Issue 4 - 2011

The National Labor Relations Board has extended the deadline for employers to post a written notice at worksites. The deadline has been extended from November 14, 2011 to January 31, 2012.

The notice informs employees of their rights under the National Labor Relations Act including the rights of employees to organize a union, bargain collectively with an employer, and strike and picket under many circumstances.

The poster can be downloaded from the NLRB's website: http://www.nlrb.gov/poster

Please note that this date change with the NLRB does not impact the Department of Labor's separate requirement that certain federal contractors must post NLRB employee rights in the workplace. This separate obligation was established by the President's Executive Order signed in 2009.

Some employer organizations, including the U.S. Chamber of Commerce, have now sued the National Labor Relations Board in an attempt to prevent its new regulation from being imposed on employers. However, at this time, no court has blocked the NLRB poster requirement. Therefore, employers should calendar January 31, 2012 as the poster deadline.

Very small employers should check with their labor counsel as to whether they fall under the NLRB's jurisdiction or not. If a small employer does not fall under the NLRB's jurisdiction, it does not need to post the notice.

The recent Ninth Circuit case, Earl v. Nielson Media Research, illustrates again that employers must treat employees in a similar manner in order to avoid discrimination claims.

Earl, a recruiter, was terminated for violating company policy when she was 59 years old. Earl had received prior warnings for violating company policies. A few months before her termination, Earl also was diagnosed with a disability and informed her supervisor of this diagnosis.

The policy violation "trigger" that led to Earl's termination involved her failure to accurately verify the address of a survey participant. In the court proceeding, Earl provided evidence that significantly younger recruiters who repeatedly violated similar policies received more lenient treatment from the company instead of being terminated. While the court noted that Earl's multiple violations of company policy may constitute a legitimate reason for termination, she raised a legitimate question regarding age and disability discrimination by providing evidence that significantly younger recruiters with similar violations received more lenient treatment from the company. Therefore, the court is allowing this case to proceed to a jury trial.

Employers must remember not to look at terminations in isolation. Just because it appears that you have significant reasons for terminating an employee, you still need to compare your rationale to the treatment of other workers (especially if they are in a different protected category such as young vs. old, non-disabled vs. disabled, etc.) when making your final decision.

Are bonuses included in overtime calculations for non-exempt employees? If your company pays bonuses to non-exempt employees, then it should review the employees' compensation to make sure their overtime is calculated correctly. As a general rule, nondiscretionary bonus payments are considered to be part of a non-exempt employee's wages for the purposes of calculating overtime compensation.

Bonuses paid on a regular, frequent basis (e.g., weekly) must be included when calculating an employee's overtime compensation for that time period. For example, if an employee receives a $50 weekly bonus if she meets a production goal, this $50 is incorporated into her wage rate when calculating the overtime premium. Her normal earnings plus the bonus will be divided by the number of hours worked to obtain the rate used for calculating her overtime.

Bonuses that are paid out at longer intervals or are deferred (e.g., a quarterly or annual bonus) must be "apportioned back" over the time period covering when the employee earned the bonus. The employee therefore must receive an additional amount of compensation for each workweek where she worked overtime, taking into account the bonus she earned.

Some types of bonuses are not included when calculating an employee's wages for overtime purposes. These exclusions include:

• Sums paid as gifts;
• Payments in the nature of gifts made at Christmas time or on other special occasions when the amount is not measured by hours worked, production or efficiency;
• Payments made for occasional periods when no work is performed due to vacation, illness, or failure of the employer to provide sufficient work;
• Payments for traveling expenses, or other similar expenses, incurred in the furtherance of the employer's interests and are reimbursable;
• Other similar payments to an employee which are not compensation for hours of employment;
• Truly discretionary bonuses [as defined below]; and
• Payments made pursuant to bona fide profit-sharing plans or trust or bona fide thrift or savings plans [such as ERISA-type plans].

In order to be a discretionary bonus, " . . . the employer must retain discretion both as to the fact of payment and as to the amount until a time quite close to the end of the period for which the bonus is paid. The sum, if any, to be as a bonus is determined by the employer without prior promise or agreement. The employee has no contract right, express or implied, to any amount. If the employer promises in advance to pay a bonus, he has abandoned his discretion with regard to it." 29 Code of Federal Regulations § 778.211(b).

Therefore, in order to retain discretion, you cannot create an expectation among employees of earning bonuses. This might defeat the purpose of offering bonuses, as you might want employees to work harder or more efficiently in the hopes of getting a bonus!

If you have not been paying overtime compensation which takes bonuses into account, then your company could be responsible for unpaid wages, penalties and interest. If you are sued and lose, you also may have to pay the employee's attorney's fees.

If you pay bonuses to your non-exempt employees, we recommend that your employment legal counsel review your practices. Simpson, Garrity, Innes & Jacuzzi has significant experience in assisting employers to comply with their wage and hour obligations.