What Must You Provide for Your Employees? Part I
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What Must You Provide for Your Employees? Part I

There are many regulations dealing with running a business. Here is an attempt at simplifying some of the regulations regarding provisions for employees

By Johnny Duncan

Government regulations are often times a burden for the small business owner and very seldom a blessing. We, in the United States, are bombarded with a new guideline to follow at every corner. In an attempt to curtail frivolous lawsuits while trying to protect the interests of the business (far reach, I know), our government keeps adding more and more to the law books.

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  • While you should review your local and federal regulations yourself, this three-part series will help to lighten the load by answering some of the most commonly asked questions:

    How Much Time Do I Have to Allow for Breaks and Lunch Periods for My Employees?

    Although some state laws require employers to provide meal periods and rest breaks to their employees, the Fair Labor Standards Acts, FLSA, includes no such requirement. Nonetheless, rest periods of short duration, running from five to about twenty minutes, are common in industry because they promote the efficiency of employees. Such rest periods must be counted as "hours worked" under the FLSA and thus compensable time consisting of rest periods may not be offset against other working time such as compensable waiting time or on-call time.

    Conversely, "bona fide" meal periods are not included in work time under the FLSA. Bona fide meal periods do not include coffee breaks or time for snacks, which are rest periods. Ordinarily, 30 minutes or more is long enough to constitute a bona fide meal period, but a shorter period may be sufficient under special conditions. The employee must be completely relieved from duty for the purposes of eating regular meals and is not relieved if he is required to perform any duties, whether active or inactive, while eating. For example, an office employee who is required to eat at his desk or a factory worker who is required to be at his machine is working while eating. Additionally, employees not allowed to leave the business location during the break period must be compensated at the regular rate of pay or provided with in-kind compensation (such as a meal) equal to or greater than minimum wage.

    When referring to "breaks", it is assumed for the basis of this article that it means regular meal or rest periods that are defined by company policy. In that regard, exempt employees are entitled to those provisions only to the extent that the company has included them within the context and scope of its defined policies.

    The Fair Labor Standards Acts, which defines what employees are exempt from record keeping and overtime provisions, is not responsible for defining any statutes or body of law regarding the issue of meal or rest periods, holidays off, or vacations - whether for exempt or nonexempt employees. Those issues are all within the discretion of organizations and their management to define.

    So in that regard, there are no legal restrictions with regard to meal or rest periods for either exempt or nonexempt employees. You are really only restricted in what you can do by humanitarian issues and generally accepted work practices in your area or industry, and the requirements to pay time/overtime to your nonexempt employees for all the time they are required to work.

    Ooops!

    We have all heard it said that there are no "free lunches." One California securities firm found out this adage has teeth when they agreed to pay $3.3 million in damages to its employees for requiring them to work during lunch breaks without pay. In Gerke v. Waterhouse Securities Inc., a group of about 1800 current and former brokerage employees received a total of $3.3 million in damages from their employer due to the employer’s failure to pay for the work done during lunch breaks. The employees contended Waterhouse Securities violated the overtime requirements of both California law and of the federal Fair Labor Standards Act, which requires a payment of at least one and one-half times the regular rate of pay for any hours worked in excess of 40 in one week.

    The employees claimed Waterhouse Securities required and pressured them to perform work during their 30-minute lunch break with no compensation for the work done. The firm even provided them with sandwiches, chips, and drinks while they worked during the lunch break. The workers sought unpaid wages and damages. The case was settled after Waterhouse Securities agreed to pay individual employees a range of compensation -- from $1,875 to $7,000 each -- depending on each one’s position with the company totaling $3.3 million. Waterhouse Securities did not admit any wrongdoing in the settlement.

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    Lesson Learned

    All employers can gain an important lesson from this case. Emphasis should repeatedly be placed on the importance of not allowing an employee to sit at the work desk during lunch breaks. The employee, even if just answering a phone, may be entitled to compensation for work done. The federal wage laws (and the laws of many states) require an employer to compensate an eligible employee for time spent while performing tasks for the benefit of the employer.

    This compensation requirement applies to any situation where an employee is working for the benefit of the employer, including when the employee is not required to perform work, but may be interrupted during meals to perform work. It is very likely that an employee may unintentionally perform some type of work if eating lunch at the desk. Therefore, in order to comply with the FLSA, and more importantly, to avoid possible litigation, it is very important that an employer require employees to take their lunch breaks away from the work desk.

    This compensation requirement also applies if the employees are not allowed to leave the work premises therefore restricted to a certain area or if the employee’s are on-call with their movement being restricted so that they cannot efficiently use the time for themselves. In both of these situations, the employee may be entitled to compensation because the employer is in control of the employee. Even if not actively performing a job duty, these restrictions on mobility leave the employer in control of the employee during the lunch hour and this may be considered by the courts to be compensable time.

    Employers should always treat a lunch break as employee time. Tailor your employment practices so that employees are not performing work during the lunch break and so there are no restrictions on the employees during the break. This will ensure full compliance with federal law.

    What About Paid Holidays?

    In his book, The Guide to Business Survival, Volume I: 50 Answers Every Manager Must Know, Robert Hoffman addresses the question of holiday pay and paid time off. He states that you may be surprised to hear that no federal laws exists that requires paid time off or even time off as a result of a holiday for private employees. Despite the fact that the federal government does not mandate time off, many companies voluntarily elect to provide time off with pay for a number of holidays.

    These are the most common paid holidays:

    • New Year's Day
    • Memorial Day
    • Independence Day
    • Labor Day
    • Thanksgiving
    • Christmas

    More diverse workplaces often also give these paid days off: Martin Luther King Jr.'s Birthday, Presidents Day, and Good Friday.

    Some jurisdictions observe state and local holidays, such as Jefferson Davis's Birthday in Alabama, Youth Day in Oklahoma, and Town Meeting Day in Vermont. To be assured of designated holidays in your state, contact your state Department of Labor.

    Federal law (5 U.S.C. 6103) establishes the public holidays for federal employees. Please note that most federal employees work Monday through Friday. For these employees, when a holiday falls on a non-workday -- Saturday or Sunday -- the holiday usually is observed on Monday (if the holiday falls on Sunday) or Friday (if the holiday falls on Saturday).

    Many companies have begun to provide a group of core holidays that must be observed by all employees. To supplement the core holidays, employees are able to use discretionary days from a paid-leave bank. The paid-leave bank replaces traditional programs and eliminates the distinction between leave for holidays, religious observance, vacation, personal holidays, emergency time, and childcare time. In the event an employee wishes to observe a religious holiday, a birthday, or significant family event, days would be deducted from the leave bank. All leave programs should be coordinated with a company attendance policy and take into consideration federal and states mandated leave regulations.

    In Part II of “What Must You Provide for Your Employees”, we will explore pay periods, overtime pay and much more.

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