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Employer Contingency Plans Must Factor In Federal Wage Laws

March 12, 2020, 7:47 PM

New Labor Department online guidance may help employers execute contingency plans during health emergencies, such as COVID-19, while remaining compliant with federal wage laws.

Relevant elements of wage and hour rules were considered in 15 questions and answers that address a range of scenarios and concerns, including those related to teleworking, wage-payment requirements, and joint employment, as well as volunteering leave and payment on termination.

Joint-Employment Concerns

Liability issues could arise for employers that supplement their workforce during the COVID-19 health crisis by relying on temporary employees from a staffing agencies if those workers are not properly paid, the guidance said. Liability would hinge on whether the employer and the staffing agency qualify as joint employers under a joint-employer final rule that is to take effect March 16, 2020.

Generally, the joint-employer final rule provides a four-factor test for determining when an entity is acting directly in the interest of an employer in relation to the employee, a situation that could establish joint employment. The rule, which provides examples for determining joint-employer status in different situations, notes that an employee’s economic dependence does not determine joint- employment status.

Examining Work Arrangements

Federal wage law does not prevent employers from implementing telework or flexible work arrangements, but it also does not relieve them of the requirement that they keep accurate hours-worked records for all employees, including those teleworking or engaged in other flexible work arrangements, the guidance said. Employers should work with such employees to establish work hours and recordkeeping, it said.

Alternative work arrangements also do not relieve employers of their responsibility to pay at least the minimum wage for all hours worked, regardless where the work is done, and to pay at least 1.5 times an employee’s regular rate of pay for all hours worked over 40 in a workweek to nonexempt employees, the guidance said.

Nonexempt employees generally must receive the required minimum wage and overtime pay amount for all hours worked, and the tool and equipment costs that employees may incur by working remotely must not reduce their pay below the required amount, the guidance said. Salaried exempt employees must receive their full salary in any week in which they perform any work, except in limited exceptions, it said.

Further, employers may encourage or require employees to telework as a public health measure or as a reasonable accommodation, but must not single out employees to telework or report to work for reasons prohibited by Equal Employment Opportunity laws, the guidance said, noting that employers should be accommodating and flexible with workers affected by government-imposed quarantines.

Alternative work arrangements and social-distancing options, such as staggered work shifts, should be considered for employees who are unable to work from home, the guidance said. Employers were encouraged to be “accommodating and flexible with workers impacted by government-imposed quarantines.” Additional paid time off for such employees might be another option, it said.

Private employers may direct exempt employees to take full or partial-day vacation or leave if the workplace closes, but the employees must be paid an amount equal to their guaranteed salary, the guidance said. Exempt employees without accrued benefits or with insufficient accrued leave would still have to receive their guaranteed salary to remain exempt, despite any absence they must take due to workplace closure, it said.

Navigating Volunteering Red Flags

Covered nonexempt employees generally cannot volunteer services for their private, for-profit employers. Such employees must be paid at least the hourly minimum wage.

Those who volunteer in an emergency-relief capacity to private nonprofit organizations for civic, religious, or humanitarian reasons, without the intent to be paid are not considered employees who must be paid under federal wage laws, unless they are employees of such organizations and would be performing the same services that they are employed to perform.

Those who volunteer their services to public agencies, such as a state, city, or county government in an emergency capacity are not owed wages under federal wage laws, as long as they offer their services freely and without coercion; they perform such services without the expectation of being paid; and they are not employed at the agency where they are volunteering and engaged in the same work they are paid to do.

To contact the reporter on this story: Christine Pulfrey in Washington at cpulfrey@bloombergtax.com

To contact the editor responsible for this story: Michael Trimarchi at mtrimarchi@bloombergtax.com

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