04.27.10

If I only had an Intern: Ever wanted to hire a Summer intern?

Posted in Education, Employment and Labor at 2:14 pm by Michael Dalrymple

If I only had an Intern:  Ever wanted to hire a Summer intern?

The Fair Labor Standards Act (FLSA) requires employers to pay almost all employees for the services they perform. One possible exception is interns.  The Department of Labor will consider an intern to be an employee unless each of the factors below relating to trainees is met. Importantly, if an intern does not satisfy each of the six factors, he or she must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek. 

The Department of Labor permits For-profit private sector internships to be unpaid if the intern’s work  serves only his or her own interest an employee of another who provides aid or instruction. This commonly applies to interns who receive training for their own educational benefit.

The following six criteria must be satisfied before classifying someone as an unpaid intern: 

1.         The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2.         The internship experience is for the benefit of the intern;

3.         The intern does not displace regular employees, but works under close supervision of existing staff;

4.         The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5.         The intern is not necessarily entitled to a job at the conclusion of the internship; and

6.         The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If each criteria is satisfied, the intern will not be considered an employee and the FLSA’s minimum wage and overtime provisions do not apply to the intern. The Department of Labor provides the following guidance when structuring an internship program. 

Similar To An Education Environment And The Primary Beneficiary Of The Activity

In general, the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience (this often occurs where a college or university exercises oversight over the internship program and provides educational credit). The more the internship provides the individual with skills that can be used in multiple employment settings, as opposed to skills particular to one employer’s operation, the more likely the intern would be viewed as receiving training. Under these circumstances the intern does not perform the routine work of the business on a regular and recurring basis, and the business is not dependent upon the work of the intern. On the other hand, if the interns are engaged in the operations of the employer or are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s minimum wage and overtime requirements because the employer benefits from the interns’ work.

Displacement And Supervision Issues

If an employer uses interns as substitutes for regular workers or to augment its existing workforce during specific time periods, these interns should be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek. If the employer would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will be viewed as employees and entitled compensation under the FLSA. Conversely, if the employer is providing job shadowing opportunities that allow an intern to learn certain functions under the close and constant supervision of regular employees, but the intern performs no or minimal work, the activity is more likely to be viewed as a bona fide education experience. On the other hand, if the intern receives the same level of supervision as the employer’s regular workforce, this would suggest an employment relationship, rather than training.

Job Entitlement

The internship should be of a fixed duration, established prior to the outset of the internship. Further, unpaid internships generally should not be used by the employer as a trial period for individuals seeking employment at the conclusion of the internship period. If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA. 

See Department of labor, Wage and Hour Division Fact Sheet 71.

For more information about this or other legal topics, please e-mail Michael Dalrymple.

http://www.dalrymple-law.com

04.16.10

Four Essential Components in a Basic Estate Plan

Posted in Estate Planning at 8:30 am by Michael Dalrymple

Four Essential Components in a Basic Estate Plan

Everyone knows they should have a will, but a will alone is not a complete estate plan.  The four components below constitute a basic estate plan that everyone should have in place.  Based on individual needs and assets, other components may be necessary. 

1.  Assist your loved ones to help you in a time of need by maintaining a document that collects and organizes your emergency and essential information

            This is not a legal document, but is necessary to family members, friends, or other loved ones who need to implement either your durable power of attorney, healthcare advanced directive, or your will.  This document lists your accounts, account numbers, various financial assets, properties, and debts.  In short, it contains all of the information needed to maintain your estate.  The information listed in this document will likely change frequently so you must update the document as appropriate. 

2.  Designate a person to handle financial and legal issues by executing a durable power of attorney

            A durable power of attorney identifies one or more individuals to make important decisions on your behalf, but only if you are incapacitated.  It becomes effective when you experience a disability, incompetency or incapacity that prevents you from making decisions.  This document should provide for decisions relating to property, financial, management, banking, business and other matters.

3.  communicate your healthcare related wishes and designate an individual responsible for carrying out those wishes by executing a Healthcare Advanced Directive

            This document insures that your healthcare related wishes are known and that a representative of your choice is responsible for implementing those wishes.  It takes the place of a living will and healthcare power of attorney. 

4.  Distribute your assets to your loved ones as you wish and with the minimal amount of state involvement by executing a will. 

            Finally, a will insures your possessions end up with the loved ones of your choice.  It also drastically reduces the work to be done by loved ones who are responsible for distributing your estate.  Just as important, it reduces the potential for family discord that may arise when your wishes are not known. 

Take the time to order your affairs by establishing and implementing a proper estate plan. 

For more information about this or other legal topics, please e-mail Michael Dalrymple.

http://www.dalrymple-law.com

04.14.10

Indiana DWD Unveils New Tools to Combat Unemployment Fraud and Abuse

Posted in Employment and Labor at 1:15 pm by Michael Dalrymple

The Indiana Department of Workforce Development unveiled two new tools to address unemployment fraud today.  Visit the link below to access these tools and learn more.

http://www.in.gov/portal/news_events/53221.htm 

For more information about this or other legal topics, please e-mail Michael Dalrymple.

http://www.dalrymple-law.com

04.12.10

The Timing of Wage Payments (3rd of 3 parts)

Posted in Employment and Labor at 10:57 am by Michael Dalrymple

The Timing of Wage Payments (3rd of 3 parts)

Indiana employers can get themselves into trouble by not paying their employees in a timely manner.  The penalties for not paying wages on time can include lost wages, punitive damages, costs and attorney’s fees.  This article briefly describes the requirements concerning when wages must be paid. 

Employers must pay wages to employees on their regular payday for each workweek. When a pay period covers more than a single week, employers must pay all wages on the regular payday for the workweek in which the pay period ends. In almost all cases, Indiana employers must pay their employees at least semimonthly or bi-weekly, but only if the employee requests the arrangement. Employers may not schedule paydays more than 10 days after the end of the regularly scheduled pay period. Payments must be made in lawful money of the United States, by negotiable check, draft, or money order, or by electronic transfer to the financial institution designated by the employee. 

If an employee is discharged or voluntarily leaves employment, the employer does not need to pay the employee the amount due the employee until the next usual and regular day for payment of wages, as established by the employer. This is also the case if work is suspended as a result of an industrial dispute.

Failure to pay employees their wages in a timely manner, whether during employment or thereafter, can expose the employer to a lawsuit for lost wages, punitive damages, costs and attorney’s fees.  Employers must pay a penalty of 10 percent of the amount due per day until the penalty reaches double the amount of damages. Combining the damages for actual lost wages with the mandatory punitive damages, the statutory requirement can result in an award of triple damages to the former employee. In addition, the former employee may recover costs and reasonable attorney’s fees.

If an employee voluntarily leaves their employment, they must provide their address or location to the employer.  If they fail to do so, the employer is not subject to penalties until:  ten days have elapsed after the employee has made a demand for the wages due; or the employee has furnished the employer with the employee’s address where the wages may be forwarded. 

For more information about this or other legal topics, please e-mail Michael Dalrymple.

http://www.dalrymple-law.com

04.07.10

Incorporating your small business

Posted in Uncategorized at 3:44 pm by Michael Dalrymple

If you are starting a small business and need to learn about the different types of corporations, the government published a very helpful guide just for you.  Click on the following link to access a wealth of information.   

http://www.business.gov/register/incorporation/?cm_mmc=GovDelivery-_-newsletter-_-0410-_-internal

For more information about this or other legal topics, please e-mail Michael Dalrymple.

http://www.dalrymple-law.com

What can be deducted from gross wages? (Part two)

Posted in Employment and Labor at 10:50 am by Michael Dalrymple

What can be deducted from gross wages? 

Whether you receive a paycheck or issue payroll, you are likely very familiar with the many deductions from gross pay.  Most of these deductions are for taxes or other benefits like social security and insurance.  An employer may also deduct other items from a paycheck, but only if specifically permitted and if all requirements are followed. 

Rounding

Regulations permit employers to round employees’ time worked (i.e., recording an employee’s starting and stopping times to the nearest five minutes, one-tenth of an hour, or one-quarter of an hour).  Although this actually constitutes a pay deduction, the protection for employees is that any such arrangement by an employer must average out so that the employees are fully compensated for all the time they actually worked. In other words, the “rounding up” of time worked must happen roughly as often as “rounding down.” Although minor differences between clock records and actual hours worked cannot always be avoided, major discrepancies should be eliminated as they raise doubt as to the accuracy of the records of the hours actually worked. As an enforcement policy, the Department of Labor typically does not question records which show an actual start time of up to 15 minutes before the clock-in time.  The Department will carefully review any difference greater than 15 minutes.

Permissible Wage Assignments

Indiana only allows deductions to be made from wages for certain reasons specified by statute and only if certain procedural safeguards are met. Deductions made from an employee’s wages generally are defined as a “wage assignment.” An assignment of the wages of an employee is valid only if the assignment is:

v         in writing;

v         signed by the employee personally;

v         revocable at any time by the employee upon written notice to the employer; and

v         agreed to in writing by the employer.

In addition, the employer must provide to the employee an executed copy of the assignment within 10 days after its execution.

Indiana law permits the following types of wage assignments: 

v         Premium on a policy of insurance obtained for the employee by the employer;

v         Pledge or contribution of the employee to a charitable or nonprofit organization;

v         Purchase price of bonds or securities, issued or guaranteed by the United States;

v         Purchase price of shares of stock, or fractional interests therein, of the employing company, or of a company owning the majority of the issued and outstanding stock of the employing company, whether purchased from such company, in the open market or otherwise;

v         Dues to become owing by the employee to a labor organization of which the employee is a member;

v         Purchase price of merchandise sold by the employer to the employee, at the written request of the employee;

v         Amount of a loan made to the employee by the employer and evidenced by a written instrument;

v         Contributions, assessments, or dues of the employee to a hospital service or a surgical or medical expense plan or to an employees’ association, trust, or plan existing for the purpose of paying pensions or other benefits to the employee or to others designated by the employee;

v         Payment to any credit union, nonprofit organizations, or associations of employees of such employer organized under any law of Indiana or the United States;

v         Payment to any person or organization regulated under the Uniform Consumer Credit Code for deposit or credit to the employee’s account by electronic transfer or as otherwise designated by the employee;

v         Premiums on policies of insurance and annuities purchased by the employee on the employee’s life;

v         The purchase price of shares or fractional interest in shares in one or more mutual funds;

v         A judgment owed by the employee if the payment is made in accordance with an agreement between the employee and the creditor and is not a garnishment under Indiana law.

Overpayment of Wages

If an employer overpays an employee, the employer may deduct the amount of the overpayment from the wages of the employee. Before doing so, the employer must give the employee two weeks notice. In addition, the employer may not deduct from an employee’s wages any disputed amount. A deduction by an employer for reimbursement of an overpayment of wages previously made to an employee does not constitute a fine or an assignment of wages.

When an employer makes a deduction for an overpayment from the employee’s wages, the employer may not withhold the entire amount from a single paycheck if the amount is greater than 25 percent of the employee’s disposable earnings or the amount by which the employee’s disposable earnings exceed 30 times the minimum wage rate, whichever is smaller. However, an employer may deduct the entire amount of a single gross wage overpayment if that overpayment was ten times the employee’s gross wages due to a misplaced decimal point.

Impermissible Deductions

It is illegal for any employer to impose a fine against an employee and to deduct the fine from the employee’s wages for any reason.  As noted in my previous article, the cost of “facilities” which are provided primarily for the employer’s benefit, which includes the cost of uniforms and of their laundering where the nature of the business requires the employee to wear a uniform, can not be included as wages.  If the employer requires an employee to pay this cost, the payment is treated as a deduction from the employee’s pay. If that deduction results in the employee receiving less than the minimum wage, the deduction is not permitted as it will violate the minimum wage requirements.

This problem is common in the restaurant industry, where employers provide uniforms, but require employees to launder the uniforms on their own time and at their own expense. When those employees are paid the bare minimum wage, the employer has been found liable for the reasonable cost of laundering and an estimate of the time spent by the employee performing this task. If, however, the employee is paid sufficiently more than minimum wage to cover this cost, there is no liability. A similar calculation is required if an employee is required to pay for tools and/or other supplies necessary for carrying out the employer’s business, or to pay for transportation required by the employer as a necessary part of employment, or to pay for any other normal and customary business expense of the employer. 

For more information about this or other legal topics, please e-mail Michael Dalrymple.

http://www.dalrymple-law.com

04.02.10

What are Wages: Part One

Posted in Employment and Labor at 11:56 am by Michael Dalrymple

What are wages?

This is the first of a three-part article on wages. 

Everyone knows what constitutes a wage, right?  It is not as obvious as it seems.  The Fair Labor Standards Act (“FLSA”) defines wages and specifically provides for what an employer must include in an employee’s wage and the permissible exclusions.  So why is this important?  An employee’s wage determines their amount of overtime. 

Non-Cash Payments are Wages

The FLSA defines the term “wage” to include things other than just an employee’s paycheck.  It includes the “reasonable cost” to an employer of furnishing an employee with such things as board, lodging, or “other facilities,” if such board, lodging, or other facilities are customarily furnished by the employer to its employees.   The “reasonable cost” cannot exceed the fair market value of what is provided to the employee.  Moreover, the employee’s acceptance of the board, lodging or other facilities must be voluntary.  The term “other facilities” includes: 

v         Meals furnished at company restaurants or cafeterias or by hospitals, hotels, or restaurants to their employees;

v         Meals, dormitory rooms, and tuition furnished by a college to its student employees;

v         Housing furnished for dwelling purposes;

v         General merchandise furnished at company stores;

v         commissaries (including articles of food, clothing, and household effects);

v         Fuel (including coal, kerosene, firewood, and lumber slabs);

v         Electricity, water, and gas furnished for the noncommercial personal use of the employee; and

v         Transportation furnished for employees between their homes and work where the travel time does not constitute hours worked compensable under the FLSA and the transportation is not an incident of and necessary to the employment. 

The cost is not a wage if the employer furnishes the “ other facilities” or items primarily for its own benefit or convenience. Examples of this that have been found to be primarily for the benefit or convenience of the employer include: 

v         Tools of the trade and other materials incidental to carrying on the employer’s business; and

v         The costs of uniforms and their laundering.

Importantly, if an employer provides non-cash compensation, its reasonable costs must be included in the regular hourly rate for the purpose of calculating overtime.

For more information about this or other legal topics, please e-mail Michael Dalrymple.

http://www.dalrymple-law.com