COVID-19 Crisis Stirs Up Lots of Wage and Hour Issues

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Benefits and Compensation Coronavirus (COVID-19) employees

Wage and hour compliance is an area that can trip up even the most diligent employers under the best of circumstances—let alone during a global pandemic when you’re trying to keep employees healthy, safe, and employed.

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While the health and safety concerns are unquestionably important, it’s prudent to make wage and hour compliance a priority, too. Frankly, it would be foolish to think employees and their legal counsel are going to take it easy on employers simply because of COVID-19 and the ensuing and still ongoing business complications.

Given how technical the wage and hour laws are, this can be seen as low-hanging fruit to plaintiffs’ lawyers. In fact, we’re already seeing wage and hour cases related to COVID-19 being filed across the country.

Wage and Hour Areas That Need Extra Attention

Given the landscape, Jim Davis was kind enough to have me as a guest on the HR Works podcast so we could unpack some of the areas that may need extra attention right now and how they tie into the litigation trends we’re anticipating.

I’m going to run through the key takeaways from my chat with Jim, but for a more in-depth look, give the entire episode a listen—“HR Works COVID-19 Update: When the Pandemic Creates Wage and Hour Violations.” (And for even more information, listen to part two of the interview, here.)

Changes to duties of exempt employees. Make sure you’re monitoring the duties your exempt employees are performing. To qualify for exemption, they have to meet certain tests for their job duties and be paid on a salary basis at not less than $684 per week.

Whether an exempt employee who’s performing nonexempt duties can still be treated as exempt depends on a few things. There’s a regulation that provides otherwise-exempt employees may temporarily perform nonexempt duties required by a public health emergency declared by a federal, state, or local authority without losing the exemption.

The U.S. Department of Labor (DOL) has stated in recent guidance that COVID-19 is consistent with the criteria for such emergencies. But the duties have to be performed because of the public health emergency and on a temporary basis.

If you have concerns about an employee’s duties, the reason they’re being performed, or their temporary nature, you may want to consider reclassification (but work with your employment counsel on this to make sure it’s handled—and messaged—properly).

Pay cuts caused by pandemic. When considering whether pay cuts are acceptable, it’s important to be clear whether you’re talking about exempt or nonexempt employees. For nonexempt employees, this is pretty easy. Make sure they are still receiving minimum wage for every hour worked and getting overtime for all hours worked over 40 in a workweek.

And, if nonexempt employees are asked to work from home and need to pay for Internet or an additional phone, they shouldn’t be required to pay for such business expenses when doing so reduces their earnings below the required minimum wage. Check state law because some states have higher minimum wages, other overtime triggers, and specific requirements applicable to employee expense reimbursements.

Turning to exempt employees, you can prospectively reduce salaries, but they still have to receive at least $684 per week on a salary basis for any workweek in which work is performed—otherwise, you may lose the exemption.

Restoring full pay. For nonexempt employees, you can change their hourly pay rates, but make sure to administratively change the overtime rate, too. If you’re contemplating some sort of payment to nonexempt employees for taking one for the team with the pay cut, make sure you’re talking with an employment lawyer about what the compensation is and what promises may have been made to employees when their pay was reduced.

Depending on the factors, the payment may or may not need to be added back into the regular rate to recalculate and pay additional overtime.

Turning to exempt employees, you can restore their pay to prepandemic levels, but whether it’s advisable depends on how much time has passed since their compensation was reduced. If you change it too much, the salary starts to look less like a salary and may put the exemption at risk. It’s best to leave it alone for about a quarter (but a month at the very minimum to be safe).

Bottom Line

HR professionals have a lot on their plates these days to keep the workplace safe. To stay up to speed on the details, keep in regular communication with your employment lawyer—we can help you spot issues, see the big picture, and comply with the current iteration of guidance as it keeps changing. Everyone needs a little extra help right now, so be sure to ask and use your resources.

Maggie Spell is a partner in Jones Walker LLP’s labor relations and employment practice. She can be reached in New Orleans at mspell@joneswalker.com.

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