Perspectives

If a non-exempt employee must travel for work, how much of that travel time is compensable?

Since states do not have laws regarding non-exempt employee travel, this blog covers the federal Fair Labor Standards Act (ACT) and the Department of Labor’s regulations.

When travel requires an overnight stay, any time spent traveling as a passenger that falls within the employee’s “normal work hours” is to be paid, regardless of what day of the week the travel takes place. Therefore, the time spent waiting at the terminal until departure, through the subsequent arrival at the destination, needs to be compensated, when it falls during those normal work hours. However, similar to when an employee is at home, the time spent traveling from home to an airport or train station is considered commute time and is not treated as hours worked, thus not compensable.

For example, if your employee normally works Monday through Friday, 8:00 a.m. to 5:00 p.m., and they are required to travel by plane on a Sunday for business in another state, their travel time on Sunday between 8:00 a.m. and 5:00 p.m., is compensable. Therefore, if the employee arrives at the airport on Sunday at 3:00 p.m. and at their destination at 8:00 p.m., the employer is required to pay only form 3:00 p.m. to 5:00 p.m., the hours that correspond with their normally scheduled work hours. Alternatively, if the employee drives themselves or other (at the direction of the employer) rather than traveling as a passenger, all the time spent driving is payable work time, regardless of the normal work hours.

However-one caveat to those “normal work hours” is that an employee must be paid for any time they are performing work. This includes time spent working during travel as a passenger that would otherwise fall outside normal hours. For instance, if that employee from the above example works on a presentation during their flight until 6:30 p.m., the employer would need to pay them from 3:00 p.m. (arrival at airport) to 6:30 p.m. (turning off computer for the remainder of the flight).

A good practice is to require any traveling hourly employee to record all hours worked and the corresponding times throughout the duration of their trip. The employee needs to be paid for all hours worked even if outside of the normal hours.

Another factor to consider are the costs your hourly employees will incur during business travel-such as food and beverages, hotels, transportation, or incidentals. If there is not a company issued credit card the employee can use, another option is providing a stipend to your employees. Stipends are commonly used to either pre-pay, or pre-approve, the employer designated costs per day during business travel. Pre-paying the employee in this way helps reduce the daily financial burden of a business trip up-front when the employee doesn’t have a company issued credit card. Or, requiring pre-approved costs/rates allows for budgeting control if the employee is booking their own hotels, etc. For example, here is a link to per diem rates in each state that apply to traveling government employees. Many private business follow these rates as well because they are standardized by the cost of each location. The website contains current rates in the continental United State for any reference you might need.

Generally, offering either the stipend or company credit card can remove the reimbursement waiting period for the travel expenses afterwards, which is a common procedure to benefit the employee. Companies are not required to pay travel stipends to employees like they are require to reimburse business travel expenses in general, so the reimbursement process may look different for the individual companies.

The Fair Labor Standards Act (FLSA) is a federal law in the United States that sets minimum wage, overtime pay, recordkeeping, and youth employment standards for employees in both the private and public sectors. The FLSA also establishes exemptions from these standards for certain employees who meet specific criteria.

One of the most common exemptions under the FLSA is the “white-collar” exemption, which applies to certain executive, administrative, and professional employees who earn above a certain salary threshold. The salary level threshold for this exemption is currently set at $684 per week or $35,568 per year, meaning that employees who earn less than that amount are generally entitled to overtime pay under the FLSA.

In 2019, the Department of Labor (DOL) announced a new final rule that would have increased the salary level threshold for the white-collar exemption to $913 per week or $47,476 per year. This rule was set to take effect on January 1, 2020, but was later blocked by a federal court and subsequently withdrawn by the DOL.

Now, the House and Senate have both introduced the Restoring Overtime Pay Act which, if signed into law, would immediately increase the salary threshold to $865 per week or $45,000 per year.  After the initial bump, the salary threshold would automatically increase by $10,000 in each subsequent year until the threshold reaches $75,000 in 2026.  Starting in 2027, the salary threshold will increase to an annualized amount equal to the rate of the 55th percentile of weekly earnings of full-time salaried workers nationally, which will be determined by the Bureau of Labor Statistics using data from the second quarter of 2026.

The stated purpose of the act is to strengthen overtime protections by increasing the number of workers who would be eligible for overtime pay.  For companies that employ exempt workers, we recommend keeping your finger on the pulse of these laws as you may need to raise salary thresholds in order to continue classifying these employees as exempt.  Stay tuned. 

With the recent closure of Silicon Valley Bank, employers may feel the pressure of liquidity issues, which in turn could impact their ability to pay employees on time or operate their compensation/benefits programs.

Three key considerations to focus on when evaluating your company’s internal finances are payroll, furlough, and benefits. These will effect your employees’ day-to-day lives, and eat up most of your HR staff’s time.

Payroll/Employee Communications:

Communicate immediately with employees regarding potential delays in payroll timing and provide prompt updates on changes. If you’re switching payroll to another financial institution, ensure compliance with existing wage rules that are designed to prevent changes to employee’s elected methods of payment without their consent. To the extent the employer cannot timely make payroll, consider furloughing or terminating employees.

Benefit Plans:

Review health and welfare benefit plans, contracts and arrangements to determine whether missed or late payments by the employer to third-party providers may cause a lapse in benefits/insurance coverage for employees (or otherwise impact coverage).

Fair Labor Standards Act:

Many employers impacted by the SVB closure are faced with difficulties in making payroll. Most employers are covered by the Fair Labor Standards Act (“FLSA”), which governs federal wage and hour standards. Covered employers have several obligations under the FLSA, including ensuring nonexempt employees are paid (a) minimum wage for all hours worked and (b) overtime for all hours worked in excess of 40 hours in any workweek. There is no explicit deadline in the FLSA itself with respect to the payment of wages. Nevertheless, the U.S. Department of Labor’s (the “DOL”) position is that FLSA-mandated sums earned for a workweek generally must be paid on the regular payday for the pay period in which the workweek ends. Currently there is no available waiver, or exemption, for noncompliance resulting from bank closures.

An employer that repeatedly or willfully violates the minimum wage or overtime pay requirements of FLSA is subject to a civil penalty of up to $1,100 for each violation. For any violation (including isolated or inadvertent violations), the employer is liable to the employee for the amount of unpaid wages and overtime pay, if any, plus an equal additional amount paid as liquidated damages. There is no requirement that the affected employee show harm beyond the late payment.

In addition to potential penalties for compliance failures under FLSA, employers may also face penalties in connection with failure to timely remit the employer portion of taxes, which includes federal income tax, Social Security and Medicare taxes and Federal Unemployment Tax. There are penalties for untimely, inaccurate, or improperly paid employment taxes, imposed based on the number of days the taxes are overdue.

State Wage Laws:

In addition to complying with wage payment obligations under FLSA, employers must also comply with applicable state wage laws or risk additional fines and penalties. Unlike FLSA, many states impose specific intervals for paying employees (e.g., weekly, bi-weekly, etc.), which may vary depending on an employee’s role or function or the industry in which they work. Penalties for failing to comply with state wage laws vary by state and can include liquidated damages and attorney’s fees.

Furloughing Employees:

In connection with similar liquidity crises, employers have considered employee furloughs as an alternative to layoffs until they can resolve their liquidity issues. Furloughs generally refer to a mandatory, but temporary, cessation from work without pay, with the expectation that the impacted workforce would return to work with the employer in the future.

Health Benefits and COBRA:

Employers that sponsor group health plans should consider whether a furlough would allow employees to continue to participate in employer-provided health benefit plans as “active” participants without requiring participants to elect benefits under COBRA. The determination will depend on the terms of the applicable plan and the underlying insurance policies maintained by their plan carrier.

Qualified Defined Contribution Retirement Plans:

A furloughed employee will generally be considered an active participant in the retirement plan and will not be considered to have experienced a “severance of employment.” Therefore, the employee would not qualify to take a termination distribution from the retirement plan. Further, furloughed employees would not qualify to take a termination distribution from the retirement plan termination assessment. Furloughed employees who are considered active participants may, subject to applicable plan terms, receive plan loans (or have existing loans remain outstanding) or in-service distributions.

Other Benefits:

Employers should also carefully review and assess the impact of furloughs on company participation in, and elections made under other benefit plans, including flexible spending accounts. A furlough may be considered a qualifying event triggering an employee’s ability to make mid-year election changes under a flexible spending account.

Labor Law and Contract Considerations:

When determining which employees to furlough, it is important for employers to use objectively defined and non-discriminatory categories of employees, to mitigate arguments of disparate impact and retaliation.

Further, employers with 100 or more employees need to be aware that under the federal Worker Adjustment and Retraining Notification Act of 1988 (“WARN Act”), employers are required to provide 60 days advance written notice to terminated employees in the event of a “plant closing” or “mass layoff.”

Under the federal WARN act, notice obligations are not triggered if employees will be furloughed for fewer than six months. However, a furlough that exceeds six months or a reduction of hours by 50% for six months or more will constitute an “employment loss” and trigger WARN’s notice obligations.

Several states that have adopted “mini-WARN” laws have similar exceptions for unforeseeable business circumstances to the WARN Act, such as New York. Employers should review the applicable local, state, and federal notice requirements before furloughing any employees.

The expense of missing payroll, or letting your employee’s benefits lapse could be detrimental to your business, especially during times of economic distress. The attorneys at Wagner, Falconer and Judd have decades worth of experience navigating the ever-changing legal obligations employers face, and are only a phone call away to help you ensure your employees, and your bottom line, are protected. Visit our Support Services page to schedule a consultation with one of our attorneys.

Minnesota lawmakers have advanced a bill that would create a new state-backed family and medical leave program, which guarantees paid time off for the roughly 75% of MN workers that currently don’t already have access to the benefit. This new law aims to take some of the cost and risk associated with employee leave off of employers, but what does that mean for your business?

What would the new policy entail?

The law proposes providing up to 12 weeks of partial wage replacement for medical leave (including pregnancy). The law also proposes providing up to 12 weeks partial wage replacement for family leave, including for a new baby or seriously ill relative.

What would the benefits be?

The law would replace wages on a progressive scale at 90%-55% of an employer’s salary (66% on average), while protecting job healthcare benefits.

Who would foot the bill?

The cost for providing leave would be handled by creating a large statewide risk pool to attempt to equally share costs between employers and employees, with both contributing 0.31% on employee earnings.

Who is going to do the paperwork?

The Minnesota Department of Employment and Economic Development would handle payments and administration on behalf of employers.

Who will be entitled to this benefit?

All working Minnesotans, including small business owners and those who are self-employed would be eligible for leave. The leave would be job-protected, including a right to be reinstated after the completion of leave, and retaliation is prohibited.

Key Components of MN’s proposed family leave policy:

This proposed policy has NOT been passed by Minnesota law makers yet, so there is no need to make any changes to your employee policies at this time. The information here is not legal advice, and you should not take, or refrain from taking action based on information here. If you have additional questions about this policy, or would like to work with the WFJ Employment Law and Human Resources team to develop your internal policy now-visit our Support Services page to request a consultation, or give us a call!

What is a home seller disclosure law?

A home seller disclosure las is a law that requires home sellers to disclose or reveal known defects regarding the property that is being sold. Every state has their own unique disclosure laws and timelines. Many states also require a specific disclosure form, which should be provided by your Realtor.

What defects should be disclosed?

Material defects, anything that has an impact on the home’s value or safety. Water or flood damage (basement), leaking roof or ceiling, foundation cracks or issues, structural issues, insect infestations, mice infestations, toxic conditions such as asbestos, mold, lead paint, mechanical issues with the HVAC system or otherwise, electrical issues, deaths that occurred on the property in the recent few years, zoning issues or proposed changes to zoning, property line disputes-and depending on the state, naturally hazardous conditions such as location in a flood zone or near an earthquake fault line, tree roots impeding the plumbing lines, etc. The seller has a duty to report all defects they are aware of. If you can, paying for a detailed home inspection may help spot latent defects (defects not visible and not always detected by a general home inspection) and help you provide a comprehensive disclosure.

Does an issue have to be disclosed even if it was fixed by the homeowner?

Yes-disclose it in case the issue reappears for the buyer. Avoid a misrepresentation, negligence or fraud claim. Sometimes home issues that are repaired/fixed are perpetual problems. When in doubt, disclose.

What are your legal options if a problem wasn’t disclosed before you bought the home?

The buyer may have a claim against a seller when it can be proven that the seller knew about the defect and intentionally failed to disclose it. Typically this must be something that existed prior to the buyer taking possession of the home, a defect that is not obvious or visible to the buyer, and there is monetary damage resulting from the defect (buyer has out of pocket costs to fix or repair the issue.) The value of the claim is typically the cost to repair the defect. In some cases, there may be an attorney’s fees provision in the purchase contract.

What can a buyer do to make sure they aren’t buying a home with issues?

Pay for a thorough home inspection by a qualified professional that comes recommended to spot/reveal any issues. Read the entire disclosure form provided regarding the property, follow up with questions to the seller if you have any. Buying a home is a large investment, and you should take the time to understand what you are buying, and the contract you are signing-it is worth hiring a competent realtor or attorney to review the documents regarding the sale. Homeowner disputes can be lengthy and costly, so if you notice any red flags regarding the property, purchase agreement or disclosure, ask your realtor to ask the seller additional questions, and ask for them in writing.

With all the snow in the Midwest, snowmobile traffic has increased and towns all over are seeing an influx in visitors from snowmobilers looking for fresh trails. While a snowmobile is often viewed as a fun “toy”, it’s also a motor vehicle and is subject to many of the same laws you would be expected to follow if you were driving a car.

One of the largest factors in fatal snowmobile crashes is alcohol. Alcohol and drugs have a negative effect on the driver’s vision, balance, coordination, and reaction time. A snowmobile can weigh over 600 pounds and travel at speeds exceeding 90 mph, so it’s important to have your wits about you.

Snowmobiling under the influence (SWI) laws and regulations are heavily enforced but citations can be avoided if you have the right information. Here are some of the commonly asked questions about snowmobiling laws.

Can I have alcohol on my snowmobile?

The open bottle law applies to motor vehicles-including snowmobiles-on public roads, regardless of whether the vehicle is in motion. The open bottle law prohibits both drivers and passengers from consuming or possessing an open container of alcohol in a vehicle that is on a public roadway or shoulder of a roadway that is not part of a designated snowmobile trail.

Do police enforce laws against snowmobile operators drinking? If so, how?

Police officers, conservation officers, state troopers, deputy sheriffs and other peace officers do enforce these laws. Law enforcement can stop, inspect, and test snowmobilers for sobriety in the same manner they do in roadside checks on state highways. These often include preliminary breath and field sobriety tests. Some states do not even require probable cause to do so.

Operators who are suspected to be impaired may be required to submit to tests by an enforcement officer to determine the presence of these substances. There is a separate additional criminal penalty for refusal to submit to these tests, and the person’s snowmobiling privileges may be suspended for one year upon refusal. SWI convictions and refusals are recorded on the violator’s driver’s license record and effect their driver’s license privileges.

It’s also important to understand the laws for the region where you are snowmobiling. For example, under Wisconsin law, by operating a snowmobile on areas open to the public, you have automatically consented to provide a sample of your breath, blood or urine to any officer who requests the test.

What are the consequences?

The consequences of an SWI are like those of a DWI. An operator who is found impaired or has an alcohol concentration of 0.08 or more, can be charged with a misdemeanor, gross misdemeanor, or felony level DWI. People convicted of a misdemeanor could: be fined up to $1,000; sentenced to jail time; and/or suffer loss of snowmobile operating privileges for up to one year.

Additional penalties may apply if the person has any prior DWI convictions, has an alcohol concentration of twice the legal limit, or has a child under 16 years of age with them on the snowmobile. Penalties include: up to $3,000 fine with longer mandatory jail time; forfeiture of the snowmobile; if a person has 3 or more DWI convictions or revocations in the last 10 years, or has prior felony convictions, they can be sentenced to 3-7 years in jail, up to $14,000 fine, or both, and longer license revocations also could be imposed.

These convictions can further effect your snowmobile and car insurance rates, making you a more high risk driver if you are charged or convicted of a crime involving alcohol. If you are a commercial driver, the consequences could be devastating.

How can I avoid these charges?

First and foremost, avoid alcohol while operating your snowmobile. You can also avoid charges by knowing the area’s snowmobile laws and regulations, making sure everyone on your snowmobile follows the safety rules, and by taking courses on safe snowmobiling.

If you find yourself charged with an SWI, speaking with an attorney immediately is the best course of action. Questions about SWI or other traffic charges can be directed to our legal team here.

In times of economic stress, there is too much money on the line to not review your large projects for red flags. Failing to act quickly when a customer is in distress could cause you to lose some of the remedies available to you-and can leave large sums of money left behind.