Covers three areas of employment law that are important to funeral service:
- Minimum wage
- Overtime compensation
- Equal pay
The Fair Labor Standards Act (FLSA)
The FLSA is administered and eforced by this. It's responsibilities are carried out by compliance officers stationed across the United States. These enforcement officers have the authority to conduct investigations and to gather data on wages, hours and other employment practices in order to determine compliance with the FLSA.
The Wage and Hour Division of the Department of Labor
The enforcement officers may recommend changes in employment practices to bring an employer into compliance.
Where Violations are Found
May occur as a result of routine audits or on the basis of an employee complaint.
May result in criminal prosecution by the Division. In addition to criminal actions, the Wave and Hour Division, as well as individual claimants, can institute a civil action in federal or state court for unpaid minimum wages or overtime pay.
Willful Violations of the Act
To terminate or in any way retaliate against an employee for filing a complaint or participating in an investigation of the Wave and Hour Division.
Funeral Directors Should be Aware that this is a Violation of the FLSA
A court may award unpaid wages and overtime bay for a back pay period of up to two years from the date the complaint is filed. In the case of a willful violation, the back pay period can extend to three years. In addition to back pay, the court can award private litigants their attorney fees. Finally, the court can award an additional amount of liquidated damages which is equal to the back pay amount. In other words, the court can double the back pay amount.
Occurs when the employer willingly violates the Act or is in reckless disregard of it.
Not all are covered by the Act. Currently, an enterprise is fully covered if its gross sales exceed over 500,000. For those funeral homes below 500,000 gross revenue threshold, they still will be subject to overtime pay, child labor restrictions, and recordkeeping requirements if they grossed 362,000 or more in any year prior to 1990. For a funeral home, all proceeds from cash advances are included as part of gross receipts.
Generally protected by the overtime and minimum wage requirements of the FLSA unless they qualify under the so-called "white collar" exemptions.
- Executive Employee
- Commissioned Outside Salesmen
- Computer Employees
The 5 "White Collar" Exemptions
In order to fall under this exemption, an employee's primary duty must consist of the management of the enterprise in which he is employed or of a customarily recognized department or subdivision of that enterprise. The employee must customarily and regularly direct the work of two or more other employees in the enterprise.
Examples in the Funeral Profession:
- General Manager
- Branch Manager
- An employee can fall under this exemption if his pirmary duty requires the exercise of descretion and independent judgement, and consists of the performance of office or non-manual work directly related to management policies or general business operations.
- Generally, secretaries and clerical workers rarely fall under this exemption. The key determinant is whether the administrator has a wide degree of discretion in the performance of his job.
The standards of determining if an individual falls under this classification:
- The employee's primary duties consist of the performance of learned, artistic or educational matters requiring advance knowlege;
- The advanced knowlege is customarily acquired by a prolonged course of specialized intellectual instruction;
- The employee's work requires the consistent exercise of discretion and judgement; and
- The employee's work is predominantly intellectual and varied in character and his output cannot be standardized in relationship to time.
An employee who customarily and regularly works away from the employer's place of business while making sales and obtaining orders for which consideration is paid on a commission basis is regarded as a commissioned salesmen and is not subject to the minimum or overtime wage benefits of the FLSA.
Commissioned Outside Salesmen
Individuals who are employed as computer system analysists, computer programmers, software engineers, or other similarly skilled workers in the computer field are not subject to the minimum or overtime wage benefits of the Act.
Althoughtfuneral directors and embalmers are required to undergo substantial specialized education and training in most states, prior to 2004 the Department of Labor steadfastly maintained that licensed funeral directors and embalmers did not qualifiy as "professionals."
For Many Years, Most Employees of Funeral Homes, with the Exception of Managers and High-level Administrators, did not Qualify for the White Collar Exemptions
The U.S. Sixth Circuit Court of Appeals ruled that a Michigan funeral director who arranged and supervised funerals qualified as a professional. The decision, which is controlling in the States of Michigan, Ohio, Tenessee, and Kentucky, found that Michigan's requirements of an associate's degree, one year of mortuary school and the passage of the national board exam and Michigan's licensing test were sufficient to reder a funeral director as a professional under the wage and hour laws. Although this decision is only controlling in these 4 states, it helped encourage the Department of Labor to update its regulations in 2004.
Rutlin v. Prime Succession, Inc.
In a significant development, the Department of Labor recognzied for the first time that a funeral director and/or embalmer could qualify as a "professional" under the white collar exemptions.
The Department of Labor Updated Regulations Governing White Collar Exemptions in 2004
The funeral director or embalmer had to be licensed and work in a state that requires four years of post-secondary education in order to be licensed as a funeral director or embalmer.
In Order to Qualify as a Professional Under the New Regulations
The new regulations from the Department of Labor had a very limited impact on funeral service. Funeral homes in the states of Minnesota and Ohio could compensate funeral directors and embalmers as professionals and pay them salaries versus hourly wages. However, in all other states, a funeral home would risk Department of Labor scrutiny if it treated a funeral director or embalmer as an exempt professional under the wage and hour laws.
Since Only the States of Minnesota and Ohio Require Four Years of Post-Secondary Education
A federal trial court for the western district of New York held that the regulations issued by the Department of Labor, which required four years of post-secondary education, were not the "exclusive" method by which i funeral director could qualify as a professional. Looking at the standards that define a professional, the court held that the plaintiff in Rowe was required as an embalmer to perform work that required advance knowlege in a field of science that is customarily acquired by prolonged course of specialized intellectual study. As such, the court held the funeral director/emblamer to be an exempt professional under the wage and hour laws.
- Raises the issue of whether funeral directors in states other than Minnesota and Ohio qualify as professionals under the wage and hour laws.
Rowe v. Olthof Funeral Home
Individuals to perform specialized services in a irregular basis. An issue that often arises is whether these individuals are employees or independent contractors.
- Limousine drivers
Many Funeral Homes Utilize This
Will consider such individuals to be employees in circumstances where the funeral home dictates the specific details of the individual's job performance. On the other hand, if the factual circumstances indicate that the person rendering services is an independent businessman performing those services without direct and close supervision of the funeral home, an independent contractor status can be supported.
Wage and Hour Division
- Is the individual free to perform the services on the employer's premises or elsewhere?
- Is the individual in business performing the same services for other companies?
- Is the individual free to set his or her own hours of work? and
- Does the individual provide his or her own equipment or tools?
Four Factors the Wage and Hour Division Will Look at in Determining Independent Contractor Status
Safe to say that this person would probably qualify as an independent contractor.
Would probably be regarded as a part-time employee.
Would e a close question that would turn o the particular facts. Obviously, if the funeral home transports the body to the embalmer's place of business, there is an independent contractor relationship. However, if the embalmer is using the funeral home facilities and equipment, and he has no such equipment available, he will probably be regarded as an employee.
- Personal Information such as name, address, and social security number.
- Hours and day when the work week beings.
- The total hours worked each day and each work week.
- The total daily and weekly straight time earnings.
- The regular hourly rate for any work week when overtime is worked.
- The total overtime pay for each work week.
- And deductions from or additions to wages.
- The total wages paid each pay period.
- The day of payment and the pay period covered.
With Regard to Employees that are Subject to Minimum Wage and Overtime Requirements, These Records Must be Maintained
Should be maintained for a three year period except for payroll records which are required to be retained for six years in compliance with the requirements of the Internal Revenue Code. They do not have to be maintained in any particular form and it is not necessary to have a time clock.
The minimum wage rate is $7.15 per hour. However, in several states, the minimum wage standards set my law are higher than the Federal Standards. When both the State and Federal laws apply, the law setting the higher wage must be observed.
As of 2011, Minimum Wage Rate
Allow an employer to pay apprentices and disabled individuals a wage scale that is lower than minimum wage. However, in order to qualify for this special wage scale, an employer must apply and recieve certification from the Wage and Hour Division.
Provisions Under the FLSA
All full-time employees that are not covered by while collar exemptions must be paid at not less than 1-1/2 times their regular rate of pay for all hours worked over 40 hours in a workweek.
General Requirements- Overtime Pay
The FLSA does not require this. The employer may make wage and salary payments at other regular intervals such as every two weeks, every half month, or every month.
An Employee to be Paid Every Week
That the minimum wage and any over-time pay required must be computed on a basis of hours worked each work-week standing alone. An employer cannot decline to pay overtime to an employee who worked 50 hours for the first week of the pay period, but only 30 hours during the second week.
What the FLSA Does Require
A regular recurring period of 168 hours in the form of 7 consecutive 24 periods. It need not be the same as the calander week. It can start on any day at any hour. Once established, it cannot be changed unless the change is intended to be permanent.
- Meals and lodging
- Profit sharing
- Vacation pay
In Determining an Employee's Regular Rate of Pay, These Issues May Arise:
When customarily provided for the benefit of the employee, the reasonable cost or fair market value of the benefits are considered wages. However, if the facilities furnished by the employer are primarily for the employer's benefit instead of the worker's, their costs may not be considered as wages. The costs of furnishing sleeping quarters to employees who have no other home may generally be regarded as wages under the FLSA.
Meals and Lodging
Production bonuses, attendance bonuses and commissions are included in wages. Gifts and discretionary bonuses are gnerally not included as wages.
Reimbursement for expenses incurred on the employer's benefit are not included in wages.
Profit sharing, welfare and thrift plan payments are not part of wages.
Vacation, holiday and sick pay are not included as wages. Also premiums paid for holiday, Saturday and Sunday work which is over the time and one-half pay scale are also no included in wages.
Although employees may be hired as a salaried worker, the employee is regarded for wage and hour purposes as an hourly employee unless he or she is covered by one of the white collar exemptions. For example, if a funeral home hires an employee for $30,000 per year, for wage and hour purposes, the employee is being paid $600 per week or $15.00 per hour. For any workweek where the individual work in excess of 40 hours, he or she must be compensated time and one-half, or $22.50, for each hour over 40 hours.
- One alternative to the regular overtime requirements.
- The primary advantage for this is that it permits an employer to pay half time for overtime rather than time and a half.
- Guarantees the employee a base weekly salary regardless of the number of hours worked.
- If an employee under this schedule works in excess of 40 hours, the employee is entitled to one-half of the regular hourly pay in excess of 40 hours.
Variable Workweek Arrangement (Fluctuating Workweek Arrangement)
Determining the employee's regular hourly rate. The regular hourly rate will fluctuate depending upon the number of hours that the employee works. To determine an employee's hourly rate, one must divide the guaranteed salary by the number of hours worked during the particular workweek.
The Difficulty in Administering a Variable Workweek Arrangement
The department ruled that the payment to an employee of any type of performance bonus or premium would disqualify the employee from being part of a Variable Workweek Arrangement. Therefore, the Variable Workweek Arrangement may not be used if the funeral home intends to pay any type of performance bonus of premium compensation above the regular hourly wage to the employee.
In a Clarification Issued by the Department of Labor in 2011
Under this act, the employer may not discriminate on the basis of sex by paying employees of one sex at rates lower than they play employees of the opposite sex in the same establishment, for doing equal work on jobs requiring substantially equal skill, effort and responsibility, and which are performed under similar working conditions. Covers executive, administrative, and professional employees who, as detailed above, are exempt from the minimum wage and overtime coverage of the FLSA.
Equal Pay Act
The Equal Pay Act permits this if it can be shown that the wage differential is based on a senority system, a merit system, or any other factor other than sex. Employers should know that violations to the Act are subject to back pay claims in the same manner as minimum wave and overtime pay violations of the FLSA.
Oftentimes, a funeral home will hire and elderly caretaker who lives at the funeral home. The caretaker may perform very light duties or not duties at all. His or her primary purpose is to provide security for the funeral home and perhaps to answer the phones during off-hours.
Whether the caretaker is an hourly employee that must be compensated for each hour the caretaker is at the funeral home. The Department of Labor has attempted to address issues such as this one with a regulation.
The Problem Presented by the Caretaker
An employee who resides on his employer's premises ona permanent basis for an extended period of time is not considered working all the time he is on the premises. Ordinarily, he may engage in normal private pursuits and this have enough time for eating, sleeping and entertaining and other periods of complete freedom from all duties when he may leave the premises for the purposes of his own. It is of course difficult to determine the exact hours worked under these circumstances and any reasonable agreement of the parties which takes into consideration all of the pertinent facts will be accepted.
Regulation for Caretakers
- Would only be working during the time that he or she was performing light duties or answering the telephone for the funeral home.
- The caretaker should thus be paid at least the minimum wage fo rthe time responding to telephone calls and performing light duties.
- The funeral homes may offset those wages in exchange fo rthe free lodging which is provided by the caretaker.
It is recommended that the caretaker of the funeral home enter into a simple agreement by which the caretaker agress to answer the phone and perform other specified light duties in exchange for free lodging. An alternative to this would be to pay the caretaker minimum wage for his or her actual working time.
To Protect the Funeral Home
Funeral homes often require their employees to be on-call so that they may respond to death calls. An issue which often arises is whether the on-call employee must be compensated for the time on call but away from the funeral home premises.
On Call Employees
Employees who are required to be on-call will not be considered to be working if the arrangement with the employer is considered to be one in which the employee is:
Waiting to be Engaged
On the other hand, the employee will be considered to be working for the entire period if it is determined that he or she is:
Engaged to Wait
The determination of whether an employee is "waiting to be engaged" or "engaged to wait" turns on the:
Freedom of Employee to Engage in a Personal Activities
To the extent that the arrangement substantially restricts any movement of the employee, there is an issue as to whether or not the employee is:
Working During the Waiting Period
To provide cell phones, beepers, or two-way messaging to on-call employees so that their freedom of movement is not restricted. Assuming they are not on-call an inordinate amount of time, the funeral home will be able to withstand any subsequent challenges by the Wage and Hour Division
The Best Solution to the On-Call Issue