labor lawAdivision of labor law center

 Massachusetts recently increased the penalties for employers who misclassify employees as independent contractors.

Many states are imposing stricter penalties for employers who illegally avoid paying unemployment insurance and workers’ comp by misclassifying workers as independent contractors.

In Somers v. Converged Access, the Massachusetts Supreme Judicial Court ruled that the independent contractor law is a strict liability  statute. This means that the employer’s intent in misclassifying a worker is irrelevant. Therefore, the worker was entitled to compensation for wages, overtime and benefits that he would have received, if he had been correctly classified as an employee. In addition, the employee was permitted to keep the $65 per hour that the company paid him as an independent contractor – an amount far in excess of an employee’s wage in the same job.

The Massachusetts company was required to pay the employee for benefits including vacation and holiday pay. In addition, the company was ordered to pay the employee overtime at a rate of $97.50 per hour – 1.5 times the worker’s $65-per-hour wage.  

The Massachusetts definition of independent contractor is even more strict than federal independent contractor regulations. A worker is an employee unless he or she is: (more…)

On January 1, 2008, the state of Massachusetts increased its state minimum wage by 50 cents, going from $7.50 to $8.00 per hour.

This put Massachusetts in the rank of second, tied with California, for the highest state minimum wage. Washington comes in first with a state minimum wage rate of $8.07 per hour.

In all, fourteen states increased the minimum wage with the new year.

This new state minimum wage does not apply to all employees. As long as the worker averages $5.37 per hour in tips, employees who earn tips can be paid as little as $2.63 per hour. Employees in the agricultural industry can receive as little as $1.60 per hour.

The Massachusetts state minimum wage law includes some other exceptions. Employers in this state are not required to pay a premium for weekend, holiday or night time work. The “Blue Laws” are an exception, which require that some retailers pay a premium rate to employees who work on holidays and Sundays.

A premium rate of pay, or overtime, is normally paid to any worker who puts in more than 40 hours during one week. This rate is paid at 1.5 times the normal hourly rate. Several types of employees, however, are excluded from overtime pay by the state minimum wage law. These employees include fishermen, golf caddies, newsboys, apprentices, outside salespersons, and switchboard operators for the phone company, among others.

Seasonal businesses that operate fewer than 120 days per year are also exempt from paying overtime.

Massachusetts excludes a number of industries from paying overtime, too. Hotel, restaurant, hospital, gas station, nursing home and amusement park workers do not qualify for overtime pay. Non-profit summer camp employees and workers are non-profit schools and colleges are exempt from overtime pay.

Many changes will occur in 2008 regarding minimum wage laws. The changes in both federal and state laws will require all Massachusetts companies to update their labor law posters. Companies that need updated information can check out the labor law website at www.laborlawcenter.com.

January 1, 2008 saw an increase in state minimum wage for fourteen states, including Montana, Arizona, Iowa and Delaware and ten others. These raises, however, are just the first of many increases slated for 2008.

The first of these increases will occur on July 1, 2008. Three states will enjoy a substantial raise at this time. Kentucky will add 70 cents to its minimum resulting in a new rate of $6.55. West Virginia will also see a 70 cent bump, from $6.55 to $7.25 per hour. Employees in Pennsylvania, however, will see the biggest boost, a 90 cent jump from $6.25 to $7.15

Five other states will enact less dramatic increases to their minimum wage rates. For example, both Michigan’s and Illinois’s rates will receive a 25 cent bump. The minimum wage in Illinois will increase from $7.50 to $7.75. Michigan’s minimum will be raised from $7.15 to $7.40 per hour.

The July 24, 2008 increase in the federal minimum wage is a result of the Fair Minimum Act of 2007, which President George W. Bush signed into law on May 24, 2006. The Act set up a three step system of increases. The July 24, 2008 bump will be the second step of that system.

Several states, including Texas, Maryland and Oklahoma, tie their state minimum wage increases to when federal minimum wage goes up. When the federal minimum wage goes up on July 24, 2008, the minimum wages in these states will go up, too. Ohio’s minimum wage will increase to $6.55 per hour for workers of companies with gross annual revenue of less than $255,000.

In addition to the states mentioned above, the District of Columbia also ties its minimum wage to the federal minimum. In D. C., however, the law requires the minimum wage rate to be at least $1.00 more per hour than the federal rate. On July 24, 2008, D.C.’s minimum wage will increase to $7.55 per hour.

The state minimum wage in Massachusetts will increase by 50 cents from $7.50 to $8.00 on January 1, 2008. This change puts the state’s minimum wage on a par with California, tied at second highest in the nation, after the Washington state minimum wage.

Under significant exceptions to the minimum wage, however, tipped employees can be paid just 2.63 per hour, as long as they earn an average of $5.37 per hour in tips over the shift. Workers in the agricultural industry can be paid just $1.60 per hour.

The Massachusetts minimum wage statue does not require employers to pay a premium for weekends, holidays or night work. However, the state Blue Laws do require that some retailers pay a premium for Sundays and holidays.

Massachusetts is one of a handful of states that requires employers to compensate employees for any accrued vacation time upon termination. However, the state does not mandate any paid sick days or severance pay.

Most workers are entitled to overtime at 1.5 times the usual rate of pay after 40 hours in one week under Massachusetts minimum wage law. However, a number of employees are excluded from the state’s overtime provision, including:

• Residential Janitors who are furnished with living quarters
• Golf Caddies
• Newsboys
• Child Actors
• Outside Salespeople
• Apprentice
• Handicapped person under special license
• Fishermen
• Switchboard Operator for the Phone Company
• Truck Driver or Helper covered by ICC
• Seamen

The state also exempts employees of a seasonal business from overtime payments, provided that business operates less than 120 days per year.

Employees in several industries are also exempt from the state overtime provisions, such as those who work in hotels, restaurants, hospitals, gas stations, nursing homes, and amusement parks. Employees in non-profit schools or colleges are also exempt from overtime, as are workers at non-profit summer camps.

Some of the workers named above may be entitled to overtime under federal regulations.

When labor laws change, employers are required to post the updated information with new labor law posters. In 2008, several changes will occur so that employers will need to update their information. Complete listings are available at www.laborlawcenter.com.

Most of the states in the country have enacted state minimum wage laws. Over a dozen of these states will introduce increases in these minimums on January 1, 2008. 

In Arizona, Florida and Montana, the minimum will see a small raise of just a few cents per hour. Arizona’s minimum will go from $6.75 to $6.90. Florida will add 14 cents to its current rate of $6.65 to get $6.79. Only nine cents will be added to Montana’s minimum wage to go from $6.15 to $6.26 per hour.

Conversely, Iowa will add over a dollar to raise their minimum from $6.20 to $7.25 per hour. New Mexico, too will add more than a $1 per hour, from $5.15 to $6.50 per hour.

Later in the year several more states will up their minimum wages, too. July 1, 2008, Kentucky will go up almost a dollar per hour from $5.58 to $6.55. Ninety cents will be added to the minimum wage in Pennsylvania of $6.25 to reach $7.15 per hour.

The federal minimum wage will go into effect on July 24, 2008 at $6.55 per hour. Many states have legislation that connects their minimum wages to the federal minimum, including Virginia, Indiana and Nebraska. On July 24, 2008, then, these states will increase their minimum wages, too. Washington D. C. has tied its minimum to the federal at exactly one dollar more, so when the new federal minimum debuts on July 24, D.C.’s minimum will go up to $7.55 per hour.

If, as an employer, the changes are not clear, or more information is needed regarding how and what to update, businesses can get information on all 50 states online at www.laborlawcenter.com.

Wal-Mart, Inc., hired workers and called them managers. It then worked those “managers” more than 40 hours a week but did not pay them overtime. Now the retail behemoth must pay $33 million in back wages and interest to 87,000 workers.

This is the gist of a settlement between the U.S. Labor Department and Wal-Mart recently. The crux of the matter was the underpayment of a group of salaried manager and programmer trainees and salaries interns for long hours of work.

Wal-Mart’s action was in violation of the U.S. and Massachusetts minimum wage laws. And its problems are not necessarily over as a result of the settlement. Nothing in the agreement says Wal-Mart is exempt from private litigation or any employee’s right to file complaints with the Department of Labor. The settlement applies only to the specific violations named.

The particular settlement said that the workers were what is described as “non-exempt salaried” employees. In short, they did not fall into the category of those salaried employees who are exempt from the regulation.

To be an exempt employee, and as a result subject to work weeks longer than 40 hours but without overtime pay, you must fall under certain guidelines. One is that you must make more than $455 a week, or $23,600 annually. Second, you must be in a decision-making or supervisory role in your division, department or store. More specifically, that applies in most cases to somebody who has the authority to hire and fire more than three people.

The employees in the Wal-Mart case were in some cases getting less than the ceiling wage, so they were covered by the regulation.

Other businesses have tried to skirt the law by calling workers managers. Howard Johnson’s was found guilty of hiring “assistant managers” for restaurants. These “assistant managers” sometimes worked 80 hours plus, doing labor like dishwashing, waiting on tables, and busing.

The new Massachusetts law also includes a new version of the tip credit that employers of tip employees should know about. The definition in the state of Massachusetts of a tipped employee, by the way, is someone who makes more than $20 per month in tips. If you have somebody like that on your pay roll, then you can expect to know what’s what about the tip credit rule in the Massachusetts minimum wage law.

The tip credit rule that I speak of says that you can the employer can pay these tipped workers a reduced minimum wage of $2.63 per hour. To be able to pay your tipped employees this rate, however, you must make sure they know this ahead of time, when they are hired or become tipped employee at your work site. And of course, being that it is a tip credit, the amount of tips that they make per hour, when added to this reduced minimum wage, must add up to equal the total regular minimum wage in the state of $7.50 per hour. That means that an employee must earn at least as much as $4.87 per hour in tips in order to get paid this tip credit minimum wage rate.

Also, according to the Massachusetts minimum wage tipped credit regulations, you cannot withhold any of their tips from them. They must either go all to the employee, or through some sort of tip pooling system through all of your tipped employees. But you cannot keep back their tips from them if, say, the employee brings in more than $4.87 per hour in tips.

Basically, if the information on the Massachusetts Department of Labor Web site is true, that means that the state has one of those tip credits that is fixed at a certain dollar amount, and not some of those other tip credits that we have seen that is a percentage of the regular minimum wage.