Articles Posted in Wage and Hour

In today’s society, more people realize the value in maintaining a manageable work-life balance. And with healthcare costs continually on the rise, now more than ever prospective employees are looking beyond a position’s salary when seeking employment. Because of this, employers realize they must provide a comprehensive and attractive benefits package to recruit and retain quality employees.

A major issue for many employees is an employer’s policy for personal time off (PTO). Paid time off, or personal time off, is generally accrued as an employee works. While employers often allow employees to use PTO for the year before they actually accrue it (to avoid everyone using their PTO at the end of the year) many employees accrue more PTO than they use. This often results in an employee having a surplus of PTO.

When it comes time to leave a job, many employees wonder whether they must be paid out for their remaining unused PTO. Given that many employees carry large balances of PTO, the payout an employee receives upon their termination can be considerable. Employers may try to limit the amount of PTO they pay an employee upon termination; however, this is not always allowed.

As we have noted in previous blog posts, the Fair Labor Standards Act (FLSA) (the “Act”) is a federal law that guarantees Texas employees certain workplace rights. Among those are the right to be paid at or above the federal hourly minimum wage and the right to collect overtime pay for any hours worked over 40 per week. While the FLSA governs most jobs in the United States, some employees are excluded from the Act’s overtime rules. These employees are referred to as “exempt” employees.

Determining whether an employee is exempt or non-exempt under the FLSA can be tricky, and may depend on how much an employee is paid, how they are paid, and what type of work they perform. As a general rule, to be considered exempt, an employee must meet each of the following three criteria:

  • the employee is paid at least $23,600 per year ($455 per week);

The Fair Labor Standards Act (FLSA) establishes employment standards that impact individuals employed in state, federal, and local government. The FLSA covers minimum wage, overtime pay, and record-keeping requirements.

The FLSA requires non-exempt employees to receive overtime pay if they work over forty hours. The rate must be at 150 percent of the employee’s regular rate of pay. Notably, this overtime rate does not apply to employees who work on holidays or weekends, unless they work over 40 hours. However, there are some exceptions to this.

Retail Exemption under the FLSA

Given the technological advancements over the past few decades, more and more employees are expected to be on call – either officially or unofficially – all day, every day. Most often, this occurs when an employee receives a phone call or email after they have left the office for the day. And depending on the sender of the communication, the subject, and the workplace culture, an employee may feel as though they must address the issue although they are technically off the clock.

The question frequently comes up whether an employee must be compensated for this type of work. The answer depends if the employee is exempt or non-exempt. Non-exempt employees must be paid for all the time they work, whereas exempt employees do not. If a non-exempt employee is not paid for their off-the-clock work, they can pursue an FLSA or unpaid wages claim against their employer.

An exempt employee is one who is exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). For an employee to be characterized as exempt, an employer must pay them a salary rather than an hourly wage. The idea being that an exempt employee is compensated for getting a job done, regardless of the time it takes. Typically, exempt positions are reserved for executive, management, and professional employees.

For many Texas employees, monetary pay is only a part of the overall compensation package offered by employers. For employees who have children or care for a sick family member, the paid- and unpaid-leave benefits provided by many employers are just as important as one’s salary or wages. Unfortunately, Texas employers are not required under any state or federal law to provide paid-leave benefits to employees, except under certain circumstances.

As a general rule, a Texas employer can decide whether to offer benefits to its employees. There are times, however, where an employer is required to provide certain benefits to its employees. One example is where an employer’s written policy provides benefits to employees, but the employer denies a qualifying employee access to these benefits. The Texas Payday Law states that an agreement to provide paid or unpaid leave is an enforceable term of the wage agreement. Thus, an employer who may not be required by law to offer benefits becomes obligated to provide them if there is a written policy offering benefits to qualifying employees.

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For those who work in the service industry, the importance of tips cannot be overstated. Many service employees work primarily for tips, meaning that their employer only provides them with a minimal level of base hourly compensation. Thus, for many service employees, their lives literally depend on the amount of tips they bring in.

On its face, the concept of tipping seems to only benefit the employee receiving the tip. However, over the years, employers have also found ways to benefit from society’s expectation that an employee will be tipped for the services they provide. For example, under Texas law, an employer is able to pay a tip-eligible employee less than those employees who do not receive tips by taking a “tip credit.”

A tip credit is an adjustment that employers can make to a tipped employee’s wage, assuming that the employee will make up the difference in tips. For example, the minimum wage in Texas is $7.25/hour. However, an employer only needs to pay a tip-eligible employee $2.13/hour. The remaining $5.12/hour is considered a tip credit. If, however, the employee does not bring in at least an additional $5.12/hour, the employer will be required to pay the difference. Thus, tipping allows for an employer to pay its tipped employees less than they pay non-tipped employees.

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The federal minimum wage for hourly employees is $7.25 per hour. Unlike other states that allow for a higher minimum wage, the Texas minimum wage is $7.25. Advocates of a higher minimum wage have cited the unrealistic expectation that people are able to live on $7.25 per hour. Furthermore, they have argued that a higher minimum wage will foster the economic growth of the United States and close the gap between low- and middle-income families.On the other side, those in favor of keeping the minimum wage lower argue that employers cannot keep up with the higher wages and will have to lay off more employees, increasing the unemployment rate. However, despite the opposition to increasing the minimum wage, the fact remains that individuals in these positions often face many obstacles surviving on so little income. In some cases, employers will try to get around complying with the minimum wage requirement, which leads employees to face even more issues.

There are very few instances when an employer does not need to comply with federal minimum-wage standards. Some exceptions are if the employee is a farm worker, student learner, independent contractor, or tipped employee. If an employee is not sure if they fall into one of these categories, or they believe their employer is not complying with federal statutes, they should contact a Dallas wage and hour attorney.

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Studies have found that employers underpaying workers is a huge problem in America. Texas is not immune from this problem. From 2014 to July 2017, $29.5 million in back pay was awarded to workers under the Texas Payday Law. However, this figure may not represent what’s truly owed. It doesn’t include back pay owed to workers who don’t realize they’ve been shorted, or who are undocumented and are afraid to involve the government for fear of deportation or other retaliation.

From January 2014 – July 2017, there were 42,788 complaints filed under Texas law. Eight hundred employers were assessed bad-faith penalties of $1.17 million for knowing underpayment of workers. Under Texas law, individual penalties cannot be more than the lesser of $1,000 or unpaid wages.

Sometimes Texas employers require or encourage workers to do work “off the clock.” This is work that isn’t compensated and isn’t tallied as part of your weekly hours when calculating overtime. Off-the-clock work may be illegal. Assuming you are a nonexempt employee, the time you spend doing things for your employer is supposed to be compensated. However, in some cases, employees do not realize this. They may volunteer to do work off the clock so that they seem appropriately enthusiastic about their careers, or simply because they enjoy working.

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Waiters and bartenders are among the least compensated people in the nation. Their median hourly wage is $9.61 each hour. Under the Obama Administration’s 2011 regulations, their tips are their property. These regulations prevent an employer from using the tips for any reasons other than as a credit against its usual obligation to pay its employees minimum wage or in order to create a valid tip pool. Valid tip pools are sharing arrangements among employees who customarily get tips, like wait staff, but they don’t include employees who don’t customarily get tips, such as dishwashers or janitors.

Moreover, under section 3(m) of the Fair Labor Standards Act, an employer is permitted to take a tip credit toward its minimum wage obligation for tipped employees that’s equal to the difference between the required cash wage and the federal minimum wage. In certain situations, an employer is able to claim additional overtime tip credit against its overtime duties.

The United States Department of Labor has estimated that around the country, there are about 1.08 million wait staff and 219,000 bartenders who receive tips in 280,000 establishments.

Sometimes Texas workers believe that they must be as helpful as possible to an employer, even if it means working off the clock. For example, sometimes workers come in early to help an employer set up for that day’s work, but they don’t punch in for that period. Or, sometimes, an employee participates in work during lunch hours that isn’t counted toward their work hours for that week. Under the Fair Labor Standards Act (FLSA), work that is not counted toward overtime or goes uncompensated is illegal.

The FLSA requires that nonexempt employees be paid overtime if they work more than 40 hours per week for all work done. Most employees are considered nonexempt and are covered by the FLSA for the purposes of overtime, as well as the minimum wage. Exempt employees are those who are considered professional, administrative, or executive, or are within certain industries such as commission-based sales.

All work for an employer should be on the clock. If an employer requires or allows employees to do any work for it without compensating the employee and counting it toward weekly hours for the purposes of calculating overtime, it is “off the clock.” What counts as work? Whenever an employee engages in work that’s not requested but allowed, such as helping a colleague or coming in early to set up, this is work that is completed and should still be compensated.

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