Wage and hour rules can be tricky

Laws covering wages and hours can trip you up. Consider, for example, the common practice of giving employees time off in place of overtime pay. It is not (legally) as easy as you may think.

Dave owns a small lawn-care business and employs Judy, who normally works 40 hours a week. Dave pays her weekly. One week, Dave's business has a rush of work. He makes Judy an offer: "If you work an extra 10 hours this week, you'll only have to work 30 hours next week, and you'll get your regular paychecks." Judy accepts the offer.

This sounds reasonable to most employers and employees, but there's a problem. Under the wage and hour laws, it's generally illegal to simply give an employee 1 hour off for each hour of overtime he or she works.

Overtime and comp time Wage and hour laws entitle employees to receive time-and-a-half pay for overtime. Giving workers hour-for-hour comp time isn't an acceptable alternative.

You do, however, have a few options for avoiding premium overtime pay by giving a worker time off instead of money. One way is to rearrange an employee's work schedule during a workweek.

For example, Susan, a landscape architect at a small firm, normally works an 8-hour day, Monday through Friday. One week, Susan works longer days to finalize her blueprints, so she can present them to the client by the deadline. That week, Susan works 10 hours a day, Monday through Thursday. The firm gives Susan Friday off and pays her for a 40-hour week at her regular rate of pay. This is legal because Susan hasn't worked any overtime as defined by federal law. Only the hours over 40 hours a week count as overtime hours.

If an employee works more than 40 hours in one week, sometimes you can reduce the worker's hours in another week so the amount of the employee's paycheck remains constant. This is legal if you meet two conditions.

* First, you must give the time off within the same pay period as the overtime work. * Second, you must give the employee an hour and a half of time off for each hour of overtime worked. Here's an example:

The Riverdale Country Club and Golf Course employs Darren and pays him $560 at the close of each 2-week period. Because of a week-long golf tournament, the superintendent wants Darren to work longer hours during the week to maintain the course's playability with the heavy traffic. However, the superintendent doesn't want to increase Darren's paycheck. Therefore, she asks Darren to work 50 hours during the week of the tournament and gives him 15 hours off the next week. Because Riverdale pays Darren every 2 weeks, it may properly reduce Darren's hours the second week to keep his paycheck at the $560 level.

Since regulations in some states may further restrict the use of comp time, check with your state's labor department. Besides requiring you to pay a premium rate for overtime work, wage and hour laws require you to:

* Pay an employee at least the minimum hourly wage--unless he or she is exempt from the laws * Pay for all the time an employee works * Pay men and women equally for the same work * Follow special rules if you employ workers younger than 18 years of age.

Exemptions Figuring out if an employee is exempt from the minimum-wage and overtime-pay requirements can be confusing. Most employees who are exempt fall into one of five categories: executive employees, administrative employees, professional employees, outside salespeople and people in certain computer-related jobs. For a free booklet explaining overtime exemptions, go to the nearest office of the U.S. Department of Labor, or call (202) 219-4907.

Typical exempt jobs include a department head, credit manager, account executive, personnel director and executive assistant. Typical non-exempt jobs include a clerk, errand runner, secretary, inspector, bookkeeper and trainee. However, job titles alone do not determine whether an employee is exempt. The actual work relationship is what counts. Some employees are exempt from the overtime-pay requirements only--not from the minimum-wage requirements. These include, for example, taxicab and truck drivers, some commissioned employees and vehicle salespeople.

You must pay covered employees for any time that you control and that benefits your business. Generally, that doesn't include the time employees spend washing themselves or changing clothes before or after work, or meal periods when employees are free from all work duties. You do not have to pay employees for the time they spend commuting between their homes and the normal job site. However, you do have to pay for commuting time that is part of the job.

For example, if you run an irrigation repair service and require workers to stop by your shop to pick-up orders, tools and supplies before going out on calls, their workday begins when they check in at your shop.

Payment for on-call time is a bit complicated. You must count as payable time any periods when you require employees to stay on your premises while waiting for a work assignment.

If you require employees to be on call, but you don't make them stay on your premises, then two rules generally apply:

You do not count as payable time the on-call time that employees can control and use for their own enjoyment or benefit.

You do count as payable time the on-call time over which employees have little or no control, and which they can't use for their own enjoyment or benefit.

For example, a small-engine maintenance shop specializing in lawn-care equipment designates one of its mechanics to be on call each Saturday. A mechanic who's on call must remain at home near the phone and, for safety reasons, can't drink any alcohol. Since designated mechanics aren't free to use their on-call time as they please, it's payable time.

You can pay a different hourly rate for on-call time than you do for regular worktime--as long as you pay the minimum wage to which the employee is entitled.

Get details on wage and hour laws from federal and state labor departments. Employers who don't comply with these laws can be hit with costly penalties.

Fred S. Steingold practices law in Ann Arbor, Mich.

As of press time, Congress was considering a comp-time bill, called the Working Families Flexibility Act of 1997. The bill, as adopted by the House of Representatives earlier this year, would allow an employer--with the employee's consent--to offer comp time in place of money for overtime work. Comp time would be given at the rate of one and a half hours for each hour of overtime work. An employee could accrue up to 160 hours of comp time in a year.

The Senate is currently considering the bill and is likely to make some changes to it to meet President Clinton's objections. If political negotiations are successful, the bill may become law by the end of the summer.

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