August 22 Tip of the Week

“Wage and Hour Requirements”

Employers are subject to a number of laws that govern their relationships with their employees.  These laws have an effect even before the employment relationship begins.  There are anti-discrimination laws, wage posting requirements, limitations on the use of criminal background check (to name only a few) that apply during the hiring process.  Once an employer has made the decision to hire an employee, however, other laws apply.  What used to be the simplest and most clearcut laws are the ones that apply to wage and hours – employees must be paid the minimum wage and must be paid at time and one half that wage for all hours worked over 40 in a week.  However, as life has become more complicated so have the laws that govern the employment relationship.  The clearest example of this is the new approach to wages paid to employees. 

            An example of this heightened approach to wage and hour laws is the newly enacted Nevada wage and overtime rules.  In a 2022 Annual Bulletin posted on April 1, 2022 (and no, it is not an April Fool’s joke), Nevada’s Office of the Labor Commissioner informed employers that they must pay employees overtime at one and a half times the employee’s regular wage rate “whenever an employee who is paid less than [one and a half] times the applicable minimum wage rate works more than 40 hours in any workweek or more than 8 hours in any workday, unless otherwise exempted.”  To further complicate this directive, whether an employee is eligible for “qualified health benefits” also impacts the employer’s obligation to pay overtime:

Employees who earn less than $14.25 per hour (offered qualified health benefits) or less than $15.75 per hour (not offered qualified health benefits) are eligible for overtime at one and half times the employee’s regular rate of pay for: 

• Over 8 hours of work in a 24-hour period; or
• Over 40 hours of work in a work week.

Nevada Office of the Labor Commissioner Bulletin, issued April 1, 2022, https://labor.nv.gov/uploadedFiles/labornvgov/content/Wages/2022%20Minimum%20Wage%20Bulletin%2004.01.2022.pdf.   

The purpose in highlighting this particular wage bulletin is to remind employers that wage and hour issues are no longer as simplistic as they once seemed – a fair day’s pay for a fair day’s work.  State and federal laws have redefined what constitutes a “fair day’s pay” – often in ways that a reasonable employer may never have anticipated – leaving employers more susceptible to wage and hour claims.  Factors to consider when paying employees include: 

• What constitutes wages for the purpose of overtime?
• How to account for commissions and other discretionary and non-discretionary bonuses when determining overtime pay rates?
• What constitutes time worked?
• Does eligibility for health insurance impact minimum wage and wage payment requirements?
• What are the minimum salary requirements for exemptions to apply?

Unfortunately, that list is not exhaustive and the burden on employers with employees in locations in multiple states have an even harder time ensuring that they meet the various wage and hour and wage payment requirements in each state.  And, to top it off, a failure to comply with those requirements can lead to expensive and time-consuming wage and hour claims and lawsuits.  The most difficult aspect of these types of claims are that they generally do not apply to just one employee and they are ripe for class action lawsuits, making them even more expensive and onerous to employers.

Working with your payroll provider is one way to ensure that you are complying with the wage and hour laws in each of the states that you operate.  Another way to protect yourself is to have a handbook that is legally compliant in all the states in which you have operations.  MyHRcounsel can assist you in developing an employee handbook that addresses the terms and conditions of employment for all your employees and includes sections on wages and hours, pay rates, and benefits.  If you do not have an employee handbook or if it has been years since you put together an employee handbook that, once it was completed, was placed on a shelf never to be looked at again, now is the time to draft one or to replace your existing outdated plan.  Reach out to us at myHRcounsel and we can assist you in developing an effective and compliant employee handbook.  In the meantime, please send all wage and hour questions our way and we can assist you in ensuring that you are following the most up to date wage and hour requirements in the states in which you do business.