Wage and Hour Issues

Pittsburgh Paralegal Association

OUTLINE AND DISCUSSION POINTS FOR PRESENTATION
Points under the Fair Labor Standards Act:
• Many employees are misclassified and deemed exempt by their employer. An exempt individual is not entitled to many wage and hour protections, most importantly overtime wages. If an employee is not exempt, they are covered by the Fair Labor Standards Act and must receive time and a half for all hours worked over 40 hours per week.
o It is important to note that this applies to all hours worked (vacation time will not count)
Supervisory Employees
One place we see this most is when employees are classified as supervisory employees. Employers argue that supervisory employees are not entitled to wage and hour benefits. However, employees can be misclassified in instances where they may have a manager title but actually perform no managerial duties. Exempt supervisory employees must pass both the salary and duties test to be considered exempt. As of January, the new annual salary threshold for exempt positions is $58,656.
The duties test is used to determine whether employees who earn at least the salary threshold are exempt. It focuses on employees in the following categories (1) executive (2) administrative (3) professional (4) computer and (5) outside sales.
1. Executive Employees: The executive employee exemption states that an employee’s primary job duty must be managing the company, the employee must regularly direct the work of 2 or more full time employees, and the employee must have the authority to hire/fire.
2. Administrative Employees: For the administrative employee exemption, the employee’s primary job duty must be office/non-manual work and the employee’s primary responsibilities must include exercising discretion and independent judgment regarding significant matters. The administrative employee exception is the most litigated because the facts are most unclear. They usually turn on the independent judgment factor.
3. Professional Employees: The professional employee exemption is broken into two sub-parts: learned professionals and creative professions. For learned professionals, the employee’s primary job duty must involve work requiring advanced knowledge and the advanced knowledge must be acquired through prolonged intellectual instruction. For creative professionals, the employees’ primary job duty must involve work requiring the imagination, invention, originality, or talent in a recognized artistic or creative field.
4. Computer employees: The computer employee exemption requires that the employee work as a skilled professional in the computer field and that the employee must perform the primary duties outlined in the FLSA including tasks related to analysis, design, development, documentation, creation, and testing of computer systems/programs.

5. Outside Sales Employees: Lastly, the outside sales employee exemption states that the employee’s primary job duty must be making sales, securing orders, or contracts for services or use of facilities and the employee must customarily and regularly work away from the employer’s place of business.
Independent Contractor vs. Employee
Another place that we commonly see wage and hour violations is when an person was misclassified as an independent contractor when really, they should have been classified as an employee. If someone is classified as an independent contractor, they will not receive certain wage and hour benefits such as overtime compensation. However, it is very common for employers to misclassify people as independent contractors, when they are really employees, to avoid complying with wage and hour laws.
Courts look at a variety of factors when ruling on whether someone is an independent contractor vs. an employee. These factors include (will go into depth on each):
1. Opportunity for profit or loss depending on managerial skill
2. Investments by the worker and the potential employer
3. Degree of permanence of the work relationship
4. Nature and degree of control
5. Extent to which the work performed is an integral part of the potential employer’s business
6. Skill and initiative.

Important things to look out for/be aware of:
• Healthcare Benefits
o Other important things to look for are complaints of individuals not receiving the healthcare benefits that were promised by their employers.
o In Pennsylvania, healthcare is considered wages and failing to provide it could arise to a wage and hour violation. Further, another red flag to look out for is when an employee is paid hourly yet their employer is telling them they are not entitled to overtime pay.
• Non-retaliation sections of the law
o Both the Pennsylvania Wage Payment and Collection Law as well as the FLSA have anti-retaliation provisions. If an employee complains about not being paid, they cannot be retaliated against. Same goes for employees who file lawsuits under the wage and hour laws but are still employed.
• Liquidated damages and attorney’s fees
o Under Pennsylvania Law, you are not only entitled to the wages that you are owed but you are also entitled to liquidated damages. Under the law, liquidated damages are either 25% of the owed wages or $500 whichever is more.

o Under the Fair Labor Standards Act, liquidated damages are 100% of what you are owed under the act. You can also get attorney’s fees under this law.
o Attorney’s fees must be reasonable, but they would be feed
• Protected activity
o Talking about wages among coworkers is a protected activity and they cannot fire/discipline employees for doing so.
• What about non-payment? i.e., when an employee doesn’t receive a paycheck despite working.
o Employees are entitled to all wages for hours worked.
• Advantages of Pennsylvania wage laws vs federal
o Pennsylvania wage and hour laws are more progressive. Pennsylvania for example does not adhere to a flexible work week.

Session Agenda: Wage-and-Hour-Summary.pdf

CLE Hours = 1 Substantive