Trying to assist a small for-profit organization to come into compliance with labor laws and my google-fu has failed me. Is it legal to pay part-time workers a stipend (or, I guess, a salary) instead of paying them hourly? Are there legal restrictions on paying them this way?
Pertinent info, the workers in question work on average 3-4 hours per week, unless they act as a substitute for another worker and take that worker’s shift, in which case worker 1 would work about 6-7 hours that week and worker 2 would work 0. Compensation is paid out after every 7-week session is completed.
I do have a call in to the IL DOL, but it’s the government and I’m not expecting a speedy reply. If anyone is familiar with the basics, I’d appreciate it.
I’m not an expert, but I do recall that the federal regulations concerning salaried vs. hourly employees were in the news recently. Basically, currently anyone who earns under $455/week (about $23,700/year) is automatically covered by the Fair Labor Standards Act; this means that they must be paid the federal minimum wage for all hours worked, and that you have to keep records of each employee’s hours. Under the White House’s proposed rule change (which would go into effect some time next year), the threshold would be raised to $970/week (over $50,000/year.)
So unless you pay pretty damn well for 3–4 hours per week (and, after the coming rule change, pay phenomenally well for 3–4 hours per week), it would appear that your employees would not be exempt under the Federal Labor Standards Act, and you would be required to pay them federal minimum wage and keep track of their hours. You could, in principle, still pay them a wage “per shift” rather than an hourly wage, so long as the hourly wage works out to be above minimum wage; but this guy seems to think it’s a really bad idea.
I am, of course, not a lawyer; and this is not legal advice. Moreover, there are probably addition Illinois-specific issues in play, which may supersede the federal rules.
I’m fairly sure there are factual answers to these questions, which is why I put it here.
Anyway. Pay does work out to above minimum, even with the weekly fluctuations, BUT keeping track of hours is something they haven’t been doing well. They are still nowhere near meeting the $455 per week threshold.
So it appears the main crux is that stipend pay is fine, as long as 1. they keep records of hours worked and 2. the math works out to at least the legal minimum hourly wage?
One other question: management has gotten into the habit of saying “these hours don’t ‘count’” for compensation for certain administrative tasks, even though the entire system would fall down if we didn’t do them and our customers would end up confused and annoyed, as well as making our duties that DO “count” much more difficult. Is there any circumstance in which that’s legal? I wouldn’t think so, but I’m willing to be surprised…
Basically, employees need to be paid for every hour in which they either did work or were available to do work.
As others have said, as long as (total hours)/(total pay) is higher than minimum wage, you have a lot of flexibility in terms of how that pay is arrived at. However, employees must receive at least minimum wage for every hour worked. Employers who pay by commission or by piece will have to make up the difference if it drops below minimum.
Sometimes nonprofits try to get employees to volunteer some of their time. I don’t have any handy cites for bright line tests, but nonprofits are not likely to win in an argument that someone was an employee for this three hours, and a volunteer for those three hours unless the second set of hours were truly optional and voluntary.
Maybe this can help, how the non-profit I work for breaks things down? It has four categories, hourly waged, full-time salaried, consultant, and volunteer. Volunteers are not employees, though they may do some of the same tasks, they are not compensated and not on the payroll or paid under any circumstances, if that were to happen, our worker’s comp insurance would take issue.
The majority are hourly waged and work either part time under 20 hours a week (no benefits), part time over 20 hours a week (paid time off earned), and full time over 35 hours a week (PTO and health insurance). Salaried people are Managers and have much more on their plates, definitely working at least 40 hours a week, and full benefits. Consultants tend to be doctors who come in once a week or two. Their checks are a flat hourly fee paid with no taxes or anything taken out, so not a payroll check, and no benefits.
Everyone, including volunteers, have their hours logged, even if it’s just on a sign in/out sheet.
This is exactly the sort of thing that my second link was warning about (post #3). If the number of hours you’re requiring the employees to work starts to drift upwards relative to the number of hours you’re actually paying them for, the effective hourly wage would be driven down, and might even go below federal (or Chicago) minimum wage.
As far as saying “these hours don’t count”: the most recent case on this point appears to be Integrity Staffing Solutions v. Busk. Basically, there are narrow allowances for not compensating certain work-related tasks, but they’re generally reserved for things like traveling to and from work, waiting to punch in, or pre-work security checks. If it’s a task that’s primarily for the employer’s benefit, and it would affect the quality of the work if it wasn’t done, it generally has to be compensated:
Again, though, I am not a lawyer, and you should really consult with one and/or your local labor relations board instead of listening to me.
Federal wage law doesn’t preclude any of this… Illinois State law, who knows?
In my home state of Ohio, this would be perfectly legal.
The question here should be: Why would you work for a company that has such low regard for it’s employees, that it only compensates Temps that have a THREE HOUR A WEEK WORKLOAD … AFTER THE COMPLETION OF A PROJECT, THAT IS SEVEN WEEKS IN ARREARS???
Yes, law. No one here is the OP’s lawyer in the OP’s state. It is therefore not actually factually legal advice that can hold up anywhere but the court of opinion, so it’s in the Opinion Place. It’s where medical and lawful things go.
Sorry if that’s junior modding - I was amused by words and had to put them somewhere not in my head.
Thanks everyone, I at least have enough to start the conversation (and tell them they need to talk to a labor attorney for specifics).
I’ve been associated with the organization for over a decade, but it’s under new management as the founder (my mentor) passed away last winter. For now I’m reserving judgment and not attributing to malice what could be explained by ignorance. The organization has been around for over 40 years in some form or another, so I’m as interested in preserving the legacy as I am concerned about the worker’s rights. Whether that’s possible, we’ll see, depending on the response I get.
This hasn’t happened since last December when ownership transferred, so I don’t know if they have an official policy. The main issue I think is that they really haven’t THOUGHT about crafting official policies – as far as I know there’s nothing written down, which leads to the messy confusion and sketchy legality we’re dealing with right now. It seems like they’re kind of winging it, and it could well be from the overwhelm of all of the business involved in taking over a business while keeping services going. My hope is that by pointing this out, they will actually put some thought into it, check with a legal expert, and write policies down. That’s what I’m going to suggest to them, anyway.
Unless you have < 50 FTE employees you are also violating the ACA - 30 not 35 hours is the standard for full time employees to receive health insurance under the ACA.
I mean to point out that those categories aren’t legal if the total # of salaried full time + > 30 hr/week hourly is greater than 50. In that case any of the “part time over 20 hours a week” that work >=30 hours a week should be getting health insurance.
If that quote isn’t the OP’s organization, then whatever organization that is, is the one in violation.
It’s not the OP’s organization, was just giving an example of what another non-profit does. The “part time over 20 hours a week” people work 24-25 hours a week (mostly cleaning people, students and 2nd job types, who work 5-6 hour shifts, and sometimes maybe three 8-hour shifts). It’s a category we’ve had in place since the 90’s so they can get some PTO, for instance when the students are on break or if they take time off their full time job and don’t have to worry about the financial hit of taking their part time job off, too.
Anyone working more than 30 hours a week is a full timer waged/salaried scheduled for 37.5 hours a week. Thanks for assuming we’re violating labor laws.
