HR Advisor December 2003

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HR Advisor

MRSC has joined with Janice Corbin and Janet May, Partners, Sound Employment Solutions, Rhonda Hilyer, President, Agreement Dynamics,and Bruce Schroeder, Employment/Litigation Attorney, Summit Law Group, to bring you the "HR Advisor" article series on employment and labor law issues affecting Washington local governments. The "HR Advisor" will feature a new article each month with timely HR management information and advice you can use.*

Avoid These Wage and Hour Tripwires

December 2003

Bruce Schroeder
Employment/Litigation Attorney
and
Kristin Anger
Employment / Litigation Attorney
Summit Law Group

Wage and hour laws have recently been a fertile ground for lawsuits against public employers. In particular, there have been a number of class action suits against public employers based on certain pay practices used by these employers. Especially where a public employer has improperly but unknowingly followed certain pay practices for several years, that employer may face substantial financial liability. Even small mistakes can have huge consequences when small amounts of unpaid compensation are multiplied by many employees over several years. A couple of mistakes to avoid are set forth below, in hopes that your agency can avoid a costly and time-consuming wage and hour lawsuit.

Understand Recent Developments Regarding Meal and Rest Periods

The State Legislature recently enacted legislation clarifying the applicability of the meal and break period provisions of the State Industrial Welfare Act to public sector employers. Public employers have long understood that these provisions did not apply to them, but two recent court decisions against the State of Washington called this interpretation into question. The bill passed by the Legislature in mid-2003 was in response to these court decisions.

The Lawsuits

Two major lawsuits against the State of Washington were filed challenging the "straight eight" work shifts traditionally used by the institutional staffs of the Department of Social and Health Services (DSHS) and the Department of Corrections (DOC). Even though these employees collectively bargained to work straight eight-hour shifts without designated rest and meal breaks instead of a nine-hour shift that includes designated break times, the lawsuits claim the employees were denied their statutory meal and break periods guaranteed in RCW 49.12 and WAC 296-126-092. The State argued, among other things, that the Industrial Welfare Act, including the WAC regulations on meal and break periods, did not apply to public employers. The trial court rejected this argument, finding that the State was not excluded from these regulations. The State appealed this decision to Division I of the Washington State Court of Appeals, and the appeal is still pending. With just these two cases, the State faces $229 million in back pay liability. Additional litigation against public employers is pending, including a suit filed by Snohomish County corrections officers.

The Legislative Response

The unexpected judgment against the State forced the Legislature to take immediate action to clarify that most of the provisions of the Industrial Welfare Act were not intended to apply to the state and local governments. Of utmost concern to legislators and State and local policy makers was the potential for significant liability if the ruling against the State were upheld. That could have opened up the floodgates of litigation - any public employer whose practices, policies, or collective bargaining agreement language did not conform exactly to the wording of WAC 296-126-092 could have been subject to liability for overtime pay for meal and break periods over the last three years. While the bill initially introduced in response to these lawsuits simply stated that most provisions of the Industrial Welfare Act did not apply to public employers, labor interests succeeded in having the bill amended so that the Act will apply to the state and local governments in the future, unless the employer and employee agree otherwise. Thus, language was specifically added to ensure that employers and employees could agree to meal and break period provisions that varied from those specified in WAC 296-126-092. In a nutshell, the legislation as signed into law on May 20, 2003 (codified at RCW 49.12.005) does the following:

effective May 20, 2003, makes public employers subject to the meal and rest period provisions of the Industrial Welfare Act that they had previously understood they were exempt from; and
requires public employers to bargain over rest and meal period provisions if they want to adopt meal and rest periods different than that provided for in the regulations; and
requires public employers to obtain their non-represented employees' consent in some form of agreement to adopt meal and rest periods different than that provided for in the regulations; and
recognizes continued exemption from meal and break period rules adopted under authority of a legislative body (i.e., city council) adopted before April 1, 2003; and
relieves public employers from potentially significant liability for back pay for meal and break periods for any period prior to May 20, 2003.

Unless an agency bargains for different rules or obtains non-represented employees' consent to different rules, the meal and rest period requirements of WAC 296-126-092 apply. The following is the current language in the Washington Administrative Code (WAC) regarding meal periods and rest periods:

Employees shall be allowed a meal period of at least 30 minutes which commences no less than two hours nor more than five hours from the beginning of the shift. Meal periods shall be on the employer's time when the employee is required by the employer to remain on duty on the premises or at a prescribed work site in the interest of the employer.
No employee shall be required to work more than five consecutive hours without a meal period.
Employees working three or more hours longer than a normal work day shall be allowed at least one 30-minute meal period prior to or during the overtime period.
Employees shall be allowed a rest period of not less than 10 minutes, on the employer's time, for each 4 hours of working time. Rest periods shall be scheduled as near as possible to the midpoint of the work period. No employee shall be required to work more than three hours without a rest period.
Where the nature of the work allows employees to take intermittent rest periods equivalent to 10 minutes for each 4 hours worked, scheduled rest periods are not required.

Take a look at your work force, your working conditions, etc. If your operations would not be impacted by following the WAC language (or if you already follow it), then you need do nothing. Keep in mind that the regulation makes it very clear that scheduled rest periods are not required if the employee is allowed to take intermittent rest periods throughout the work day. This is likely the case with most of your office employees, and probably your field employees as well.

Effect of the New Legislation on Your Unionized Workforce

The new law includes the following language: "Employees of public employers may enter into collective bargaining contracts, labor/management agreements, or other mutually agreed to employment agreements that specifically vary from or supersede, in part or in total, rules adopted under this chapter regarding appropriate rest and meal periods." If you have already bargained meal and rest period provisions with your employees, then the new law will have little impact on you. If your bargaining agreements are silent on the issue, you and your unionized employees may bargain new provisions that differ from the requirements set forth in the WAC.

What about Management and Non-Represented Employees?

Again, if you are content to comply with the default rule set forth in the WAC for these employees, you need take no further action. However, if you want to implement different meal and rest period provisions for non-represented employees, the new law requires a "mutually agreed to employment agreement." "Mutually agreed to" is not defined in the new legislation, and there is no express requirement that the employment agreement be in writing. There is a school of thought that continuing to work under the employer's well established meal and rest period policies and practices constitutes "agreement" with the provisions. Written acknowledgment of receipt of personnel policies outlining meal and break provisions would be a more advisable approach, however. Obviously, the most cautious alternative would be to obtain written agreements with each employee.

When are Meal Periods Compensable?

The fact that the meal and rest period requirements are now applicable to public employers (unless different arrangements are agreed upon, as noted above) requires that public employers pay attention to certain related issued. For example, when do you have to pay employees for their meal periods? Employees who remain on the premises during their meal period on their own initiative and are completely relieved from duty are not required to be paid when they keep their pager, cell phone, or radio on if they are under no obligation to respond to the pager or cell phone or to return to work. The circumstances in determining when employees carrying cell phones, pagers, radios, etc. are subject to payment of wages will be evaluated on a case-by-case basis.

Are Employees Entitled to Additional Compensation if They Are On-Call During Their Meal Period?

In Iverson v. Snohomish County Department of Corrections, 117 Wn. App. 618, 72 P.3d 772 (Div. I, June 16, 2003), a corrections officer sued the County for additional compensation for his 30-minute meal period, because although paid, he is required to remain at his post during his lunch period and respond to emergencies. The Washington Court of Appeals affirmed summary judgment for the County, holding that where an employer complies with WAC 296-126-092 (1) and pays an employee for remaining on call for his meal period, the employer is not required to pay additional compensation for remaining on call. In Salvation Army v. White, et al., 118 Wn. App. 272, 75 P.3d 990 (Div. I, Sept. 8, 2003), the Court of Appeals rejected a claim by domestic violence counselors for the Salvation Army that they were entitled to additional compensation because they had to remain on call during meal and rest periods. The Court concluded that employees were not engaged in specific work activities while on call and therefore they were not denied the required meal and rest periods. The Court also found that the intermittent rest and meal period options of the regulations were satisfied by the ability of the counselors to take meal and rest periods in small segments. The Court allowed this option even for meal periods where employees would be interrupted for small periods of time.

Beware of Delayed Overtime Approvals

To guard against unnecessary overtime, many employers have policies stating that overtime must be approved by an employee's supervisor. While this is a sound approach, employers must ensure that supervisors do not delay giving the required approval and/or that any delays by supervisors do not prevent the employer from paying the employee the overtime he or she is owed in a timely manner. King County recently settled a multi-million dollar lawsuit over these very kinds of delayed overtime payments.

State law requires that employers pay employees no later than seven days after the close of each payroll period. An employee should receive all of the compensation owed in connection with that payroll period, including any overtime earned during that payroll period. Where a personnel policy requires supervisor approval for any overtime, some employers have withheld overtime payments until that supervisor approval is given. In situations where a supervisor let overtime requests accumulate, employees might not receive overtime pay associated with a particular payroll period until several pay periods later when the supervisor got around to his or her paperwork. In the King County case, although the employees whose overtime payments were delayed ultimately received their pay, they filed a class action lawsuit over the delay. Under state law, employers who withhold wages may be liable for double damages and attorney fees. Thus, although they had already received payment of their overtime, the plaintiffs in the King County suit demanded double payment plus their fees, as well as an injunction ordering the County to pay overtime in a timely manner. As noted above, the case proved to be expensive for the County.

If you have a policy requiring supervisor approval of overtime, you should implement controls to ensure that such approvals are given in a timely manner, and that overtime payments are not delayed because the overtime submittals are sitting in some supervisor's in-box. In light of the potential for double damages and attorney fees, delayed overtime payments (or other wage payments) can be expensive if challenged.

Bruce Schroeder is an employment / litigation attorney with Summit Law Group, Seattle. Bruce's practice is concentrated on representing management in the entire range of employment law matters. More.

Janice Corbin is a partner with Sound Employment Solutions, LLC, Seattle. Janice has over 15 years of human resources experience with the Seattle Police Department and the International Harvester Truck Company and has worked in the law enforcement field for over 22 years. More.

Janet May is a partner and attorney with Sound Employment Solutions, LLC, Seattle. Janet has over ten years of experience in the labor and employment law field, and has represented both management and labor. More.

Rhonda Hilyer, President and Founder of Agreement Dynamics, is an international consultant with a reputation for helping convert traditional, conflict-based environments into productive, collaborative ones. More.

*The Articles appearing in the "HR Advisor" column represent the opinions of the authors and do not necessarily reflect those of the Municipal Research & Services Center.