Friday, December 22, 2017

'Twas The Night Before The Lawsuit...

Most homeowners do very few (if any) of these things. It is imperative that if you employ a domestic worker you become familiar with all of these rules.  - Oscar Michelen

Sorry kids, no presents this year! The DOL just
hit us with a $45K punitive damages penalty for

tricking your Nanny into working free hours.
Nothing quite says Christmas like everyone gathered around the hearth and brushing up on the Fair Labor Standards Act. 

So, in keeping with that holiday spirit, I happened upon a great summary of why it's so important for domestic staff to be paid legally - and I don't just mean being paid with a check instead of handing over a little wad of cash.

Enter Attorney Oscar Michelen, whose blog Courtroom Strategy contains one of the best articles on the importance of following both FLSA and your states' labor laws; of actually paying and running your domestic staff team like a real, honest-to-goodness, professional little company. And aside from that, the article was written in a passionate tone which genuinely piqued my interest in learning more about labor law.


These applicable wage and hour laws, including the newly implemented domestic workers law, require families to act like small businesses in dealing with their household help. Believe me when I tell you it is much better to get your house in order BEFORE you are sued by a disgruntled ex-employee.  - Oscar Michelen


"Oh, but we have them on salary." That one, which I often heard a few years back when helping estates with assorted staffing and training needs, falls into the "if I had a nickle for every time I heard an estate owner say that one...." category. Amazingly disregarded, or simply disobeyed, more than any other laws I can think of, are wage and hour laws for non-exempt domestic workers (most non-managerial domestic staff will fall under this classification). 

Keeping track of workers' time and ensuring FLSA compliance with honestly paying them is really quite possible, especially with the help from an experienced payroll vendor and the proliferation and availability of labor law attorneys, that Citizen Editor is honestly confused as to why so many households (including some of extreme wealth) still just won't do it. I'm not sure if some estate owners (and their designated representatives) actually don't realize that labor laws which apply to everyone else in society also apply to the workers in their home, or if they have attorneys who know - yet are afraid to tell the estate owner for fear of them becoming angry... or perhaps, as I found sometimes is the case, everyone is indeed familiar with FLSA, but the Estate Manager is instructed to look the other way and pretend that everything is fine. 

One thing is for certain: rarely does the non-exempt domestic worker speak up about back wages still owed - usually for fear of being fired from his or her job, or fearful they will be seen as being "not flexible" or "not a team player," thus putting both job and year-end bonus at risk.  

Yet, are there any other professions in which we correlate the concepts of "flexibility" or "team player" with that of donating payments for services which otherwise would be agreed upon as reasonable?  If a surgeon performs a quadruple bypass on a family member, do we then expect him to toss in a liver transplant later on for free, under the guise of being "flexible" with the care we receive? If our general contractor builds an extension to the living room, do we then call him up a few weeks later and expect him to remodel two of the bathrooms for free, because everyone working on the estate needs to be a "team player" and pitch in where needed? 

"Flexibility" and "team player" are very important work ethic characteristics which should be displayed through daily behaviors and mutually respectful relationships - yet which should never be used to hold hostage or steal a domestic worker's legally earned wages.

After the job has been lost, however, most of that fear about speaking up quickly disappears.  

Having non-exempt employees on "salary" is very different than having exempt, managerial workers on salary; and it simply means the investigator at DOL (often with the willing help of the disgruntled ex-employee's newly hired labor law attorney) now does the very simple arithmetic to determine what the hourly wage is/was, in addition to any unpaid wages (straight time or overtime, depending) still owed the non-exempt worker. 

New flash! "We have them on salary" isn't clever - and it doesn't fool the folks at the Department of Labor.

It may, however, fool the non-exempt and mis-classified domestic worker into believing their employer is free from the responsibility of paying them for all hours actually worked, straight or time+half which may vary according to live-in or live-out and other factors (in addition to heavy fines levied upon the employer)... for a short time, anyway, until one day the worker learns otherwise, then perhaps leaving the estate under less than ideal conditions - and deciding it's now time to cash in and get paid for all those years of overtime. A similar level of importance goes for the record-keeping of hours of which the employer must ensure the non-exempt worker takes an active role with by acknowledging all hours worked, in writing, in addition to all applicable federal and state laws the worker must be informed of and also acknowledge. 

These Human Resource Management actions fall upon the employer to ensure they are completed fully and accurately; in other words, as nutty as this may sound:

The employer is responsible for managing their domestic staff - and also for managing a legal employment relationship.


Paying employees "off the books" does not absolve families of their statutory minimum wage, overtime, and record-keeping obligations; it merely makes an already difficult compliance situation worse. It is the employer's legal obligation to maintain appropriate records of hours worked and wages paid. To the extent the employer maintains inadequate records or, as is often the case, no records at all, the employee's estimate of the amount of overtime worked will suffice to satisfy at least the employee's initial legal burden. So, whatever the worker says, goes. It is not uncommon for household workers to claim to have worked 12 hours a day or more for five or six days a week over the course of years. - Oscar Michelen


Beyond referenced comments here about the importance of running the household professionally (yes, and that means even for a domestic staff of just one worker), there's nothing really more I can add, except as we're making New Year's resolutions about how to do and be better next year, what better place to begin than the foundation of domestic staff teams - that of the employment relationships and work agreements themselves?  

Well, perhaps there is just one thing I can add... and that is that much of what you will see anywhere on the topic of labor law, whether it be from a book, a website, or your own privately hired attorney, comes from the point of because doing so will provide a cushy layer of "CYA" between the employer entity and any disgruntled employee mayhem. All well and good, I say, yet... I think this onion deserves to be peeled away just one layer deeper, and for both employers and employees to realize that wage and hour laws need to be followed for one very special reason: 

Because it's the right thing to do. That's it. Very simple!

Laws covering employer/employee agreements are complex and beyond the scope of this blog to cover beyond an occasional post to hopefully bring the interest level up a notch or two, and this is very similar to other laws which protect us all!

There are also laws which state that manufacturers cannot dump toxic sludge into the local river; there are also laws which require us to slow down to 15MPH when driving through a school zone. You get the point... this is who we are as a society, and we have decided that fair and good behaviors result in a fair and good society, for all of us. 

Same with how domestic workers should be treated, in how the rules, regulations, and laws are followed... not just so that the employer doesn't "get into trouble," but so that the right thing is done, for everyone's benefit, because it's both fair and good.

I encourage you to now get that cup of hot chocolate and favorite blanket ready, and settle in for the perhaps the best primer on this particular labor law topic you are likely to read throughout this holiday season:

Folks With Nannies and Housekeepers Need To Know Fair Wages Laws

Update to Posting:

On classifying your workers as exempt, or non-exempt, you may find helpful:
  • A video from Federal DOL explaining the new salary level increase to $47,476 - as one component needed for the establishment of an "exempt" status worker, this new pay level which took effect just recently on December 1, 2016, is here.
  • A very detailed video from HR Options, Inc. is here.
  • A video primer on this topic from JustWorks is here.
  • A fact sheet from Federal DOL on live-in domestic workers is here.

On determining if your worker is an employee, or an independent contractor, you may find helpful:
  • From the IRS, you may wish to read this.
  • From Servant HR, you may wish to watch this video.
  • An excellent documentary on 1099 worker mis-classification as sub-contrator. It goes into detail why it is so harmful for the mis-classified worker and for the tax payers of the community and the state.  Watch this video.
As you can see, this is a very small sampling of the information available to anyone with just a few clicks. When in doubt, you may wish to refer directly to the websites of both the Federal DOL and your own State's DOL, as your employment relationship with your domestic workers will be governed by both. Labor law attorneys, especially those specializing in or with extensive experience concerning domestic worker employment, of course, should be a valuable part of your strategy to ensure you are in compliance. Many payroll services, such as Paychex, will also offer guidance, in addition to offering employee handbooks.

The important point is to ensure the domestic workers on your estate are being both managed and paid appropriately, for their benefit and for yours.


Disclaimer: This posting and blog does not contain or constitute legal advice; we are not attorneys; please contact a qualified labor law attorney for any questions you may have about your employee or employment relationship.

1 comment:

  1. Excellent blog post. Thank you Jim. Employers and workers need to understand who can and who can not be classified as independent contractors.


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