MBA News - Quiz

Fair Labor Standards Act (FLSA) and nonpaid internships: Quiz

MBAHRO — Wed, 19 May 2010 16:12:00 GMT

Fair Labor Standards Act (FLSA) and nonpaid internships: Quiz

The Fair Labor Standards Act (FLSA) requires that nonexempt employees receive at least minimum wage for all hours worked and must also receive time-and-a-half pay for all hours worked more than 40 during the workweek.

While the FLSA doesn't define what an intern is, nor provide an exemption from minimum wages or overtime for interns, it does define an employee as "any individual employed by an employer." The definition of "employ" under the FLSA "includes to suffer or permit to work."

Under federal law, for-profit organizations must pay workers unless the position fits six criteria. The following quiz helps to illustrate the six criteria.

Would the employee be correctly classified as a “Coordinator”, “Trainee”, or “Intern”?

For an unpaid internship to be lawful under the Fair Labor Standards Act (“FLSA”), the intern must be classified as a “trainee” rather than an employee.

Does the training need to be similar to that which would be given in a vocational school?

Yes.

Is the internship program for the benefit of the company to leverage willing people to help the company in exchange for experience?

No, the training is for the benefit of the trainee.

Can you use the unpaid internship program to delay hiring normal employees?

No, the trainees cannot displace regular employee positions.

Are you required to make some kind of hiring offer to unpaid interns at the end of the program, even if you know they won’t take it?

No, trainees are not necessarily entitles to a job at the completion of the training period.

To ensure compliance, employers offering unpaid internships should structure the position in a way that the intern receives the full benefit of the experience.

Failing to comply with wage and hour laws can lead to serious FLSA administration errors that could cost your business thousands in fines. Tools like the FLSA Compliance Kit can help you navigate through every FLSA regulation from child labor laws to timekeeping discrepancies.

Modern Business Associates frequently deals with designing internship programs. As a Professional Payroll and HR outsource organization, our clients rely on us to help them effectively deal with these kinds of topics.

Pay Deductions Quiz: Uniforms for a minimum wage employee.

MBAHRO — Fri, 16 Apr 2010 17:09:00 GMT

Pay Deductions Quiz: Uniforms for a minimum wage employee.

You hire a minimum wage employee to work as a cashier at your auto parts store. The employee signs an agreement to have $20.00 deducted from her first check to cover the cost of a uniform. You then, as agreed upon, deduct $20.00 from the employee's first check to cover the cost of the uniform.

Have you violated any Fair Labor Standards Act (FLSA) requirements?

Here, you have violated the FLSA's requirement that a nonexempt employee be paid the minimum wage for each hour worked. It makes no difference that the employee agreed to the deduction. Because the employee is a minimum wage employee, there was nothing that could legally be deducted from the employee's wage to cover the cost of the uniform. Any deduction puts the employee below the minimum wage level.

Modern Business Associates frequently deals with payroll issues. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of topics including deductions and minimum wage laws.

Pay Deduction Quiz: Aprons for the hardworking cook.

MBAHRO — Tue, 06 Apr 2010 17:16:00 GMT

Pay Deduction Quiz: Aprons for the hardworking cook.

A cook earns $10.00 per hour and works 45 hours in the workweek. Therefore the cook will have wages of $400.00 in regular pay and $75.00 in overtime pay. The employer reasons that the cook earns well above minimum wage and decides to deduct $5.00 from the cook's weekly paycheck for a replacement apron and hat although the cook has not agreed in advance to the deduction.

Have you violated any FLSA requirements?

Probably. Note that the deductions may not cut into any pay for overtime hours. Deductions made during weeks when overtime is worked will be particularly scrutinized to ensure that the employer is not attempting to evade the overtime requirements of the FLSA.

Pay Deductions Quiz: Uniforms for a minimum wage employee.

MBAHRO — Sun, 28 Mar 2010 18:30:00 GMT

Pay Deductions Quiz: Uniforms for a minimum wage employee.

Have you violated any Fair Labor Standards Act (FLSA) requirements?

You make the call: Is this gas station employee non exempt, vs exempt?

MBAHRO — Thu, 11 Mar 2010 23:00:00 GMT

You make the call: Is this gas station employee non exempt, vs exempt?

Two decisions from different federal appellate courts illustrate the potential uncertainty in classifying an employee as an exempt employee. You make the call: Is this gas station employee non exempt, vs exempt?

In Thomas v. Speedway SuperAmerica, LLC1, the court pondered whether the store manager of a chain of gas station-convenience stores was properly classified as an exempt employee.

The key issue in the case was whether the employee's primary duty was management.

She spent approximately 60 percent of her time on non-managerial tasks such as stocking merchandise, sweeping floors, cleaning bathrooms, operating the register and clerical duties.
However, she also hired, trained, disciplined, scheduled and evaluated employees.
She recommended increases, most of which were approved, and terminated some employees without prior approval from her district manager.

Is this gas station employee exempt?
Based on these facts, the court concluded that the employee's primary duty was management and that she qualified as an exempt-executive employee.

In Rodriguez v. Farm Stores Grocery, Inc., the court considered whether managers for a drive-through grocery store chain were non-exempt employees.

The issue in this case turned on whether the employees' primary duty was management.

One store manager testified that in a typical week, he spent an average of 30 percent of his time cleaning, 50 percent on customer attention or service, 10 percent on merchandise receiving and 10 percent on stocking merchandise.
Other managers conceded that they spent some time each week on managerial tasks, but all insisted it was not the majority of their work.
The store managers further testified that they lacked authority and discretion over their stores and employees. For example, evaluation forms they signed were actually completed by district managers and they had to seek permission from a district manager before making management decisions.

Is this gas station employee exempt?

Based on these facts, the appellate court found that the jury reasonably concluded that the store managers' primary duty was not management. Therefore, these employees were entitled to overtime pay.

Whether a given employee is properly classified as exempt is a factual determination. Effective Aug. 23, 2004, the DOL issued new regulations governing the white-collar exemptions. While the cases outlined here apply the older regulations (because few appellate court cases have been decided under the new regulations), the issue of whether management is the primary duty of an exempt employee remains crucial under the new regulations. In both cases, however, the courts refused to adopt an across-the-board rule that any employee who is responsible for a store location must come within the executive exemption.

Modern Business Associates deals with the non exempt vs exempt employee issues including keeping updated on recent statues and case law. As a Professional Employee Organization, our clients rely on us to help them effectively deal with these kinds of labor standards act issues.