Small Business: Wage issues employers should keep on their radar as they reopen

The pandemic has shaken up the structure of many workplaces.

For many companies, it’s resulted in reduced workforces, changing roles and responsibilities for employees and salary reductions.

Given that, as companies reopen, there are wage and hour issues employers should be aware of including the possibility that some employees previously designated as overtime exempt no longer fit into that category.

“While an employee prior to the pandemic may have been properly classified as exempt from overtime, a change in an employee’s duties and/or compensation upon their return may now change that classification,” says Keith Gutstein, comanaging partner of the Woodbury office of Kaufman Dolowich & Voluck LLP.

Generally speaking, exemption from overtime is based on salary and job duties, he says.

On Long Island, as per New York State standards, eligible white-collar employees have to make at least $50,700 ($975 per week) in 2020 to qualify for an overtime exemption, says Gutstein.

They also have to perform certain job duties, which differ across different categories of exemptions (ie., executive, administrative, and professional), he says. For example, under the executive employee exemption, the employee must customarily and regularly direct the work of two or more other employees, he says.

With workforce reductions, that could change for some employees, as could salary thresholds making them no longer exempt, says Gutstein.

Keep in mind the salary and duties test differs for those considered highly compensated white-collar employees. For 2020, these employees are considered exempt from overtime if they make at least $107,432 and perform certain functions, says Christine Malafi, a senior partner at Ronkonkoma-based Campolo, Middleton & McCormick LLP. See https://tinyurl.com/htnrp8m for duties.

Malafi advises employers to “review classifications as you hire employees back.”

Separately, employers also need to make sure they are properly tracking hours especially if some employees will remain remote, says Malafi.

Consider that if hourly employees check their work emails outside of working hours, even if told not to, or forbidden to do so, they are still entitled to overtime pay, she says. To help with that, employers might consider actually cutting off access to work emails and/or work VPNs after a certain time, she noted.

Perhaps even institute a policy that dictates an employee’s not authorized to work without a supervisor’s approval after a certain time and if they break that protocol they will still be paid overtime, but will be subject to disciplinary action, says Robert Hingula, an employment law partner in the Kansas City office of Polsinelli PC.

Beyond that, consider many employers are instituting various safety measures including requiring testing, temperature screenings or donning personal protective equipment/gear  before entering the premises, he says. If it’s just putting on a mask, that wouldn’t be compensable time, he says. But if it’s donning necessary job-specific protective gear (ie. protective boots, sterilized suits, etc.) then it’s compensable, he says. Similarly, a conservative approach would be to compensate employees for testing or temperature screening, says Hingula.

Rick Maher, chief executive of Turning Point HCM, a Coram HR outsourcing firm, says whenever his clients have conducted testing it’s about a 15-minute time frame and they have been paying employees for that time. Over a week that time can add up.

He can see wage/hour issues surfacing especially if overtime exempt employees become nonexempt, but it’s not on the employer’s radar yet. 

Businesses upon opening will still be in survival mode, which “creates opportunities to run afoul of wage and hour laws,” says Maher.

Still, pandemic or not, "all wage and hour laws still apply here in New York State, and businesses must abide by them,” says state Department of Labor spokeswoman Deanna Cohen. “Some do make honest mistakes, and when we identify these issues, we work to bring those businesses into compliance. We will, however, continue to vigorously enforce labor laws.”

Among other issues to consider, for employers that require employees to do any training while furloughed in anticipation of returning to work, you must pay them for that time, says Christine Ippolito, principal at Hauppauge's Compass Workforce Solutions, an HR consulting firm.

Also consider setting parameters for hourly employees that work virtually regarding daily breaks.

Breaks of 20 minutes or less are paid time (breaks must be more than 20 minutes and 100% relieved from work duties to be true breaks), she says. While working remotely employees could have many interruptions. If employees take extended breaks, employers must specify what time employees are actually compensated for and perhaps accommodate for lengthier breaks with say flexible working hours to avoid overtime issues, says Ippolito.