Virtual Hawaii Employment Lawyer

“With job openings scarce for young people, the number of unpaid internships has climbed in recent years, leading federal and state regulators to worry that more employers are illegally using such internships for free labor.  Convinced that many unpaid internships violate minimum wage laws, officials in Oregon, California and other states have begun investigations and fined employers.”  View the article here:  The Unpaid Intern, Legal or Not.

Employers should review their internship programs in light of increased disputes over unpaid interns and make changes consistent with the requirements imposed by wage and hour regulations.  The U.S. Department of Labor’s Wage and Hour Division (WHD) has developed the six factors below to evaluate whether a worker is a trainee or an employee for purposes of the FLSA:

1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees;
3. The trainees do not displace regular employees, but work under their close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the conclusion of the training period; and
6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

If all of the factors listed above are met, then the worker is a “trainee”, an employment relationship does not exist under the FLSA, and the FLSA’s minimum wage and overtime provisions do not apply to the worker.  Because the FLSA’s definition of “employee” is broad, the excluded category of “trainee” is necessarily quite narrow.

The Wage and Hour Division of the Department of Labor has recently reversed a prior opinion and has concluded that most mortgage loan officers will not qualify for the administrative exemption to the overtime provisions of federal law.

In Administrator’s Interpretation No. 2010-1, the DOL focused on the “production versus administrative” dichotomy in determining that mortgage loan officers are production workers whose primary duty is making sales, as opposed to administrative workers whose work is directly related to the management or general business operations of their employer or their employer’s customers.

The DOL’s newly adopted position will obviously have a great impact on the mortgage lending industry.  View the opinion here.  DOL Opinion: Mortgage Loan Officers Entitled to Overtime Pay

The Obama Administration has made clear in its proposed budget for the fiscal year 2011 that it will be targeting the misclassification of independent contractors. As part of the 2011 Budget, the Departments of Labor and Treasury are pursuing a joint proposal that eliminates incentives in law for employers to misclassify their employees; enhances the ability of both agencies to penalize employers who misclassify; and restores protections to employees who have been denied them because of their improper classification.

Employers should be aware that the Department of Labor will often find misclassification as an independent contractor where the following factors exists, singly or in combination with others:

- The independent contractor performs the same kind of work that employees also perform for the business;

- The independent contractor performs work that is essential to the business;

- The independent contractor is prohibited from selecting their own personnel;

- The independent contractor is not paid per project;
- The independent contractor may not/does not, perform similar services for other businesses;

- The independent contractor lacks the ability to control the manner in which services are performed;

- The independent contractor receives training from the business;

- The independent contractor does not provide their their own tools/suppies.

Employers should take extreme care to ensure independent contractors are properly classified. Failure to do so can lead to significant penalties.

Secretary of Labor Hilda L. Solis today, through a national online discussion with stakeholder groups, the general public and the news media, outlined the president’s fiscal year (FY) 2011 budget request for the U.S. Department of Labor, which is built around the vision of “good jobs for everyone.” The budget launches innovative ways to prepare workers for 21st century jobs, and makes new investments in programs that protect workers’ rights, safety and health in the new economy. It reaches out to diverse audiences to ensure that all people from all communities are included in the jobs of the future. See Secretary Hilda L. Solis’ Press Release here: DOL Press Release

The U.S. Department of Labor just announced it’s hiring 250 investigators to look into wage-and-hour violations by employers across the country. View the article here: 250 More Investigators for DOL.

As the State of Hawaii and other Hawaii employers face the potential of instituting work furloughs, the federal Department of Labor recently issued answers to frequenty asked questions on the issue.  Some of the more relevant FAQs include the following:

If an employer is having trouble meeting payroll, do they need to pay non-exempt employees on the regular payday?   In general, an employer must pay covered non-exempt employees the full minimum wage and any statutory overtime due on the regularly scheduled pay day for the workweek in question. Failure to do so constitutes a violation of the FLSA. When the correct amount of overtime compensation cannot be determined until sometime after the regular pay period, however, the requirements of the FLSA will be satisfied if the employer pays the excess overtime compensation as soon after the regular pay period as is practicable. Read more…

In a decision rendered on June 29, 2009, the 7th Circuit Court of Appeals held that the Fair Labor Standards Act does not protect employees who complain about perceived violations of the law by the employer from retaliation unless such complaint is in writing. Read more…

Hawaii employers may not deduct, withhold or otherwise require employees to pay any part of their compensation unless required by law, court process, or authorized in writing by the employees. An employee, however, cannot authorize or be required to bear the following:

1. Fines;

2. Cash shortages in a common till or register used by two or more persons or under the sole control of one employee who is not given an opportunity to account for all monies received at the start of a shift and all monies turned in at the end of a shift;

3. Fines or replacement costs for breakage;

4. Losses due to acceptance of bad checks if the employee is given discretion to accept or reject checks;

5. Losses due to defective or faulty workmanship lost, stolen or damaged property; default of customer credit; or nonpayment for goods and services unless such losses are attributable to the employee’s willful or intentional disregard of the employer’s interests; and/or

6. Cost of medical examinations or reports which are requested or required by the employer or by a government agency.

An employer may make adjustments in wages for advances or correction of computation errors from previous payrolls and such an action is not considered an unlawful deduction from an employee’s wages.

An April 2009 California appellate court decision demonstrates that “on-call” employees continue to pose a risk to employers under wage and hour laws. In Gomez v. Lincare Inc., the employees alleged the employer did not properly compensate them for on-call time in which they were tasked with responding by phone to customer inquiries. Read more…