We are seeing states start to re-open and businesses start to come back to life and bring their employees back. There are many difficult economic issues that surround these developments, not the least of which is the continuing need to comply with the Fair Labor Standards Act (and state wage and hour laws). These issues may depend on industry (and season) but there are certain issues that cut across all of these lines.

One issue concerns exempt employees, i.e. those workers not due overtime even if they exceed forty hours of work in a week. As businesses come back and may be working shorthanded, an employee who is a “manager” or “supervisor” and therefore exempt, may be converted to a non-exempt worker in a week(s) that they perform too much non-exempt work, e.g. serving customers, working the cash register. In such a scenario, these employees would be entitled to overtime for those weeks.

Another less well known problem may involve people paid on commissions. Under Section 207(i) of the FLSA, commission based employees, who earn at least 50% of their compensation from commissions and work for a “retail or service establishments are exempt from overtime even though they are not “white collar” exempt employees. If sales plummet, meaning commissions plummet, that 50% threshold may not be achievable and, therefore, the employees would be overtime eligible for those periods of time.

Similarly, “outside sales employees,” who are also exempt, are only exempt if they regularly and customarily engage in outside sales work. Naturally, in these days of wholesale shutdowns, more and more outside sales people are working from home or another fixed location. Under that set of circumstances, these people would not be working/selling outside on a regular and customary basis and, again, they would be non-exempt for those weeks.

Another issue is whether employees that are subjected to testing for COVID-19, such as temperature screenings, are compensable time. This might be analogized to the security screenings that many workers already go through, where the standard is whether waiting on line for the security checks was compensable, which the U.S. Supreme Court concluded that it was not. State laws might be tougher, especially where states have not adopted the federal Portal to Portal Act.

The Takeaway

Employers may think they have enough to be concerned with just with bringing their employees back safely, preventing them from becoming ill when they do return, and returning to normal operation and, hopefully, profitability. As discussed above, there are numerous wage hour issues that may sneak up on an unwary employer, which could ultimately lead to collective or class actions being filed. That is why employers must be proactive and compliant with federal, and state, wage and hour laws when they re-open.

Talk about adding insult to injury…

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