Capped Commissions

As a sales representative for a computer software company, Richard received an annual salary and sales commissions as determined by a compensation plan that was part of his contract. There was a specific formula for how commissions were to be calculated, but language in the plan gave the company broad authority to make a final decision about compensation and to change the plan at any time. For sales commissions, in particular, the employer reserved the right to review any transaction generating a commission beyond a salesman’s annual quota and to determine the “appropriate treatment” of it.

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Small Businesses and Job Discrimination

Number of Employees

The federal Equal Employment Opportunity Commission (EEOC) is responsible for enforcing the most widely applicable federal laws that prohibit discrimination in employment. The smallest of businesses are not subject to most of these statutes. Title I of the Americans with Disabilities Act (ADA), which prohibits employment discrimination against qualified individuals with disabilities, applies only to employers with 15 or more employees.

The same is true for Title VII of the Civil Rights Act of 1964 (Title VII), which prohibits job discrimination based on race, color, religion, sex, and national origin. The threshold for coverage under the Age Discrimination in Employment Act (ADEA) is 20 or more employees. The Equal Pay Act, which is intended to prevent wage discrimination between men and women in substantially equal jobs in the same establishment, applies to most employers with at least one employee.

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When Is An Employee A “Supervisor”?

Title VII of the Civil Rights Act of 1964 prohibits the creation of a harassing hostile work environment based on the prohibited forms of discrimination, such as discrimination based on sex or race. To hold the employer liable for the harassment, the plaintiff must show that the work environment was so pervaded by discrimination that the terms and conditions of employment were altered. Isolated or trivial occurrences are not likely to be sufficient.

If the harassing employee is the victim’s coworker, that is, someone no higher in the chain of command than the victim is, the employer is liable under Title VII only if it was negligent in controlling working conditions. However, if a supervisor’s harassment of an employee culminates in a tangible employment action, such as a termination or a demotion, the employer is strictly liable under Title VII.

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Classifying Employees For Wages

As a general proposition, employers are required by federal law to pay their employees overtime, usually one and one-half times the hourly pay, for time in excess of 40 hours in a work week. They are also required to pay the minimum wage, which is currently $7.25 an hour (note: with some exceptions, the minimum wage in Illinois is $8.25 per hour).

The first four groups of employees that are “exempt” from having these rights are executive, administrative, and professional personnel and outside salespersons. For any of the first three exemptions, collectively called the “white collar exemptions,” to apply, the employee must receive, on a salaried basis, at least $455 per week or its equivalent.

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Criminal Background Checks On Employees

It is not a new development in employment law that many employers take into account an applicant’s or employee’s criminal history information, including
arrests or convictions, when making employment decisions. Nor is it unprecedented for the federal Equal Employment Opportunity Commission (EEOC) to
come out with policies and guidance on the subject.

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Employer Forced to Pay Unapproved Overtime

An enforcement action by the U.S. Department of Labor resulted in a ruling that nurses were employees, not independent contractors, of a staffing agency that provided them on a temporary basis to hospitals. After this ruling, the agency took action to attempt to deter unauthorized overtime by the nurses and to avoid having to pay time and a half for such hours. It adopted a policy, printed on all of the nurses’ time sheets, stating that the nurses had to notify the agency in advance of any hours exceeding 40 hours a week. If they did not, the notice stated that the nurses would be paid for such time only at their regular rate.When nurses who had worked overtime hours at hospitals without notifying the agency ahead of time sought to recover pay at the overtime rate, they prevailed despite not having followed the employer’s policy. A federal court ruled that the agency had not done enough to meet its duty under the federal Fair Labor Standards Act to “make every effort” to prevent performance of unauthorized overtime work of which it had knowledge. The agency’s knowledge was present, albeit after the fact, as was evidenced by the nurses’ time sheets showing the unauthorized overtime that was worked.
Suggestions from the Court

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Is it "Work" to Dress for Work?

Six times a day, for 6 to 10 minutes each time, workers at a chicken processing plant were required to put on, take off, and clean safety and sanitary clothing that they had to wear while on the job. The special gear consisted of smocks, hairnets, gloves, earplugs, and safety glasses. When a dispute arose between the workers and their employer over whether the employees were entitled to be paid during this time, the workers claimed a right to compensation under the federal Fair Labor Standards Act (FLSA).

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Small Business – Maintaining a Safe Workplace

In theory, and often in practice, the safety of the workplace is a top priority for any business. But while large companies may have personnel devoted exclusively to the subject, safety is but one of many responsibilities for the owners of small businesses. In some cases, the matter of keeping workers safe slips down the list of priorities. There to make sure the issue is not neglected is the federal Occupational Safety and Health Administration (OSHA).

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"Hours of Service" Under The FMLA

To be eligible for leave under the federal Family and Medical Leave Act (FMLA), an employee must have been employed by the employer for the preceding 12 months, and the employee must have put in at least 1,250 “hours of service” during that time. Neither the FMLA nor the Fair Labor Standards Act (FLSA) defines “hours of service.”When a hospital determined that a nurse it employed was about seven hours short of the 1,250 hours threshold, and therefore denied the nurse FMLA leave in connection with her surgery for carpal tunnel syndrome, the circumstances required a federal appellate court to construe the proper meaning of “hours of service.”

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IRS Gets Tough on Deferred Compensation

The much-anticipated and much-delayed rules from the IRS on the income tax treatment of deferred compensation are now available. At almost 400 pages, the rules are not exactly light reading for the average taxpayer. Taxpayers have until the end of 2007 to make any necessary changes to their deferred compensation plans. The Internal Revenue Code … Read more