options, call attorney Kira Fonteneau today at 205-564-9005 or message us online to schedule a free consultation.

holiday retail overtime pay

Holiday Retail and Overtime Pay Violations

The holiday season is a “make it or break it” time for retailers. “Black Friday” is named as such because the Friday after Thanksgiving is the day when retailers hope to be “in the black” for the year. This is definitely the busiest time of the year in the malls and shopping centers, and it is also the time when retail employees put in lots of overtime.

Under the Federal Labor Standards Act (FLSA), most employers are required to pay overtime to employees who work more than 40 hours in a week. There are a few exceptions to this rule, but they almost never apply to retail stores. If a store has at least two employees and does at least $500,000 per year in business, or the store participates in “interstate commerce” (which is so broadly defined it includes almost everyone), then they are required to comply with FLSA overtime rules.

There are some employees who are exempt from having to be paid overtime. These exemptions are mostly for employees who are considered “white collar”, such as executives and administrative professionals. Exemptions may also apply to supervisors, managers, and salaried employees who earn at least $455 per week. Important Note: Starting January 1, 2020, the weekly overtime exemption threshold for salaried employees increases to $684 per week.

In the retail industry, there are many ways employers may violate overtime rules during the holidays. Here are some of the most common:

Not Counting all of the Hours the Employee Works

It is very easy during the hustle and bustle of the holiday season to not accurately count all of the hours that an employee puts in. For example, an employee may end up working “off the clock” before the shift starts or after the shift is over in order to clean their work area, restock shelves, and perform other tasks needed to get the store ready for shoppers. This might even become an unspoken expectation that is dressed up as “doing your part for the team” or some similar sentiment. Loyalty to your employer is admirable and highly encouraged, but no employee should ever feel like they are required to work for free, even if it is just for short periods of time.

Another common issue is employees not receiving their required breaks. For example, an employee is there for 8 hours but is only paid for 7.5 hours because they are supposed to receive half hour lunch (unpaid), but the store is so busy that the employee never gets his/her lunch break. These half hours may not seem like a lot, but they can add up quickly, especially when the employee is supposed to receive overtime pay for all this extra time worked.

Claiming that the Overtime the Employee Worked was Not Authorized

Along the lines of the previous point, some employers might refuse to pay an employee overtime because it was not properly authorized. Here is a common scenario in which this could happen. The employee is waiting for his/her replacement and they are running late or did not show up at all. As a result, the employee is forced to work two or three (or more) extra hours. The supervisor was busy and nowhere to be found, so no one was around to approve the overtime. Later on, the retailer reprimands the employee for working unauthorized overtime and refuses to pay it.

Whether overtime is authorized or not, this does not absolve an employer of their legal obligation to pay it. No matter what they might tell you, if you are a non-exempt employee and you work more than 40 hours per week, then your employer is bound by FLSA rules to pay the required overtime without exception.

Misclassifying an Employee in Order to Gain an Overtime Exemption

An employer might classify an employee as a “manager” or “supervisor”, even when their duties are not materially different from an hourly employee. In the retail business, there are a lot of positions called “team leads”, and these are employees who have essentially the same job as their coworkers, but they are in charge when an actual supervisor is not around. While each individual case is different, in general, an employee in this category should not be exempt from overtime rules.

Another common issue in the retail business is commissioned employees. Some employees are paid a sales commission instead of an hourly wage, and some receive a combination of hourly wage and commission. The Department of Labor (DOL) has specific rules on when a commissioned employee is exempt from overtime wages. For this to be the case, three conditions must be met:

  • The employee must work in a retail or service establishment;
  • The employee’s average hourly rate for the overtime hours worked must be at least 1.5 times minimum wage (in Alabama, this would mean the employee’s average needs to be at least $10.88 per hour); and
  • Commissions must account for more than half of the employee’s total earnings during the pay period in which the overtime was worked.

Miscalculating the Employee’s Hourly Rate

Some employers do not include all of the required compensation in the overtime wage. For example, they might not include commissions, shift differentials, performance-based bonuses, and other types of pay when they calculate the overtime premium of 150% of the employee’s pay. If an employee is not exempt under any of the aforementioned rules and an employer is required to pay them overtime, all of their pay must be included in this calculation.

Did Your Employer Fail to Pay you for Your Overtime Worked? Call Attorney Kira Fonteneau to Discuss your Case

If your Alabama employer did not pay the amount you were entitled to for the overtime work, there are legal recourses available, which may include monetary damages over and above the pay you are owed. To discuss your legal options, call attorney Kira Fonteneau today at 205-564-9005 or message us online to schedule a free consultation.

can I be forced into tip pooling?

Can I Be Forced to Participate in Tip Pooling?

The short answer is yes. Federal law does allow employers to require employees to participate in tip pooling, as long as the tip pool is legal.  If your employer has implemented an illegal tip pool, then you are not required to participate in it, and you may also be able to take legal action against your employer. If you suspect that you are being forced to participate in an illegal tip pool, get in touch with an experienced employment law attorney to discuss your legal rights and options.

What is Tip Pooling?

You just got a job as a bartender or waitress, you have an outgoing personality and love to be around people, and you are looking forward to using your social skills to earn good money in tips. After you are hired, however, you find out that you are required to give a portion of your tips to a group of your co-workers. This doesn’t seem fair. Why should you have to share money that your customers gave you for your outstanding service to others who did not earn it?

This is the dilemma that many workers in the service industry face, and this is how a tip pool works. Instead of keeping all of the tips you earn, you are forced to chip in part (or in some cases all) of your tips into a collective pool that is then divided among a certain group of co-workers.

There are numerous ways a tip pool can operate. Tips can be divided solely among others who do the same thing as you (such as pooling the tips of waiters/waitresses or bartenders), or they can be shared with other staff, such as hosts/hostesses.

Tip pools can also vary by which shift workers are included. For example, tips may be divided among those working on the same 8-hour shift (e.g., day, swing, or graveyard shift), they could be divided among workers on all three shifts for that day, or they could be divided among those who worked over the entire week. Each establishment decides exactly how a tip pool will be set up, and any of these arrangements are legal as long as all of the other pooling requirements are met.

When it is Tip Pooling Allowed?

There are two main questions that help determine whether or not a tip pool is legal:

Does the Pool include only Employees who Customarily and Regularly Receive Tips?

For a long time, there has been an argument about which employees should be allowed to participate in a tip pool, and many courts had ruled that such a pool could only include “front of the house” employees as opposed to “back of the house” employees.

  • “Front of the house” employees are workers who have frequent interaction with customers and receive tips regularly. Examples include hosts, order takers, serving staff, bartenders, and those who refill beverages.
  • “Back of the house” employees are those who have no or limited customer interaction. Examples include cooks, dishwashers, bus staff, and those who clean tables before and after an establishment opens.

In March of 2018, an amendment to the Fair Labor Standards Act (FLSA) helped clarify this issue. Under this amendment, a tip pool can now include “back of the house” employees as long as the employer pays each tipped employee at least the full minimum wage. Some employers take what are known as “tip credits”. This means that they pay a tipped employee an amount below the minimum wage because they are expected to more than make up for it with the tips they earn. 

If an employer is taking a tip credit and there is a tip pool that includes “back of the house” employees, then this pool is illegal, and you cannot be forced to participate in it. 

Do Managers or Supervisors Participate in a Pool?

It used to be that managers and supervisors were allowed to participate in a tip pool as long as the employer was not taking a tip credit. Changes in the law last year prohibited tip pooling with management for all employers, regardless of whether or not they take a tip credit. This means that if any establishment has managers or supervisors taking a share of tips, this type of tip pool is illegal.

Forced to Participate in an Illegal Tip Pool in Alabama? Call Attorney Kira Fonteneau to Review Your Options

If you or someone you know is a tipped employee who is in a pool that you suspect is against the law, there are potential legal remedies available, which may include compensation for tips that were illegally withheld, as well as monetary damages. If this occurred in Alabama, contact attorney Kira Fonteneau to schedule a free consultation by calling 205-564-9005 or messaging us through our web contact form. 

tip credit calculation

What are Tip Credits? Should I be Concerned About How my Employer Handles Them?

Under federal law and the laws of most states, employers are allowed to pay employees who earn tips an hourly rate that is below the minimum wage, as long as the income they earn from their tips makes up the difference. This is commonly known as a “tip credit”, because the tips the employee earns are counted toward their employer’s obligation to pay them the minimum wage. 

Tip credits can only be claimed by an employer if an employee earns at least $30.00 in tips per month. In addition, if the combined wages and tips of the employee does not equal at least $7.25 per hour (the current federal minimum wage and the current minimum wage in Alabama), the employer is required to make up the difference.

Employers are allowed to pay as low as $2.13 per hour and take a tip credit of up to $5.12 to bring the employee’s combined hourly rate up to at least $7.25. This can be problematic for employees that do not earn tips all the time – for example, a restaurant worker who works most of the time as a waitress, but sometimes fills in as a hostess. This could also become an issue with employees who earn higher tips during certain times of the year (such as the holiday season), but their tips drop significantly during slow seasons.

Tip credits are fairly common in the hospitality industry, but they can create some problems that employees should be aware of:

Overtime Pay

During busy seasons especially, employees are often asked to work overtime. Calculating overtime pay is fairly simple with a regular hourly employee who is paid minimum wage or higher. The employer simply pays the employee their regular hourly rate x 1.5 (i.e., time and a half) for the overtime hours. For example, if you earn $10.00 per hour and work 5 hours of overtime, you are paid $15.00 per hour on those 5 hours.

Things can become a lot more complicated if you and tip credits into the mix. Employers who take a tip credit are still required to pay employees time and a half on their full minimum wage. So, if an employer pays $2.13 per hour and takes a $5.12 per hour tip credit, they need to pay time and a half on $7.25 per hour, not $2.13 per hour. If an employer is paying time and a half on only 2.13 per hour in this scenario, this would be a wage violation.

Tip-Pooling

Employees may be required to participate in a tip pool in which their tips are shared with other employees, but supervisors and managers are not allowed to participate in such a pool. As of 2018, this is true regardless of whether or not the employer takes a tip credit. If any type of employer allows management to be part of a tip pool, this would be another violation of wage and hour laws. Along these same lines, if an employer were to require employees to give back a percentage of their tips to cover overhead or other employer expenses, this would also be against the law.

Tip-Pooling for staff that does not regularly receive tips (e.g., dishwashers, cooks, and other back house staff) is also forbidden in establishments where employers take a tip credit. If the employer does not take a tip credit, these types of employees are allowed to participate in the pool.

Credit Card Processing Fees

Many employers make a regular practice of subtracting processing fees from employee tips that are put on a credit card. For example, the average fee imposed by the banks to process a credit card charge is 3%. Employers in most states are allowed to take out that fee and give only 97% of the tip to key employee. This could create problems when an employer takes tip credits if the 3% deduction puts the employee below the $7.25 per hour minimum wage and the employer fails to make up the difference.

Contact Alabama Employment Law Attorney Kira Fonteneau

If you are a tipped employee in Alabama, your employer takes tip credits, and they have committed violations of the Fair Labor Standards Act (FLSA), there are legal remedies available; which may include compensation for the amount of wages you were shorted as well as monetary damages. It is also a violation for an employer to terminate or discriminate against an employee who files a complaint or participates in an FLSA legal proceeding.

For skilled guidance with FLSA violations and all other employment law matters, call attorney Kira Fonteneau today at 205-564-9005 for a free consultation or send us a message through our online contact form.

What are Tip Credits, and Should I be Concerned about How my Employer Handles these Credits?

tip pooling

New Federal Law Prohibits Tip-Pooling with Management for All Employers

In many professions, workers depend heavily on tips to earn a livable income. This is especially true in the hospitality industry, where bartenders, waiters and waitresses, delivery drivers, hotel maids, and many others derive the vast majority of their income from tips. Some employers pay less than the minimum wage to employees who earn at least $30.00 per month or more in tips if these employees are able to make up the difference through their tip income, and as long as the employer is in compliance with the Federal Labor Standards Act (FLSA).

One of the most important provisions of the FSLA that pertains to tipped employees is that, if an employer pays below the minimum wage and lieu of tips (also known as taking a “tip credit”), employers, supervisors, managers, and “back house staff” (i.e., those who work behind the scenes such as dishwashers and cleaning staff) are not allowed to participate in any “tip-pooling”.

Tip-pooling means taking all of the tips of a group of employees and dividing them among each employee, sometimes equally and sometimes according to other preset guidelines. Employers who take a tip credit and allow management or back house staff to participate in a tip pool are in violation of the FSLA, making them liable for damages.

A provision in the Consolidated Appropriations Act for 2018 amended the FSLA to prohibit employers from allowing management to be part of a tip-pooling arrangement regardless of whether or not the employer takes the tip credit. This is a major change to FSLA guidelines regarding tipped employees, because employers may now be in violation of the Act even if they are paying their employees (who are receiving tips) the full minimum wage. Employers who don’t take a tip credit had until March 23 of 2018 to ensure that their managers and supervisors were excluded from any tip pools.

What has Changed under the New Law?

For employers who already take a tip credit, nothing has really changed with the new amendment – they were already prohibited from allowing management and back house staff to participate in tip pools, and they are still prohibited from doing so. So, the only employers that are really affected by this change are those who do not take the tip credit.

As mentioned earlier, the most significant change is that employers who pay full minimum wage are no longer allowed to let their managers and supervisors participate in tip pools as the Act equates such practices to an employer keeping their tips. In the Department of Labor (DOL) field assistance bulletin pertaining to the amendment, the DOL states that it would use the duties test for the executive exemption (29 C.F.R. § 541.100(a)(2)-(4)) “to determine whether an employee is a manager or supervisor for purposes of section 3(m).”

This means that the prohibition of managerial participation in tip pools might not apply to lower level supervisors or team leads if they do not have authority over certain areas such as hiring, firing, disciplinary actions, etc. That said, these are initial field guidelines that could be changed over time, and the courts could apply this rule differently in the future as well. As always, speak with an experienced employment law attorney to discuss your specific case, how the law is currently being applied, and your legal rights and options.

Another area that was addressed in the field assistance bulletin was whether or not back house staff can participate in tip-pooling for employers who pay a full minimum wage. For now, these employers can allow tips to be pooled with cooks, dishwashers, and other non-management and nonsupervisory staff that are not “customarily and regularly tipped.” However, this could be subject to change as additional rules are made in the future to further clarify the 2018 amendment.

Contact Alabama Employment Law Attorney Kira Fonteneau

If you believe your employer may be in violation of FSLA tip-pooling guidelines or has engaged in any other FSLA violation against you, you may be entitled to damages, which may include compensation for tips illegally withheld and additional monetary damages. Call attorney Kira Fonteneau today at 205-564-9005 for a free and confidential consultation to discuss your case. You may also send us a message through our online contact form.

photo of military dog tag

The Ugly Truth About Workplace Discrimination Against Veterans

It may seem unthinkable that an employer would single out a veteran or service member for discrimination at work, but it happens quite a lot. Whether it is a general misunderstanding about the military, an outright negativity toward those who serve, or more subtle discrimination, such as a desire to avoid prolonged absences for deployments or other obligations, there are employers who actually try to avoid hiring veterans and service members. For some, it is an irrational fear that veterans will not be stable mentally or successful in terms of career productivity.

The ugly truth about veteran discrimination is that it can be easy to spot, yet hard to prove. Fortunately, employment discrimination lawyers may be able to help in some situations.

Common Reasons for Employers Discriminating Against Veterans

 

While there are sadly those who may just have a pure disdain for the military, the vast majority of veteran discrimination cases are not so obvious. Here are some of the most common types of unlawful discrimination against veterans and military service members:

Ignoring Veterans’ Preference Laws

 

Under Alabama law, all private employers are “authorized” to create and follow a veterans’ preference hiring policy. This means that private employers are allowed to apply a preference in favor of veterans, but they are not required to do so. Public employers, however, are required to give veterans extra points in the hiring process. Section 36-26-15(b) of the Alabama Code even extends these rights to wives of some severely disabled or deceased veterans. Federal law also requires special hiring authorities for some veterans.

 

Refusing to Hire or Retain Reservists and Guard Members

Those currently serving in the Reserves or Guard have additional protections under both Alabama law and federal law. You are entitled to a leave of absence, but there are several key rules that apply to also protect employers in the event of an extended long-term deployment. Some employers choose to unlawfully discriminate in hiring to “avoid the trouble.” Some employers will also try to convince reservists to quit when they are activated, sometimes finding creative ways to force the employee to leave employment, rather than keeping the job open.

 

Presumption of PTSD or Mental Health Problems

USA Today reports that many employers have unfair, biased views of veterans, assuming that they all suffer from mental health issues or that post-traumatic stress disorder (PTSD) will cause them to be a liability in the workforce. While this stereotyping may be completely offensive, it does happen. Veterans should be mindful of warning signs of discrimination in the workplace.

 

Presumption of Physical Disability

Since many veterans returning from combat service may have suffered physical injuries during their service, some employers may come to the generalized conclusion that “most” or “all” veterans are broken (mentally or physically). Rather than seeing veterans as resilient, highly-skilled, and dedicated employees who add value, these employers may see veterans as a liability risk or more likely to file a claim for injuries. All are unsupported by evidence. Of course, that’s the nature of discrimination – it is an employment practice that focuses on factors that have nothing to do with ability or skill.

Veteran Discrimination in Your Workplace?

 

If you are a veteran who is suffering discrimination because of your status as a veteran, you may have options. Do not let someone trample on your rights. You have worked hard to build your career, and you deserve to continue building on your hard work. Contact the attorneys of Fonteneau & Arnold, LLC. With over 20 years of combined experience representing employees in labor and discrimination disputes, we understand what it takes to fight discrimination. Do not just worry about your situation; call us to get real advice today.

Am I Exempt From Time and a Half?

There are a lot of different ways that an employer can pay an employee. Some workers receive a weekly paycheck, some are paid by the hour, and others have a set annual salary, which is broken into bi-weekly payments. The variations are pretty much unlimited. However, federal law still requires that workers be properly compensated for the time they work, regardless of how they are paid. Under the Fair Labor Standards Act (FLSA), employers are required to pay minimum wage and overtime pay for their employees. Not all employers or employees are eligible for these protections.

What is Time and a Half?

 

Time and a half is often misunderstood, but it is pretty simple. Your employer is supposed to pay overtime for any hours worked in excess of 40 hours within any seven-day period. It does not matter if work is at night, on the weekend, or you work a holiday. Just count any seven-day period, and if your hours exceeded 40, there should be overtime pay for the excess hours. Obviously, there are plenty of exceptions and nuances to this, but that is the general rule. Overtime should be paid at 1.5 times your regular wage.

 

Is My Employer Exempt?

 

As a federal law, FLSA applies to employers who engage in interstate commerce with at least $500,000 in annual business. Interstate commerce is a tricky concept. In general, interstate commerce means making things that will ultimately be sold across state lines, performing services across state lines, buying or selling things in different states, handling or transporting things across state lines, working on things in other states, or any other kind of work that implicates more than one state.

Big corporations are usually obvious examples, but even a small employer who sells items online could be covered by the law, provided the $500,000 limit is met.

My Employer Does Not Meet the $500,000 Limit or do Anything Out of State

 

Even if your employer does not meet the monetary threshold or obviously participate in interstate commerce, FLSA specifically covers the following:

  • Hospitals (private or public)
  • Nursing Homes (or any type of facility that serves the aged, sick, or disabled)
  • PK-12 Schools
  • Colleges and Universities
  • Federal/State/Local Government

The following household employees might be covered if they work at least eight hours per week and earn more than a predetermined annual threshold of income from a single employer:

  • Housekeepers
  • Cooks
  • Gardeners
  • Home Health Aides
  • Nurses

An individual employee who works in interstate commerce for a designated period of time may still be covered, even if the employer generally does not.

Is My Profession or Job Title Exempt?

 

This is one of the more common ways employers try to avoid paying overtime – they ‘classify’ workers as being one of the following job types. These are all exempt from the overtime protections of FLSA Overtime Protection, just to mention a few:

  • Executives
  • Administrative
  • Professionals
  • Teachers
  • Lawyers
  • Most Sales Employees
  • IT / Skilled Computer Tech Jobs
  • Fishermen
  • Most Small Farm Workers (less than 500 workers)
  • Casual Babysitters
  • Most Commissioned Retail Workers
  • Many More

My Employer Says I am Exempt, but I Disagree

 

Many employers will give a blue collar worker an ‘administrative’ title like Operations Manager or Office Manager, even though the person’s primary job duties are heavy labor or non-exempt types of work. This is done so the employer can classify the worker as a professional or administrative exemption in order to avoid paying overtime. Other employers might say that because they pay a salary, rather than hourly wage, this exempts the employee. This is untrue. The Department of Labor provides great resources for you to review.

If you believe your wage rights are being violated, call the attorneys of Fonteneau & Arnold, LLC. One call could save you thousands in lost wages, so do not keep wondering. Talk to an attorney who can help you understand and fight for your rights today.