Tag: employee benefits

New York Paid Sick Leave

New York Paid Sick Leave (Webinar Recap)

On November 12, 2020, I presented a complimentary webinar called “New York Paid Sick Leave”. For those who couldn’t attend the live webinar, I’m happy to make it available for you to watch at your convenience.

In the webinar, I discuss:

  • Accrual, Use, and Payout
  • Notice Requirements
  • Overlap with Other Laws
  • Recordkeeping
  • Policy Considerations

Beginning January 1, 2021, New York companies must provide employees sick leave. Many businesses must pay employees for this time off, up to 40 or 56 hours per year, depending on employer size.

There are many ambiguities in the New York Paid Sick Leave Law. Recent State guidance addresses several issues, but leaves many others unanswered. This webinar addresses what is known and tries to help fill the gaps.

Don’t have time to watch the whole webinar right now? Click here to download the slides from the webinar.

Why You Should Watch “New York Paid Sick Leave”

Every private (non-governmental) employer in New York State must provide sick leave to employees beginning January 1, 2021. For many, this will be a company-paid benefit. Despite a seemingly straightforward concept, the implications of this new requirement are potentially complex. Questions include how to administer accrual, what to put in your policy, and how the new law interacts with other legal obligations.

This webinar starts with the basics and builds up to the detailed questions that employers are asking. Can you combine sick leave with other forms of leave? How does frontloading sick leave work? What about part-time employees?

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FLSA Regular Rate

U.S. DOL Clarifies FLSA Regular Rate

For the first time in over 50 years, the U.S. Department of Labor updated its interpretation of “regular rate of pay” under the Fair Labor Standards Act (FLSA). The new DOL rule takes effective January 15, 2020. The changes address new, more complicated perks and benefits. These include wellness plans, fitness classes, nutrition classes, and smoking cessation classes. The new rule will make it less costly for employers to provide additional benefits to employees. This, in turn, may increase workplace morale and employee retention.

The FLSA Regular Rate

The Fair Labor Standards Act is the federal law that establishes minimum wage, overtime pay, recordkeeping, and child labor standards. The FLSA covers most employees in the private sector and federal, state, and local governments.

Under the FLSA, an employee is eligible for minimum wage and overtime unless they qualify for a statutory exemption.

The employer must pay “non-exempt” employees at least minimum wage and compensate them for overtime at a premium rate of 1.5 multiplied by the employee’s “regular rate of pay” for all hours worked over 40 in a “workweek.”

Under current regulations, the “regular rate of pay” includes all remuneration for employment paid to or on behalf of an employee for hours worked, except for specific categories that were excluded under the FLSA. This “regular rate” includes the hourly wages and salaries for non-exempt employees, most bonuses, shift differential pay, on-call pay, and commission payments. The regular rate of pay is generally calculated by adding the employee’s includible compensation each week and dividing it by the number of hours worked within the workweek.

For more details on performing the FLSA regular rate calculation, read Calculating the Overtime ‘Regular Rate’.

New Rule on Regular Rate of Pay

The new rule clarifies that the following perks may be excluded from the calculation of an employee’s regular rate of pay, effective January 15, 2020:

  • The cost of providing parking benefits, wellness programs, onsite specialist treatments, gym access, and fitness classes, employee discount on retail goods and services, certain tuition benefits and adoption assistance;
  • Payment for unused paid leave, including paid sick leave and paid time off;
  • Certain penalties incurred by employees under state and local scheduling leave laws;
  • Business expense reimbursement for items such as cellphone plans, credentialing exam fee, organization membership dues and travel expenses that don’t exceed the maximum travel reimbursement under the Federal Travel Regulation system or the optional IRS substantiation amounts for certain travel expenses;
  • Certain sign-on and longevity bonuses;
  • Complimentary office coffee and snacks;
  • Discretionary bonuses (the DOL noted that the label given to a bonus doesn’t determine whether the bonus is discretionary); and
  • Contributions to benefit plans for accidents, unemployment, legal services, and other events that could cause financial hardship or expense in the future.

The DOL has also expanded the circumstances where employers can exclude call-back pay from the regular rate. Such payments no longer must go into the regular rate unless they are scheduled and prearranged.

Regular Rate Pitfalls

Overtime Must Be Calculated Weekly

Under the FLSA, an employer is responsible for determining the official workweek. Employers have considerable leeway in doing so. However, the workweek must consist of a fixed reoccurring 168 hours that contains seven, 24-hour workdays.  The workweek and workday start and end times must remain consistent unless employees receive advance notice of the changes.

Non-exempt employees must be paid overtime for all hours worked over 40 in a workweek (or as otherwise described by applicable law). Employers may not average the number of work hours worked by an employee over a two-week period, even if the employer has their payroll set up biweekly, to avoid paying overtime. For example, if an employee works 45 hours in week 1 and 35 hours in week 2, the employer may not average the hours worked over the two weeks resulting in a payment of zero overtime hours. Instead, the employee would be due 5 hours of overtime for week 1 and no overtime hours for week 2. Many employers make this mistake that could result in an extensive and expensive audit or litigation.

Employees Can’t Waive Overtime Pay

Non-exempt employees cannot waive their right to receive statutory overtime pay. This is true even for collective bargaining agreements or other written employment contracts.

Private Companies Can’t Use “Comp Time” Instead of Overtime Pay

Companies cannot provide employees with compensatory time (comp time) in exchange for payment for overtime hours worked each week. There are some exceptions to this rule for government workers.

Salaried, Non-Exempt Employees Are Still Eligible for Overtime Pay

An employer could pay a non-exempt employee a weekly salary that will represent pay for all regular hours of work. But if the employee works overtime during the workweek, the employer must pay additional premium compensation above and beyond the weekly salary for each overtime hour worked.

Example: An employee earns a weekly salary of $700 each week and works 43 hours. This employee’s regular rate of pay for this week would be $700/43=$16.28. The extra premium pay owed for the overtime hours can be determined by dividing the regular rate of pay in half. The employee should receive the normal weekly salary of $700, plus (3 hours x premium pay of $8.14) = $724.42.

State Overtime Laws

This new rule relates specifically to the FLSA. Many states have separate minimum wage and overtime laws. Employers often must satisfy both state and federal laws in this area. The “regular rate” concept may differ in some states. Therefore, be sure to consider the laws of your state in addition to the FLSA.

What Employers Should Do Next

Employers should conduct an overall audit to review what they include in their regular rate calculations. Companies using a third-party payroll provider should ask for clarification as to how overtime is calculated each week.

The FLSA is a complex law with many nuances beyond those described here. An experienced employment attorney can evaluate your pay practices and consult with you on overtime compliance. They might be able to identify alternative work schedules or payroll practices that comply with the wage and hour laws.

 

The new FLSA regular rate regulations are available here.

New York Wage Deduction Rules

New York Wage Deduction Rules

In addition to satisfying minimum wage and overtime requirements, employers are generally expected to pay employees all of the compensation they earn. In New York, businesses cannot withhold money from their employees’ wages unless expressly allowed by law. These New York wage deduction rules apply to all private employers, but not governmental entities such as municipalities and school districts.

New York Labor Law Section 193

Section 193 of the New York Labor Law says that “no employer shall make any deductions from the wages of an employee except deductions which” are either:

1. Made in accordance with any law or rule.

2. Voluntary, for the employee’s benefit, and expressly authorized in writing by the employee.

This category is limited to payments for:

  • insurance premiums and prepaid legal plans;
  • pension or health and welfare benefits;
  • contributions to a bona fide charitable organization;
  • purchases made at events sponsored by a bona fide charitable organization affiliated with the employer where at least 20% of the event’s profits are being contributed to a bona fide charitable organization;
  • United States bonds;
  • dues or assessments to a labor organization;
  • discounted parking or discounted passes, tokens, fare cards, vouchers, or other items that entitle the employee to use mass transit;
  • fitness center, health club, and/or gym membership dues;
  • cafeteria and vending machine purchases made at the employer’s place of business and purchases made at gift shops operated by the employer, where the employer is a hospital, college, or university;
  • pharmacy purchases made at the employer’s place of business;
  • tuition, room, board, and fees for pre-school, nursery, primary, secondary, and/or post-secondary educational institutions;
  • daycare, before-school, and after-school care expenses;
  • payments for housing provided at no more than market rates by non-profit hospitals or affiliates thereof; and
  • similar payments for the benefit of the employee.

“Similar Payments”

Given the detailed nature of most items in this list, it’s always hard to determine whether anything else would qualify as a “similar payment” falling into the last category.

New York Department of Labor regulations explain that to qualify as “similar payments” the benefits to the employee must fall into one of these categories:

  • Health and Welfare Benefits
  • Pension and Savings Benefits
  • Charitable Benefits
  • Representational (i.e., union) Benefits
  • Transportation Benefits
  • Food and Lodging Benefits

The regulations also state that “convenience” is not a benefit. Thus, employers may not, for example, deduct a fee for cashing an employee’s paycheck.

The DOL also expressly prohibits deductions for employee purchases of tools, equipment, and work clothes; fines or penalties for misconduct; and repayment of employer losses, such as spoilage, breakage, and cash shortages.

3. Related to recovery of an overpayment of wages due to a mathematical or other clerical error by the employer.

The New York wage deduction rules only allow employers to recover overpayments of wages if the overpayment was due to a mathematical or other clerical error. If that is the case, then the employer must satisfy a number of specific procedural requirements in order to recover the overpayment from future paychecks. This includes advance notice to the employee and an opportunity to appeal the finding that an overpayment occurred.

Click here for more on recovering overpaid wages.

4. Repayment of advances of salary or wages made by the employer to the employee.

As with the recovery of overpayments, the New York wage deduction rules establish many procedural parameters for recouping money advanced to employees.

Under these rules, an “advance” is any provision of money by the employer to the employee based on the anticipation of the earning of future wages. If the payment is contingent on interest accruing, fees, or a repayment amount higher than the money provided by the employer, then it does not qualify as an advance. Employers cannot recover such “loans” through payroll deductions.

To establish a wage or salary advance that the employer may recover through payroll deductions, the employee must provide advance written authorization.

New York Wage Deduction Rules Apply to Separate Transactions

The New York wage deduction rules also prohibit employers from requiring employees to make any payment in a separate transaction that could not be made as a pay deduction. There is an exception where a current collective bargaining agreement requires the payment.

This prohibition does not prevent employers from asking for repayment or pursuing legal remedies against their employees. For example, an employer could sue an employee for theft of property or not repaying a lawful loan. But the employer could not take adverse employment action because the employee doesn’t pay. (However, the employer could, of course, take appropriate discipline for stealing, losing company money or property, etc.)

Review Your Wage Deduction Practices

New York businesses could face substantial penalties for failing to pay wages due to employees. This includes making unlawful wage deductions. Beyond taxes and standard employee benefits, such as insurance coverages, there are few permissible deductions from wages in New York. If you have any questions in this area, please consult with an experienced employment attorney.

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