Recent federal wage and hour Investigations should remind employers to get their pay practices in compliance

November 20, 2021

The U.S. Department of Labor announced earlier this month that it recovered $40,000 in back wages from Richmond-based Alliance Drywall & Paint LLC.

The drywall company allegedly failed to pay 63 non-exempt hourly employees time and a half for all hours worked over 40 in a workweek, as required by federal and state law, according to the Labor Department release.

The company also failed to maintain an accurate record of hours worked, also a violation of the law.

“Employers must understand their responsibility to comply with the law and avoid overtime violations like those found in this case,” said Roberto Melendez, the Wage and Hour Division district director in Richmond.

“Other construction industry employers should use the outcome of this investigation as an opportunity to review their own pay practices to ensure their workers receive all hard-earned wages,” he said.

But wage and hour violations are not limited to construction or any industry in particular. They are rampant in virtually all industries, and the issues range from misclassification to flat-out failure to properly pay employees whether exempt or non-exempt.

In fact, the Labor Department announced in September that a Danville home health care agency, Angel Wings Home Health Inc., would pay over $99,000 in unpaid wages to 53 personal care aides and certified nursing assistants for time worked and overtime wages due.

The federal Fair Labor Standards Act has been in place since 1938, but Virginia also passed an even more robust wage and hour law in July 2020, with increased penalties and the potential for criminal charges.

Because of lucrative attorney fees and double or triple damages that can be awarded to employees for violations, wage payment cases are sought after by plaintiff attorneys. The stakes are high, yet it’s a bit astounding how many employers fail to pay properly and consistent with the law.

Employers, no matter the size or industry, should set aside resources to get their pay practices in order.

First and foremost, employers should determine if exempt employees are properly classified.

Exempt employees must meet a minimum salary basis threshold (in most cases) and must also perform specific duties to be classified as exempt under the law. Merely paying an employee a salary alone does not place the employee in exempt status.

Too often, employers try to force an employee into the exempt status to avoid overtime and for ease of keeping track of time. Some employees prefer to be exempt because it gives them flexibility in their work and they don’t have to track their hours.

However, agreements between the employee and employer fail to satisfy the legal requirements of exempt or non-exempt status. An employee can be exempt only if the law makes it so. And when in doubt, the employee should remain non-exempt.

Once employees are properly classified, those who are non-exempt must be paid for all hours worked, and receive overtime at a rate of one and a half times that employee’s regular rate of pay or all hours worked over 40 in the defined seven-day workweek.

Employers often confuse this requirement with the pay period and allow employees to make up time the following week. The law prohibits this unless the employee falls under the narrow special rules for certain industries like law enforcement, fire departments and health care.

Working time includes all time worked, including in certain instances when the employee is traveling, training, waiting, volunteering and on break.

While no Virginia or federal law requires employers to provide meal or break periods, if one is provided, there are special rules around it. For example, breaks of about 20 minutes or less are compensable. The employee must be paid when she takes 10 or 15 minutes away from work.

However, a meal period of 30 minutes or more is not considered working time, but if the employee is interrupted during the meal period or expected to work, the employee gets an entirely new reset of the 30-minute meal period for the meal time to be uncompensated.

Managers are expected to be aware of when employees are working and whether their time is accurately recorded. This makes it difficult when managers are not working closely with employees on a day-to-day or hourly basis.

The government doesn’t care about all of that. Managers must keep track of when employees are working so employees can be properly paid.

To make things more complicated, employers also must recalculate the hourly rate if an employee works overtime in a workweek to include any other compensation such as non-discretionary bonuses or on-call pay.

The regular rate of pay calculation is complicated, and employers cannot simply rely on their payroll companies and assume it’s being processed accurately. Employers need to make sure they understand how the pay is being recorded and calculated so that they don’t run afoul of the law.

In all cases, employers need to pay what they owe — when they owe it. If a bonus is due, pay it on time.

Employers should make establishing proper pay practices a priority.