Making a List, Checking It Twice: Are Santa and His Elves Your Employees? (This and other wage-hour issues to consider during the holidays.)


In the holiday rush, it's easy to overlook wage-hour issues. This Wrapping Paper discusses common ones to which you should be alerted, including:
  • Temporary workers and independent contractors
  • Unpaid interns and trainees
  • "Off-the-clock" work
  • Meal and rest breaks
  • Seating requirements
  • Cost of uniforms
  • Workplace safety
  • Overtime exemptions

Temporary Workers and Independent Contractors

If you obtain temporary workers from an agency, be sure that the agency is properly compensating them, withholding and paying payroll taxes for them. Otherwise you could be on the hook. Also, check the language of your benefit plans to be sure that agency temps are not covered.

Just calling a worker an "independent contractor" does not make it so. Many so-called independent contractors are really employees, entitled to all wage-hour protections. Also, some workers who in fact meet the IRS test of independent contractors are still considered employees for unemployment and worker compensation payroll taxes. They may also be protected by equal employment laws.

If an independent contractor is injured on your premises, you may be liable for the injuries, whereas most employee injuries are covered by worker's compensation.

Unpaid Interns and Trainees

It is almost impossible for a private-sector employer to legally have unpaid workers, whether they are called interns or trainees. If someone is working for you, he or she is probably an employee who must be paid at least minimum wage and overtime pay and who may also be entitled to participate in your benefit plans.

Off-the-Clock Work

Employees must be paid for all time worked for you, even if it is before they clock in or after they clock out. Common types of off-the-clock work include:

  • Call center employees logging into their computers, getting ready to answer calls
  • New hire orientation and training
  • Changing into work clothes or uniforms
  • Standing by for work
  • Tidying up after closing

Meal and Rest Breaks

Many states have stringent requirements for meal and rest breaks. Some have penalties for noncompliance; others simply require additional pay if the breaks are not taken. Also,when employees are scheduled to work full time, the pay for missed breaks may be at overtime rates.

Seating Requirements

Some states require employers to provide suitable seating for their employees. With increased staffing for the holidays, additional seating may be required.

Costs of Uniforms

If employees are required to wear special clothing, there are at least two potential ramifications. Under federal law, if employees are required to pay for and maintain special clothing, the cost may be treated as a reduction of their wages—which may result in minimum wage violations. Some states make employers pay for special clothing.

Workplace Safety

Workplace safety laws protect all employees. Some state laws require safety orientation and training before newly hired employees are assigned to work.

Overtime Exemptions

Misclassifying employees as exempt is a widespread problem due, in large part, to common misconceptions. For example, outside sales people may be exempt from overtime requirements, but merchandisers typically are not. Similarly, although some retail commissioned sales people may be exempt, most inside sales employees are not.

The wage-hour laws of some states are far more demanding than federal laws. For example, in California store managers and assistant store managers are not exempt if they spend more than 50% of their time on non-exempt work. During the holiday season, it's pretty easy to exceed that threshold.

The Bottom Line

The wage-hour laws are not suspended during the holiday season. If you have any questions about them, ask for advice - in advance.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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