VANNOY:

Hi everyone. Mike Vannoy, vice President of Marketing at Asure. And today we’re gonna talk about a topic that I, I think might sound super boring, but is just so incredibly important. It’s really at the core of paying employees FLSA Pay Compliance FLSA stands for the Fair Labor Standards Act. And, and the reason it may sound boring is cuz you might have learned about it in like elementary or middle school history. Going, going back to 1938 when the Fair Labor stands, fair Labor Standards Act first passed and became law providing, you know, overtime and child labor protection laws, et cetera. But this isn’t some old fashioned thing that doesn’t apply anymore. It’s, it’s really the, the core to day-to-day compliance in, in the law is continually updated. I think maybe making it even harder for, for employers today.

It, it’s not just this federal law that’s some 80 ish years old. It’s the fact that this law is continually updated and is, is states and local municipalities are, are passing their own versions of it. So it’s not just a, a local version of the same law, it’s with a twist. So whether it’s each state and municipalities having their own overtime laws or leave laws the foundation of FLSA just continues to expand and get more and more complex, I’d say exponentially more complex for employers in the last five to 10 years. So have a great guest today to help me unpack this topic. Regular lecture of the show. You’ll, you’ll know Brian, Brian Shenker’s practice focused on representing employers in a wide range of workplace manners as well as preventative advice and counseling. Brian has extensive experience defending class and collective action lawsuits under federal and state wage and hour laws. He has successfully defended wage and hour audits conducted by the US and New York State Departments of Labor. And Brian regularly handles cases before courts and administrative agencies involving claim claims of discrimination, sexual harassment and retaliation. Brian, welcome to the show.

SHENKER:

Thanks for having me, Mike. And yeah, this is the FLSA. Something that may on the surface seems so simple but I think as we’ll discuss today, there’s a bit more than that to it. It for, you know, gives us some compliance challenges for sure.

VANNOY:

So I remember I think maybe middle school, US History had to read Upton Sinclair’s, the Jungle, and all the terrible abuses that were happening to employees back then. Right. And, and outta that came unions came the standard 40 hour work week came, child protection laws came FLSA Right. So, can you, maybe just without, without going into too much detail, what is FLSA and why is this still important for employer today? What does it cover?

SHENKER:

Sure. So the FLSA, it’s the federal law that essentially sets the floor for minimum wage overtime, you know, exemptions from overtime child labor and record keeping requirements. States can go above and beyond the FLSA requirements. Some do, many do not, but, you know, the FLSA sets the floor, you can’t go under that. So, you know, we have the US Department of Labor, which is tasked with enforcing the FLSA and so, you know, the main enforcement mechanisms we see here are through, you know, d o L audits, as you mentioned, as well as, you know, private lawsuits and, and federal or state courts. I think that, you know you know, one of the statistics I saw, which was really fascinating to me, is that you know, over 135 million workers and more than 7 million workplaces are covered by the FLSA in the us.

So it’s something that business owners should be aware of, understand, understand their state counterparts. But you know, the, the main, the main areas of concern here are gonna be right, the minimum wage and overtime in those record keeping requirements. And we see a lot of activity in this area. You know, it’s something business need to focus on because we have the D O l, this, the federal D o l state, D o Ls, private attorneys. As you mentioned, one of the things I handle are class and collective actions. So, you know, these cases aren’t always just, you know, one individual employee. It can grow into, you know, large groups of individuals. So there’s just a lot going on here. You know, it’s an area where, you know, compliance is essential.

VANNOY:

Yeah, right. I, so not looking to scare folks today, but yeah, I do wanna, I want to paint a picture for how serious it is that you must comply. So if I’m if I’m a really good carpenter and I, and I, I end up hiring a crew, and then eventually I have three crews working for me remodeling kitchens and, and, and bathrooms you know, I, I know what minimum wage is, right? I, I, I, I, I know some, some basic stuff just from being around and being in business, but I’m probably really good at, at designing kitchens and baths. I, I don’t, I don’t know the details of FLSA. Can, can you paint a picture for maybe, maybe cases you’ve been involved with for how serious this is from a litigation standpoint, from a fine standpoint of why, you know, ignorance of the law is no excuse. You, you, you, you gotta

SHENKER:

Get stuff, right? Yeah, absolutely. And this is one of those areas where, you know, you don’t get credited for substantial compliance, you know, so if you think you’re doing things right, but you haven’t really checked with someone and you know, you’re found to have not paid them in wage or not paid for all hours, hours, there’s, you know, no mitigating circumstances because you tried to be a good employer, unfortunately. And so the damages are, can be very big. So, you know, when we’re talking about minimum wage or overtime, you know, if you haven’t paid, you know, federally the minimum wage is $7 25 cents, and over time is time and a half the regular rate. So if a company hasn’t paid, you know, those wages, they will be responsible for not only paying the employees those unpaid wages, they’re also liquidated damages, which under the FLSA are a hundred percent of unpaid wages.

So you owe an employee, you know, one of your workers $10,000. Now, that’s automatically become 20,000. As, as I mentioned before, the plaintiff’s bar is very active. And for good reason, plaintiff’s attorneys in this area, if they recover anything for the employee, they can recover their attorney’s fees. So that means, as a business owner, you’re not only paying your attorney to represent you, you’re not only paying the employee their wages and liquidated damages and probably interest on that as well, but you’re also paying their attorneys fees, you know, at the end of the case. And, and then there’re look, then there’s the issue of class actions, which under the FLSA it, it’s a little different than a class action. We call it a collective action under the FLSA because what happens is notice will go out to certain workers and they have to affirmatively sign the document, send it back in to join the case.

 But those can grow cases. So in, in your scenario, Mike, you know, if you have a number of employees that do similar or the same work you know, they would be considered similarly situated. And now you can have a lawsuit, not just, you know, one worker in that classification who started it, but now it involves, you know, maybe you have 50, so you can see, you know, exposure, you know, you increases rapidly when you talk about, you know, additional workers, you know, potentially joining these claims. And, and as I said, there’s really, you know, the, the tough part here is you complied or you didn’t, right there, there’s no middle ground that a court or d o l will come to and say, well, you know, you really tried. You, you made a great effort. There, there are no bonus points, there’s no mitigation for that.

 So understanding the rules, understanding how to pay, and a, as we always talk about, Mike, you know, documenting and we’ll get to record keeping later, but certainly in how we pay people, you know, documentation is key because that’s the main way you prove to the D o l or prove to a court that, that you paid your employees, you know, at least the minimum wage and, you know, the time and a half for overtime. Or, you know, as we’ll touch on, you know, that your employees that you classified as exempt from overtime are actually exempt. So documentation really goes a long way here.

VANNOY:

Let, lemme ask this. So how, how, how does, how does the ffl FLSA get enforced? Because there, there, there’s no such thing as the FLSA police, there’s not a federal department called FLSA, it’s a law, right? So can you talk about enforcement, but, and, and I, and I think I know the, the answer here, but beyond the Department of Labor enforcing, inspecting, auditing there’s, there’s also the courts, right? Right. So, speak to both ends of that, if you could.

SHENKER:

Right? So on the one hand, right, you have the D O L, and this is the federal deal, the US Department of Labor. And, you know, I’ll just mention note real quickly. There are state DOLs who will go, go around and enforce the state versions of the slot. But when we’re talking about the US D O l, you know what they can do? And what they do is they can randomly audit a business. So that means you’re conducting your business, and all of a sudden an investigator or two walk into your shop, they show you their business card, they say they’re from the Department of Labor, and they want to ask you some questions as a business owner. And they also wanna walk around and interview some of your employees. They’re also going to ask you for a whole lot of records, you know, payroll time records tax records, you know, there’s a whole lot of stuff they’ll ask for, and they’re entitled to do this.

 You know, you don’t need to produce records right away. You have several days typically to produce the records. But yeah, so the, the D O L can randomly select businesses, and they do, they, they often go through trends of focusing on different oc, you know, different industries. You know, we’ve seen it you know, go from car washes to restaurants, you know, a lot of areas where they think they’re going to be violations. But on the other hand, you can also have a complaint. An employee can file a complaint with the Department of Labor, and then the D O L comes in and will investigate. And that’s the,

VANNOY:

That’s the more common path, isn’t it?

SHENKER:

Definitely, definitely more common. And, you know, even the, and I’ll just note that even though it’s just one employee complaining that the DL can decide, all right, we’re just gonna look into that one individual’s claims, or they’ll say, we’re doing a company-wide audit, you know, provide us all your payroll, a list of all employees for the last, you know, two or three years. Yeah. so, so that,

VANNOY:

Brian, what I, what I’ve seen is it’s, it’s typically the employee who, who feels aggrieved. They’re, they, they’re not gonna, probably, they might do, they might do Google search and say, you know what? They owe me such and such and maybe they’re right, maybe they’re wrong, but they’re gonna lawyer up. They’re gonna find somebody to take this case on for free and work, work, you know, only on a percentage of the recovery. And that attorney is gonna then file a formal complaint with either state if, if it’s a state issue or the federal department of Labor. Right. Can you speak to the the obligations of the D O l? I mean, once this has been, once a complaint has been filed, are they automatically obligated to, to pursue this? How, how does that unfold?

SHENKER:

Yeah, so with the D O L, what they do, they, they first investigate, right? Like most agencies, when they get a complaint, they’ll investigate and, and that’ll usually involve a site visit, but also requesting documentation. And depending on how many employees we’re dealing with, you know, it might take them months to go through everything, or it could be a week. And then typically what the U S D O L will do, they’ll set up a call with the owner, and if you’re represented by counsel or anyone else, that they’ll be on the line too, and they’ll go through their findings and you discuss that. And hopefully, obviously the ideal is that, you know, there are no monetary violations, but there often are. And then, you know, there can be a negotiation. But, you know, in the end, if, you know, if you don’t settle with the D O L, then you may very well wind up in litigation and federal court with them.

You know, just like, as you mentioned, the, the other way this is enforces through private attorneys. And you know, I would say, you know, this is a lot of what I handle, wage and hour cases, and, you know, there are a lot of D O L audits, but the majority of what I see are private lawsuits. Yeah. And it’s really because the attorneys can collect attorneys fees if they prevail. And so it’s very you know, it’s very attractive to certain attorneys as a business model to, to bring these cases. And it’s very easy for employees to bring them, because as you mentioned, they don’t pay, you know, they typically have a contingency relationship with their attorney, which means, you know, if they recover some amount of unpaid wages, the attorney will take typically one third. So your employees don’t have any upfront costs to bringing a claim. As, you know, as a company, you will, you will need to hire an attorney. You will have upfront costs. So, you know, that’s just one of the ways, you know, this law is formed to, you know, advantage employees. And,

VANNOY:

And, and we’ll, and we’re gonna get to record keeping in a, in a minute here. I know, but this is why record keeping is so ridiculously important, right? Because you could have, and, and I don’t wanna disparage employees. There’s plenty of, you know, thousands, tens of thousands of completely valid claims. There’s also thousands of frivolous claims that, that really have no basis. But if you don’t have good record keeping, your insurance policy is probably gonna, your insurance company is gonna say, Hey, settle this thing. It’s gonna be cheaper to settle than pursue this. They’re gonna walk away with some money, but you’re still gonna have at least some cost to defend up upfront. Even if you end up settling out of court, this is gonna cost you thousands, at least thousands, probably tens of thousands of dollars for, for the, for the most basic claim, right?

SHENKER:

Yeah. R really does because you, you know what, the plaintiff’s attorneys, they understand what you’re dealing with. They understand that what your litigation costs are gonna be. They, you know, if they know that they have you and that you have no records or your records are insufficient, you know, they, they have you, and they, you know, why would they take, you know, why would they sell themselves short? They’ll wanna get, you know, paid on that. And so you, that’s often a problem. I have, you know, where, look, you know, a one plaintiff case might be easy to settle because we just have that one person. But I can tell you a lot of times it’s not just one employee. You know, it’s seven people coming together. And then, like you said, even if it’s, you know, you know, 10, 20,000 that’s owed per person, which, you know, I’ve seen a lot more than that you know, that adds up very, very quickly and becomes an expensive you know, we’ll call it learning lesson for an employer.

 You know, and that goes hand in hand with the, the class actions, right? That if they’re gonna seek a class or collective action, you know, depending on the sides of the employee, that could range from, you know, a dozen extra, you know, plaintiffs to hundreds. You know, I’ve had cases where, between the time the complaint was filed and 30 days later when we were filing an answer, you know, we had over a hundred employees join the lawsuit. And you know that that’s not a place you wanna be as an employer. And if that is where you are, you know, as we’ll discuss, you know, really hope that there are good records and that, you know, you’ve gotten, you know, good guidance on your FLSA requirements and obligations.

VANNOY:

And, and, and here, and here’s something I want, I want to drive home that if, if you’ve got a bunch of employees coming together, then chances are you’ve done something wrong, right? I mean cause cuz they, they, they wouldn’t, that wouldn’t happen unless, right? But, but most people listening today probably think, ah, that’s not me. You know, I don’t, I don’t even have lots of people that work here. I’ve got 20 people in my firm, right? And so we’re like family. We worked together for a long time. I don’t need to really pay that close attention to this. I, I can tell you that literally two weeks ago, talking to a customer that they had an employee that and they were asking, and we’re, we’re gonna touch on severance here. They’re asking advice on severance. Had an employee that had been with ’em for 12 years, they were like family, right?

They, they truly were at work, outside of work. They were friends. And this person started having some mental health issues that over a, a couple year period of constant coaching and paid leave. And I mean, this was, this was a tortuous employer trying to help their friend, employee. And this relationship ended up just going south. And the person had to be, had to be terminated. My point is, don’t think this doesn’t apply to you, just cuz you got a small firm with a small number of employees. We all like each other. And you know, Johnny would never sue me. Sally would never sue me. Not Trent, probably not, and probably not soon, but stuff happens, right? So you’ve got to, no matter what your situation, you have to understand this. And you have to document, you have to have, have good record keeping. So, yeah.

SHENKER:

And, and like, the reason I’m smiling is because so many times is that’s what I hear from clients, especially at small businesses where, you know, maybe there were five or 10 employees, you know, these are workers who’ve been there, you know, 5, 10, 15 years, they’ve been inviting, invited to, you know, your family of events. You’ve gone to their, you know, christenings. You know, it, it’s, it’s things like that where, you know, because a business owner treats the employees as almost family or friends, and they forget about the formalities of, of the relationship and, you know, tracking time worked and, and paying them the right way. And, you know, maybe the employee says, you know, don’t worry, I want to be paid a salary. Don’t worry about overtime. You know, and look, maybe that works for, you know, a whole bunch of years, but then at the end of employment, or, you know, some point thereafter, they smart enough and they realize, well, that wasn’t the right way.

And look, as we’ll discuss, you know, one of the big misconceptions about the FLSA is that employers can contract around it. That if you have an employee who wants to paid a certain way, let’s the, you know, say a non-exempt employee who should be paid hourly and get overtime, that, you know, you can pay that person a salary as long as they sign something saying they, they want a salary and, and you’re safe. No, that’s, that’s not the case. Courts will not uphold any agreements to avoid the FLSA and so, yeah, I’d say, you know, if you’re an employer, don’t get trapped in that idea that these, you know, your employers are loyal. They’ll never do anything as a, you know, as I’ve said before, you know, the first employee your, your last employee you fired is the first one in your pocket, right? Loyalty ends at the door. And sometimes even before that, you know, when they file something while they’re still working. So yeah, that definitely, you know, that, that just spoke to me when, when you said that, because I’ve heard that so many times from small businesses that, you know, this is a long term employee, we’ve never had any issues. And you know, now, now they, they have a lot of exposure on their hand.

VANNOY:

So I, I definitely want to go deeper on classification and when it comes to the overtime impact, but let’s, let’s maybe start it kinda an employee life cycle. Let’s talk pre-employment applications, job offers, let’s talk employment classification and, and overtime, et cetera. And, and then yeah, let’s get to record keeping and then all the way on, on a, on an exit severance and, and such. So talk, talk about the recruiting, the onboarding the you know, putting in job posting, what requirements do we have what, what, when actually providing a job offer,

SHENKER:

Right? So I, I think, right, even before we get to that stage of making a job offer, you know, most companies should probably develop a job description. And as part of that job description, you know, the company is going to decide, you know, the first step in this process is this position exempt or non-exempt. And, you know, we’re not gonna get into all the exemptions today. That could be a whole day affair. And you,

VANNOY:

What Mary Simmons, anybody interested? Mary Simmons and I did a, a, a a show on this exact topic, go back I don’t know, two, three months or something, and you’ll see it in the website, in the archives, but yeah, ex exemptions is a whole topic in of itself. In classification is a whole topic in of itself, but just right, high level get everybody, yeah.

SHENKER:

Yeah. At its most level, basic level, you need to determine whether the position is non-exempt, which that should be your starting point. Non-Exempt means they’re getting paid an hourly rate, and then if they work beyond 40 hours in a work week, they’ll be getting paid time and a half their regular rate. So that should be

VANNOY:

Just to be, just to be black and white. Brian, non-exempt means exempt means you are exempt from overtime. Non-Exempt means you’re not exempt from overtime regardless of, of what your job is. It’s that that’s, it’s that straightforward.

SHENKER:

Yeah. Right? And, and there are requirements, and like you said, you know you can look to your and Mary’s webinar on, on that, but, you know, there are requirements. It’s not just the employer deciding exempt or non-exempt. There are requirements. So, you know, once that, that’s decided now, now you know how you’re, you know, how you’re going to pay this person salary, salary, maybe hourly maybe a day rate, whatever that is. And so now you, you found the candidate, you’re, you’re offering them a job. So, you know, there, there’s some basic information that, that we want in a job offer. Some of it related to wage and hour and the FLSA some, you know, a little separate from that. But obviously FLSA related, you know, we wanna put in the, you know, specific pay details, right?

The details on compensation when the pay periods are, when the payday, when the payday is. And when, when we do offer letters, I, I often suggest stating the compensation in terms of an hourly rate or a weekly salary something on a weekly basis. Because, you know, if you state a full, you know, year annual salary or something on a longer time period, that may give the impression that there’s an offer for a specific period of time. And right. So if I say, you know, you will be paid, you know, 50,000 per year, you know, that, that could lead to an argument, well, I’ve been hired with a year contract, you know, might not fly. But again, avoid any confusion by stating it in the, in the smallest terms, the hourly rate, the daily rate, the, the weekly wage, and then, you know,

VANNOY:

The judge might throw that one out, but it might cost you five grand in lawyer fees to, to make the case.

SHENKER:

Yeah. So, yeah, that, that’s a very, very simple one. And, and, you know, you just want be, you’re, you’re just being as accurate as possible. But, you know, o other things that we’re looking for in offer letters, you know, well, except for anyone in Montana we, we want say that it’s at-will employment, you know, Montana doesn’t quite have at-will employment, but, you know, we, we want to confirm that it’s at will employment, because that means the employee can be fired at any time for any reason or no reason. And likewise, the employee can quit at any time for, for no reason. And so that, that’s the basic tenant of at will employment. So as many times as you can state that in offer letter, that’s fine. But then, you know, some other, you know, information about the position, right? The, the title, the start date the, the shifts, you know, whether it’s full-time or part-time you know, and, and usually we put something in the, in their, you know, language that says something to the extent, you know, the company, you know, has discretion to alter these, you know, responsibilities or these you know, parts of your, your job because you’re the employer, you, you, you do retain that, that discretion.

 There, there’s also, you know, benefits information that should be included, you know, medical insurance, 401k. But again, that should be very limited information because there’s a plan document that’s going to explain that. So you might wanna explain what benefits are available, but no need to get into a long-winded discussion of that. Same thing with, you know, pto, you know, paid time off vacation, that type of, those types of benefits. Again, no real reason to go through that all and have it, you know, every part of that policy in the offer letter, but you might mention it and refer the, the employee to the handbook.

VANNOY:

Right. Can, can you, one of the things that I think is really frustrating for employers when they listen to a conversation like we’re having here, on one hand, there’s a law that is, it’s black and white. This is legal, this is illegal, right? This, this is the law. On the other hand, they hear people like us talk, and this sounds like a bunch of vagary kind of suggestions. The law does not, FLSA does not say you must have a job description. It does, it does not specify the requirements of, of an offer letter. Can you bridge that for everyone? Why is it that you’re making these, call it suggestions, right? In, in, in, in how, you know, it’s, it’s kinda a no-brainer that more than a suggestion, we’re gonna, we’re gonna fuck you upside the head and say, you really need to do this.

SHENKER:

Yeah. Yeah. And, and it goes back to, you know, the offer letter is really the first part of the documentation you are creating to protect the company, okay? Right? So when we’re talking about the wage information, right? You know, look, a lot of states, you know, the F L FLSA doesn’t, but a lot of states have requirements about, you know, certain notifications of wage rate, pay days, things like that at the outset of employment. So, you know, also, by putting this in an offer letter, you’re, you’re complying with some of those rules. But you know, at its most basic, you want the, the employee to have this information. You, you wanna be as clear about how they are paid as possible that will, you know, resolve, you know, avoid lots of confusion down the road if they have a document that tells ’em how they’re being paid.

 Again, you know, I have, I’ve had many cases where no documentation was ever given to the employee. There are no records. It’s just, you know, all verbal. And in a lot of those cases, the, the lawsuit comes about on one part because employee thinks they’re underpaid, but on the other part, because they’re not quite sure how they were paid or how it was calculated, or how their hours were calculated, or their, their rate of pay, even. So, you know, putting those out, explaining those basics of how the employee will be paid i is so important, not only for compliance, but look, you can avoid a lot of legal issues by being as clear as possible with employees. You know, and, and we talked about that with handbook provisions, you know, set their expectations. And, and so that’s really, you know, what, where, where we’re starting here, right?

You don’t want to give them an employee the impression that they’re being hired for a year by saying, you know, you’ll be paid, you know, 50,000 per year, we’re gonna say you’ll be paid X amount per week for your convenience. This is an, you know, this is an annual salary of, you know, 50,000. So these are all, you know, some are required, you know, but these might not be required things, but they, they all go towards what we’re trying to establish. You know, this is how employee, the employees being paid, this is how it’s calculated. And, you know, down the road when the employee, you know, questions or challenges or makes a claim, here, we can go back to the file and we have this documentation, look, you know, John Doe remember on, you know you know, June 30th, you signed this, there’s your signature. You recognized that this was your, you know, how you were gonna be paid. So it, it does, it’s, it is a big benefit to, to, you know, put this type of information in there.

VANNOY:

Okay? So I, I guess, and I, I keep, I can’t help myself. I keep jumping head to record keeping, but in the same way the IRS has an explicit, you know, X number of cents per mile that you can expense. The law is black and white. It is simply a best practice to actually log your miles, right? So, because if you did get audited you know, if you have no proof, no documentation, you know, there’s, there’s the cost, risk, all that. So I think what we’re talking about here is really just a smart way to run your business and proactively helps you as the employer stay compliant, right? Because you’re thoughtfully putting these things together, but then the documentation is all in place. Should something bad ever happen, you just pull it out and say, no, we did it right? And here’s proof,

SHENKER:

Right? And, and that’s just, you know, look, just you know, for anyone to think if you’re in court, would you rather have it be your testimony versus the employee’s testimony? Or would you like it to be your testimony plus a whole bunch of records that were kept, whether they’re time records, pay records, offer letters, you know, notices, you know, things like that. Those types of documents speak much louder than words, right? If, if I’m a business owner and I have to come in and, you know, testify as to what hours this employee were, you know, that testimony isn’t great. It’s not gonna be specific day to day, but if we have contemporaneous, you know, time records of when he clocked in and clocked out each day, you know, then by way of having those records, we turn the burden around and put it on the employee to establish that those records are wrong, rather than if you have no records and you have no documentation, the employee can get up there and say whatever they want, and they have a, there’s a rebuttable presumption that what they’re saying is true, unless the company can come forward with specifics, you know you know, contradicting that.

So yeah, I know we keep going to records, but yeah, records, you know, and again, it’s because we can’t overstate the importance of having, you know, wage and hour records. And again, just for clarity, you know, for our non-exempt, our hourly employees, those records are the main records we’re talking about are time records and pay records, right? I mean, that’s what it really boils down to on, on a broad scale.

VANNOY:

Yeah. Okay. So all the, all the categories, classification, pay, hours rate, all these things that are, are, aren’t fall under the FLSA. We should include those in the offer letter, really is kind of the punch sign here. And preceding that all the way through the, from the application process all the way through. But good, good best practices to include these in the offer letter. Okay? So now someone’s on board. We talked a little bit about classifications. So either you’re exempt, meaning you’re exempt from overtime that you can work more than 40, you can work a 60 hour week, and you’re not getting overtime because you’re, say, a manager and you’re making more than X dollars salary, right? Or you’re, you’re non-exempt, meaning you’re gonna get overtime regardless, right? So you got, you get classified, right? But now they’re on the job, they’re working. So what counts Brian, as as hours worked?

SHENKER:

Sure. And this is, you know, the million dollar question for, for the FLSA right? Because, you know, and, and when we talk about hours worked, obviously we’re, we’re mainly talking about our non-exempt employees. You know, there, there we have the white collar exemptions where we’re not tracking hours, there are a few exemptions where hours are tracked. We’re not gonna talk about those right now. We’re really just focused on our non-exempt hourly employees and, and what counts as hours. So yeah, so the FLSA is very broad in what it counts as, you know, hours worked. And the basic premise is that the employee needs to be paid for all the time that are considered hours worked under the FLSA. So hours worked will include, you know, time spent engaged to wait for work, could include oncall time, could in call, include, you know, training and travel time.

 But you know, one of these really, you know interesting terms in the F LSA is that even work that’s not requested by the employer, but that is so suffered or permitted is considered work time. So that’s a very broad view. So I’ll give you an example, right? You have you know, the, we have a manufacturing shop and, you know, every day at, at noon, you know, the bell rings, you know, people, everyone goes to eat lunch, you know, for the next hour. But you have, you know, one employee who you know, continually works, you know, an extra 15 minutes, you know, works till 1215, takes only a 30 minute break, and then comes back at 1245. So, you know, that’s a half an hour of extra work each day. No one’s telling him he needs to do it. In fact, you know, managers might be telling him, Hey, take lunch like everyone else, but, you know, no one enforces it, no one kicks him off the floor to stop working.

That would be time worked, even if they’re, you know, not necessarily allowed to do the work, but the company is permitting them to do it. So, you know, I I say that because I think it, that shows an example of, you know, how expansive work time is in that, it’s not just time you require employees to work, it’s anything they do. It’s a non-exempt employee checking their email and sending a couple emails at night. And so, you know, working this back to record keeping, you know, th this is why, you know, employers, and often it will depend on what industry you’re in, what, what are the realities of your your employees work life. But, you know, there needs to be systems in place for employees to capture this time for employees, you know, to report, right? If they’re on a meal break and they perform some work, you know, you should have ways for them to, you know, inform the company that they worked because, you know, you can count you can count it that, you know, if they ever make a claim, you’re gonna get all these, we call them off the clock claims, right?

That the, the employee’s gonna say, I worked more hours beyond the hours that I actually recorded, right? You told me to record these hours, but hey, you know, I was supposed to have a 30 minute lunch break and 15 minutes into that, you know, I had to take a work call under, under the law under that full a, you know, that would mean very likely that that break time should have been compensated. So right.

VANNOY:

I know it’s not possible to cover every single use case here, but let’s, let’s tackle a few of these that are kind of on the fringe, right? So to, to paint a picture for what’s, what the rails are here. Yeah. So let’s say I’m an employee that I work for an owner who owns three subway franchises and I worked lunch shift at one location, but then I’m working the, the evening shift somewhere else. Am I on the clock? So I’m clearly not on the clock driving to work in the morning or driving home from work in the evening? Am I on the clock driving from location one to location two?

SHENKER:

Yeah. So that, that’s a great question. Travel time is where employers often get tripped up. So right, as you mentioned, right? Ordinary home to work and work to home, you know, at the beginning and end today, end of the day is, that’s not compensable typically, but right. When you talk about traveling between work sites during the day, that is often, often and, and typically will be compensable. That is time you need to compensate an employee for. Really what happens is once the employee’s day starts and then they perform any travel as part of that day, that tr travel is typically going to be, you know, work time and need to be paid for. Now what some employers do is they have different hourly rates for travel time versus other time, right? You know, taking, putting aside any statement and wage, right? We have, you know, seven and a quarter federally. So you could say, all right, your regular work time at the, you know, at the franchise locations, we’ll pay you 15 an hour, but you know, your travel time record that separately, that’s 10 an hour, you know, so you can do things like that. But yes, travel time, if you have travel time during the day, or if you have your employees starting work at home before traveling to work, you know, those, those can be issues of of time that’s not being compensated properly.

VANNOY:

Okay. how about, I’m an employer, maybe it’s a single location, we’ll stick with a, maybe a retailer. And we have a, we have a busy, we have a busy noon crowd and then it’s dead in the afternoon, and then busy again in the a in, in the evening. Can I, can I ask an employee to clock out and just and clock back in, say just an hour later for their second shift that day to begin?

SHENKER:

So that kind of gets into the issue of what’s a rest period or meal period. So yeah, I mean, the basic answer is yes, that that can be done. Of course, the the typical lawyer answer is, but there could be some complications and you might wanna look at, you know, what state law has to say about that. But yeah, so I, I mean, but talking about rest periods, the, the general concept under the FLSA is that, you know, rest periods in order for it to be a true rest period that you do not have to pay the employee for, that should typically be over 20 minutes. And I, I, I, I’m a bit conservative on that. So I’d say really a, a bonafide break that does not need to be paid should be at least 30 minutes. And the idea is the employee should not be performing any work during that time.

They should be free to, you know, leave the premises if they want stay there, right? You’re not limiting them, right? It’s, it’s not a true respirate if you’re saying, yeah, take the next hour, but I want you to sit at the cash register and if anyone comes in, you’re back on the clock. You know, that’s not, that, that’s too limiting to really make that a a true rest period, right? They’re not completely relieved of their duty. Sorry. And you know, another thing that I’ve seen are you know, auto deduct policies for lunch, right? Where helping, yeah. So auto deductions for meal periods can also be a problem. You know, in some, you know, when, when you have these auto deducts or meal periods or are really, most employers should have some policy that provides a way for the employee to report time worked that otherwise, you know, isn’t captured, right? So there should be policy, you know, contact HR or you know, the owner, whoever it might be, you know, an email to them about work, right? So that, you know, if it’s something you did at night, if it’s something you did at lunch, you know, those hours, you know, can be captured.

VANNOY:

Got it. Okay. Anything else that employers need to understand about hours worked? Yeah,

SHENKER:

So real quick, I’ll say one thing that where I often see employers not paying for training time you know, whether it’s at the outset of employment or throughout employment I think that, you know, that that’s one key area where typically training time is going to be compensable unless it, you know, fulfills a number of factors. And we won’t get into all those today, but just, you know, be on the lookout for, you know, for training time likely should be compensated.

VANNOY:

Got it. Okay. all right, let’s, so let’s move and again, so when it comes to, so we talked about offer letters, we talked about hours, worked highly, highly encourage everyone to take a look at the, the show that Mayor Simmons <inaudible> on this topic around classification for how to determine exempt versus not exempt and what those exemptions are for, for over time. But let’s, let’s, let’s move to record keeping. You keep hinting at it. It’s not legally required to have a job description. It’s not legally required to have an employee handbook. It’s not legally required to include all of the FLSA components in a, in an offer letter. But it’s, dare I say, insane not to. That’s how strong our advice is, right? So it’s, it’s advice but break down what is legally required for record keeping under FLSA, and then let’s broaden that out to whatever else we have not yet covered for suggestions.

SHENKER:

Yeah. Per, exactly. So for, for the FLSA, and I’ll note that typically under the FLSA, the, the records that we’ll go through should be kept for that, that’s err on the side of caution in say, three years because that’s the, the longest statute of limitations under the FFLs. A meaning if an employee filed a claim today, they could go back and seek unpaid wages for the last three years. So we’ll say three years is the minimum. But I would also as always consult your, your state law because for instance, here in New York, the, the state equivalent of the FLSA goes six years as a six year statute of limitations. So therefore, when I advise clients in New York, I tell them, you’re keeping everything at least six years, even though the F s A is three. So three is the minimum for these document, for these records, but it could be more so, I mean, look, there, there’s some real basis I’m

VANNOY:

Stop you, stop you there. Cause this is perfect example. Excuse me. When this gets so complex for employer today, I’m I’m an employer in here in my hometown in St. Louis. we’re a business services company where my many of my employees can work virtual. I got this awesome new candidate, Brian Shinker that I’m gonna hire he’s gonna work from home, home in New York. I am now, and I retain all my records for three years. Cause that’s what the law says here in Missouri. Ignorance of the law is no excuse. I gotta, I gotta got to retain Brian’s records for six, right? Yeah,

SHENKER:

Yeah, exactly. And so, right, it, it’s kind of easy to think of when you have locations in different states. There’s that understanding that, okay, I understand different state laws are going to apply, but now in the past few years with, you know, more and more individuals working remotely, yeah. That, that’s absolutely something companies need to be aware of. You know, where is my employee working? What’s, you know, and, and that’s why I think we’ve talked in, in past times that, you know, if an employer wants to limit where employees will work from, or you know, say No, you can’t work remote from this place, you know, there’s some consideration for that cuz you’re opening your company up to additional obligations under other state laws.

VANNOY:

Hundred percent. I interviewed the coolest candidate. We ended up not coming together for different reasons for a marketing role. Super creative. Pink care lived in the Airstream, spent part of the year in Austin, part of it in the Pacific Northwest part of it, in the back of the north northeast around the holidays, seeing family in all points in between stopping for a day or three months at a time. And I always, I always think about that use case, what at a compliance nightmare. Cause technically it’s not where that person’s residence is, right? Or their, their PO box that they receive mail. It’s where the work is performed. So and I use that as kind of an extreme case, but this is a thing of the future where, where work performed is performed. Today’s modern employee the, the millennials coming up, they don’t see geography. The the way, you know, a bunch of us old folks do that are used to work in, in a brick and mortar world, right?

SHENKER:

Exactly. Exactly. But circling back to the FLSA, you know, and when, what the FLSA requires, so there’s some very basic information about the actual employee, right? You know, their, their name, date of birth you know, social security number, address you know, those are some of the, you know, the basic things about the employee. But then, then we get into the stuff about the wages, right? So, you know, you need to keep a record. What’s their regular rate of pay, right? And, and what’s the basis for that, right? So it could be $10 an hour and it’s an hourly rate, or is it a daily rate, or you know, is it, do they get commissions, right? So is there a commission component? So you wanna, you know, set forth the rate of pay. And then that now then we get into basically, you know, the time and payroll type of information, right?

The total hours worked each day and total hours worked each week. And then FLSA even wants companies to break that down further. What’s the total, you know, regular hours worked, what’s the weekly, you know, total overtime. And so, you know, then based on those, what’s the total amount of wages due for regular at work and total amount due for overtime? You know, what are any deductions from the pay? So, you know, I mean obviously, you know, payroll will have the withholdings, but you know, perhaps there, you know, some deductions for some reason, I mean, deductions under the FLSA are very limited, but you know, for instance, you know, a child support deduction, right? That should be listed on, on the payroll. That’s not something we’re just doing without any record of. And then obviously what’s, what, what else is important, right? We need to have what day of the week is payment made, you know, what is the work week?

 You know, the work week can be any seven consecutive day period, right? You can go from Monday to Sunday, you could go from, you know, Wednesday to Tuesday you know, and what hour does it start at? Does it start at, you know, midnight? You know, these are, you know, they’re simple things. But when you start breaking it down, these are the components that go into how you actually pay people. And it makes sense that the FLSA wants you to keep records of how are these people actually being paid and, you know, what are the, how are you, you know, deriving the hours that you’re paying them for. So tho those are mainly the, the requirements under the FLSA. Obviously I would tell you right now, the most important stuff out of this are the time records. And, you know, when we talk about time records, it can be anything relating to time.

So obviously, you know, the, the one thing we think, you know, clock in, clock out records, right? Or punches, you know, and whatever system the company uses is fine for that. The FLSA does not, you know, mandate a certain type of time recording system. It just should be, should be accurate and should be done contemporaneously with that work. Yeah. But those, those are the most important. So you have the time records, but you know, maybe you’re also keeping work schedules, right? If you have work schedules apart from the, the, the time records, you know, those are something that should be keep kept. Maybe there’s something electronic that, that should be kept in this regard. You know, one thing that I often see, you know, companies not having is that even though they will pay commissions that for their commission employees, they won’t actually retain records of how those commissions were calculated.

And then you get an unpaid commission claim, and we’re left doing reverse calculations based on whatever data we have left at this point to figure out if the, the employee was paid correctly. So, you know, a lot of small businesses, and I’ve seen it before, you know, do you know it’s a back of the napkin you know, back of your hand you know, some calculations that you’re doing it in pencil and you throw it out and you know, that’s not something you wanna throw it out. You, you wanna keep those records, you know, and again, it doesn’t need to be something in Excel, it can be your handwritten record, but just kept,

VANNOY:

Right? And in that case, that going further upstream, having a clear, concise, well-documented commission and compensation plan, right? Including initials signature that it was received in the understood, right? I mean, I’ve, I firsthand have seen cases where great employee turns into disgruntled employee, never saw it coming, and all of a sudden completely blindsided by a suit saying, Hey, I’m owed commissions for this thing that everybody in the company knows. They didn’t pay commissions on that, right? Yeah. But there wasn’t documentation to prove otherwise, and it cost that company a lot of money.

SHENKER:

Yeah, no, exactly. And so these are things that, you know, look, if I had a nickel for every time I, I spoke to a client and I said, you know, all right, you know, look, when I get a wage and hour case and a pay wage case, the first thing I’m asking a client is, what records do you have? Do you have time records? And so many times I hear, oh, well, I, well, I did, I had time records, but I I threw them all out or, you know, I I, I threw out the, you know, the, the ones o other than the last six months, I, I cleared out, you know, the, the garage, or I cleared out our, you know, warehouse and threw them out, you know, and, and that’s so tough to hear because, you know, the company made the records. They, they had them and then, and then they just didn’t preserve them long enough.

And, and that’s so painful because those are the documents that help you defend a case like these, you know, there’s no avoiding an unpaid wage lawsuit, an FLSA lawsuit, but the records are what get you out of the lawsuit. The records are what provide the defense and will, you know, result in the dismissal or a very small, you know, you know, reso, you know monetary resolution. And so, yeah, so, you know, where do we keep those records? I mean, number one, keep them somewhere safe. You know, sometimes we don’t wanna store them on the floor in a basement. I have also had a number of clients who had floods in a basement. And look, if it’s, you know, if it’s water damage, all right? May, maybe you can salvage things, but when you get sewage in there, I mean, they have to be tossed. So now, now you have problems. So, you know, they should be kept at the business location or some central, you know, record keeping location if, if outside of the, the business location. But you know, you may wanna invest in, you know, a safe or, or something. Just make sure that you know it, it’s not in a place that’s likely to get destroyed, and it’s in a place where, you know, no one’s likely to confuse it with other records that that could be thrown out.

VANNOY:

Any guidance. So in it’s 2022, right? So a lot of people, you know, plenty of people still like paper will print digital documents to put it in a safe or if I’ll get it somewhere. But a lot of people will be thinking, oh, why would I, why would I create paper when I can just have all this in the cloud? What, what guidance do you give for digital? And, and versus paper, physical, et cetera.

SHENKER:

So I think it’s a great idea to, you know, scan in these records if that’s what you wanna do. I mean, depending on the number of employees, that could be a whole lot of data. But even if you’re doing that, you should still retain the originals. Most courts have a rule where, you know, if there’s an original available, that’s the document that be used in court. But, you know, look, backing them up, scanning them in is a good tool because if those originals ever get lost or destroyed, then the electronic scans, those become the best evidence and would likely be admissible because, you know, so yeah, definitely a good idea to back things up. And, and look, sometimes the records might only be electronic. You know, lots of companies use, you know you know, cell phone apps or you know, computer apps to track time. So there is no handwritten time sheet or punch card. It’s all electronic. And so that, that’s fine. Those are great records too.

VANNOY:

Yeah, I mean, in, in our case, you know, we, so we have time to 10 software that helps companies, you know, stay FLSA compliant. You’re not gonna print out all those punches, scan them, and then store them. You’re gonna, you’re just gonna store the punches in that, in that time date. Right?

SHENKER:

Exactly. And then I think the o the only other

VANNOY:

Go ahead. But, but to your point if I, if I have a, if I have a, a, a proof that I emailed you a job offer, but, and, and, and later there’s a dispute and I don’t have your reply, I don’t have your electronic signature that would be considered beneficial evidence. It’s like, okay, you showed the employee that you sent it, but you have no proof that they actually read it or understood it and received it. Right. So e even as, no matter how digital we are, anything that gets signed or some acknowledgement really should it, if you’re gonna go digital, which I would be my preference, what I do in, in our businesses is you, you scan it and you stick it in the cloud. Right?

SHENKER:

Exactly. Exactly. Yeah. And then I think real quick, the only other record keeping piece we have under the FLSA is the required posting. That’s, you know, it is something that should be posted in a conspicuous place where employees go like, you know, a lunchroom or employee lounge. The D o L has their this you know, their poster on their website. I imagine, you know, I’m sure as Asure, you know, it can provide those to clients who ask as well. You know, there’s

VANNOY:

All of our clients, we, we, we, they, they get compliance posters to put their breakthroughs. Yeah. Cause

SHENKER:

Right, this isn’t the only

VANNOY:

One more specifically what that poster is and why it’s required.

SHENKER:

Yeah. So the poster, you know, most people will never read it. What you probably will see in biggest terms are the word, you know, fair Labor Standards Act, and you’ll see 7 25 per hour. So it’s explaining what the minimum wage is, and it also has, albeit in small writing some, you know, general information about what employees are entitled to receive in terms of minimum wage and overtime it’s kinda like an overview of, of the FLSA for, for employees. And so again, it’s something I wouldn’t suggest, you know, as an employer, you don’t need to create something new, but, you know, this will go, you know, in whatever wall you have that has, you know, the other federal posters like, you know, the F M L A poster and you know, other federal posters and, you know, most states have their own, you know, state versions, you know, before we know it, we’re gonna be, you know, covering the whole walls, you know, in, in the offices with these posters. But again, important to put up there in, in, in lawsuits that I deal with, you know, this is a discovery request. Show us where you you post the FLSA no notice, you know, the poster it’s important. It, it goes to show that you’re a company that takes its obligations seriously.

VANNOY:

So this one is a legal requirement, so make no mistake, you need to have the poster. And as long as in a, a prominent visible place for employees doesn’t have to meet the front of the store, could be the break room, could be the back door, it could be wherever. But you gotta do it how, how it, it also implies the age of the law because what, what is the legal obligation for the poster requirement for virtual employees,

SHENKER:

Right? So that’s something where, you know, I would even suggest if you have virtual employees, then you can get these posters, you know, in electronic form and, you know, put them all together and, and email them to the employee. Because yeah, if, if they’re not coming in, you know, that’s something where you’re not gonna be able to show them to show the posters to them. But I think a best practice is, you know, all the posters that, and especially the f LSA one, we already know it’s, you know, available electronically. It’s on their, the DOLs website, you know, just send it to them. There’s not, you don’t need to explain it to them. You don’t need to, you know, walk through or read it with the employee, but the fact that you’re providing it to them is, is what really counts.

VANNOY:

Yeah. Email and or your company intranet if you’re virtual company, right? You have other electronic ways of communicating.

SHENKER:

Communicating, right. Right. Yeah. A lot of these are posted on company intranets and, you know, have a link where they, you know, the employees can go to all the posters and such. So it’s still made available.

VANNOY:

Brian, let’s, let’s move to the, maybe the last topic here. The, the exiting employee. One of the questions we get a lot about is severance are you are really required to provide it. Does what, what does FLSA, if anything, have to say about it? If you’re gonna do it, you know, what can be included, what not included? Take us through that.

SHENKER:

Yeah, so severance of, well, so just to define severance payment, right? That’s a payment you’re going to make to a terminated employee at, at the end of their employment. Typically, you’ll be paying them some amount of money. They’ll be, you know, signing a general release, releasing the company of any claims. So the first part is severance pay is not required by the FLSA or for most other laws for that matter. There are probably only, you know, two circumstances I can think of when it might be required. One would be, you know, some states have laws that if you’re doing a, you know, large layoff of a certain number of employees, there might be some severance payment needed to be made. Those are few and far between. And also where there’s an agreement, right? If you have an employment contract with with an employee who you know, and it calls for severance, that there’s an instance where you’d be required to make it, or, you know, if you have, you know, a policy, something else that, that guarantees it.

 But you know, what are, you know, going into, you know, what the terms are that, that we would put in there. So obviously the, the first two are the most basic, right? The company is gonna pay the employee some amount in exchange for the employee releasing claims that that’s what severance is really about at the end of the day, because, you know, what the company wants to make sure is that this employee, you know, won’t be able to assert any future claims. Now, we’ll get into it, you know, whether you wanna do this for every employee, just high level employees, or, you know, there might be individual circumstances that call for it. But you know, there’s no real guideline for how much should be paid. It needs to be something of value. Many companies go with the one to two weeks per of severance, per year of service.

You know, that, that’s fine. And, you know, so what, what are some of the other terms that we see? You know, sometimes the company will agree to pay, you know, for COBRA continuation benefits for some period of time, the employer will agree on the language of of a reference for a potential new employer. And, you know, but there are other things, right? The, the employer could include a confidentiality provision in there, or, you know, if there was previously some type of restrictive covenant, like a non-solicitation, you know, that can go in there, or, you know, the employee will affirmatively agree that they will abide by the agreement that they previously signed. You know, that’s helpful in enforcing a restrictive covenant if you have an employee at termination, getting payment and then agreeing once more to what they’ve already you know, previously agreed to in a prior agreement.

 And so another thing, you know, return of company property is another provision we put in there, right? You don’t wanna pay this person’s severance until you get your company you know, laptop back or, or other, you know, trade secret information. So, you know, those are all things that, that are part of it. You know, and, and real quick, I know we’re running out of time, but you know, my general take is that these shouldn’t be offered to every single employee. When we talk about severance, typically we’re considering it with high level employees, you know, management, you know, but there could be situations where you give it to someone else. Perhaps you’ve terminated someone who’s, you know, made some claims or, you know, alluded to, you know, that they have some unpaid wages or they’re gonna go see an attorney. You know, do you wanna, you know, offer them severance to avoid, you know, any potential issue down the road? You know, again, the company knows its employees better than you know, you or I do, but you know, you need to weigh the, the pros and cons of that. If you give someone a severance agreement, they might take that to an attorney to review, and then the attorney might say, oh, well, Johnny, you, you have a lot of claims here, don’t, you know, let’s negotiate more.

VANNOY:

Even they know they’re guilty, they’re offering to buy you off, right? I mean,

SHENKER:

Right. So that’s why, you know, you want it to be in the right scenario because there are certain times where offering severance, can I say backfire? Because, you know, it, it enlightens the employee that they might have a claim or there’s some concern on the company’s end. But on the other side, there are companies that, you know, make it their policy that all individuals that this level or higher will be offered severance. It’s one way to, you know, split amicably with people. It’s, it also provides, you know, the you know, a good way of avoiding lawsuits because right in that severance, they’re agreeing, they’re not gonna sue you for anything related to their employment employment. So, so there, there’s certainly effective tools that, that can be used in the right situation.

VANNOY:

Yeah. Okay. Let’s touch on one last topic here Brian. So employee leaves, whether it’s good terms or bad terms they’re, they’re choosing or you are choosing what, what things can and cannot be withheld. And I’m thinking things like commissions paid time off p PTO or vacation tips company property. Can I just charge you for it instead of returning? I mean, what, what, what are, again, we’ll never hit all the use cases, but, but paint a picture for what, what are the basic <inaudible> here?

SHENKER:

So the first place I’d start is that they should be paid all their wages in their last paycheck, right? That if they worked, even if they’re, you know, even if you have an issue with them holding onto property, it’s never, you know, company property. You don’t wanna say, Hey, I’m only giving you your paycheck if you return this property. The FLSA stands alone, and the F S A requires you to pay these, the employee for their work. So, you know, I’ve seen this happen where, you know, a $500 paycheck or a thousand dollars paycheck, you know, gets withheld or, you know, part of it gets withheld. And what could have been resolved for a few hundred dollars leads to a, you know, a lawsuit that costs the company, you know, exponentially more than that. So the, the first issue is, you know, that, that that final paycheck should be paid and without deductions, right?

Even, you know, the LSA says that we can deduct, you know, things from the paycheck, but only for things that will benefit the employees. So if they’ve taken company property, you go about your own way of getting that back. You don’t deduct for, you know, say we’re deducting, you know, $500 for this, you know, company’s cell phone, you haven’t returned. We’re, we’re not gonna touch that last wage. Then we get into commissions, which are also wages. And I think we’ve talked about this before, that, you know, when, when we want commissions, you know, documented, we want a commission agreement, because one of the most important parts of that is, you know, what happens on termination, right? The commission agreement should say, you know, when commissions are earned and what happens on termination. So typically commissions that were earned but not yet paid, will be owed to the employee. Commissions that have not been earned at the time of termination typically do not need to be paid. And that’s

VANNOY:

A, that’s a, that’s a deep ocean right there because and, and we don’t have to spend too much time on this, cuz I know we’re a, a short on time, but imagine you’re paying a sales rep, that sales rep probably thinks that they earned their commission when they, the customer signed the contract. But if your, if your policy says they earned commission, when that customer actually pays their first invoice, then, and they’re not employed when that customer pays the invoice, but they signed the contract, you are wide open for a legal dispute there if you don’t have really clear documentation.

SHENKER:

Yeah. And that, and that happens, and, and that’s why, you know, the company could even be right in that scenario that based on, you know, PAC tax practices, that’s not something they pay out. But if it’s not something that’s defined in that document that’s right, you’re, you’re gonna have you know, issues or a claim because, you know, commissions, sometimes they’re small, but sometimes they’re substantial. And so don’t expect an employee to, you know, voluntarily just walk away from potentially, you know, thousands of dollars on the last commission. And, and, you know, that often, you know, starts off, you know, you know, a rolling ball of, well, there are other issues and PTO o you mentioned, right? You know, have they been paid out, you know, they’re accrued pto o So, you know, one of the things, you know, the FLSA does not govern paid time off.

It does not require it P T O is typically either a state law issue or if not governed by state law. It’s really, you know, just up to the employer what they’re going to do. So that’s why, again, documentation, you, you want a PTO o policy that explains what happens on termination. Because yeah, that, that’s one of the big areas besides, you know, commissions and the last paycheck. PTO is one of those things where so often I have companies saying, I just fired this person, and now they’re saying they’re entitled to, you know, this amount of pto. And I say, all right, well let’s look at your your employee handbook or your PTO policy and oh, you know, we don’t have one. Or it doesn’t say what happens in this scenario, that’s a problem, right? So you wanna have those things defined in advance so that, you know, if they’ve accrued, you know, 10 hours of pto but have, you know, have not used it, alright, that might, you might owe them, you know, 10 hours of pto. But you know, if you, you, you know, maybe you have a provision that, you know, they forfeit their PTO if they quit and don’t provide, you know, x number of weeks notice, you know, in certain states, you, you, you can put in a provision like that. And so, you know, if you have a provision like that and this employee just quit and walked off the, the job one day, now you have a valid reason why, you know, you’re not gonna pay that PTO out. So, so yeah, those are, you know, important things that,

VANNOY:

So PTO is a big one. Commissions are big one that we see a lot. And then the last one, and you hit on it, that is, is company property. You know, if you’re a small business owner and you’re, and you’re, and you’re struggling to stay alive, it, it’s reasonable that you would expect that a thousand dollars laptop to be returned to you before you pay them. But FLSA, you said it stands alone. You cannot break the law and also put your, put yourself in the employee’s position. You, you think that you gotta get that laptop back before you pay them. Cuz that’s the only leverage you have. They might think the same thing, right? You know, if I give them the laptop back, are they, are they gonna pay me? Right? Right. Because the, the relationship ended, presumably somebody’s not happy about that. So just, you can’t break the law. You have to, you have to file FS FLSA no matter what. Find another means to recover. Brian, anything that you would say, just to, to to, to kind of wrap up our conversation here on, on pay compliance for FLSA?

SHENKER:

Yeah, no, I, I think just touching on the very end, right? We started at the beginning of the employment relationship. This is the end. And look, there, there are pitfalls everywhere, but just, you know, keeping with where we are at the end, try to avoid pay issues at the end of employment because from my personal experience, these small issues can turn into costly lawsuits. So, you know, have clear policies about what happens at termination and, you know, don’t play around with employees, pay at the end, you know, a couple hundred dollars here or there, you know, it’s not going to make or break a company. But for the employee that could be, you know, very meaningful amount of money and that might spur them to go to the D O L or to a private attorney. And then before you know it, you’re dealing, you know, with one of these unpaid wage losses,

VANNOY:

Great compliance at the end of a working relationship starts at the beginning of the relationship. So goes right back to, goes right back to job descriptions, employee handbook, employee communication, documentation, record keeping, that sets you up for, for the, the best outcomes possible when it, when it comes that relationship. Now, I’ll use that as a segue. This stuff is complex in this is what Asure does. So we have three different levels of HR service. If you were gonna hire a SHRM certified HR professional, you’re easily looking at 80, 90, a hundred, 10, $120,000 a year for truly pennies on the dollar. We can have services where we can be your virtual HR department in the simplest providing and building out an employee handbook and job descriptions to get compliant all the way up and through. We are your virtual HR department and your employees call us with all their questions and we become an extension of your team. Brian, do you wanna take just 30 seconds and explain you know, your role and your firm and how you help clients?

SHENKER:

Sure. So as Mike mentioned, I’m an attorney with Jackson Lewis. We’re a nationwide law firm. All we do is labor and employment representation of companies. We have over 60 offices, over 900 attorneys all throughout the us. And one big part of what we do is, you know, wage and hour FLSA compliance. It’s a big part of what I do litigating these cases. You know, hopefully you, you use Asures you know, compliance resources to avoid the issues. But you know, you, you can’t necessarily avoid lawsuits sometimes. You need to defend them. And you know, we’re always here for that.

VANNOY:

Brian, I always learn every something new every time I talk to you. Thanks for joining me today, and thanks for everybody else for joining until next week’s show. Thanks for your time.