Washington State Department of Labor & Industries Approves Housekeeping Revisions to State Wage and Hour Regulations

Posted on March 16, 2010 by Wage and Hour Practice Group

The Washington State Department of Labor & Industries (“L&I”) has approved a number of housekeeping revisions to the Washington state wage and hour regulations contained in Chapter 296-126 of the Washington Administrative Code (WAC). The revisions take effect on March 15, 2010.

As explained by L&I, the purpose of the revisions is to “repeal and delete outdated requirements; remove duplicative provisions; establish rules consistent with current statutory requirements; specify the information for certain requirements; create cross references and update definitions and terms for consistency and clarity.”
 

The following changes were made to the regulations:

  • WAC 296-126-001 was updated to clarify language, delete the reference to the Industrial Welfare Committee, and add notes referring public employers to RCW 49.12.005(3) and employers to the variance rule in WAC 296-126-130.
  • WAC 296-126-002 definitions were revised as follows:
    • “Employer” was updated to reflect the amended definition in chapter 49.12 RCW;
    • “Employee” was clarified by restating the exemptions from the definition;
    • “Adult” was updated by deleting “of either sex”;
    • “Minor” was updated by deleting “of either sex”;
    • “Committee” was deleted since the Industrial Welfare Committee no longer exists; and
    • “Department” and “Director” were added to be consistent with chapter 49.12 RCW.
  • WAC 296-126-010 was updated by deleting outdated language that refers to the adult minimum wage as $1.80 an hour. In addition, language was added to address the payment of sub-minimum wage rates under special certificates issued by L&I.
  • WAC 296-126-015 was revised to add a new section that explains how to calculate wage rates under special certificates.
  • WAC 296-126-030(8) was modified by replacing the term “deductions” with “adjustments” in order to be consistent with other rules.
  • WAC 296-126-040 was updated to clarify the requirements for employee pay stubs. The revised regulation requires that employee pay stubs be provided in “a separate written statement from the paycheck.” In addition, the revised regulation clarifies that pay stubs “may be furnished or made available electronically provided each employee has access to receive and copy it on the payday.”
  • WAC 296-126-050 was updated to clarify the requirement that, upon receiving a written request from a former employee, an employer must furnish a signed written statement stating the reasons for and effective date of the employee’s discharge within 10 days of the former employee’s request. A note was also added to the regulation explaining that additional recordkeeping requirements are stated in WAC 296-128-010 through 296-128-030.
  • WAC 296-126-060 was repealed to eliminate duplicative language requiring an employer of minors to obtain a work permit (the requirement is already provided in chapter 296-125 WAC).
  • WAC 296-126-080 was revised to add the specific title of the poster employers are required to keep.
  • WAC 296-126-090 was revised to replace the term “industrial welfare committee” with “department” in order to be consistent with RCW 43.22.280 and .282 and RCW 49.12.
  • WAC 296-126-096 was repealed because it addressed non-wage and hour issues (manual lifting) that are already covered by the L&I Division of Safety and Health.
  • WAC 296-126-130 was updated to clarify the process for employers to obtain wage and hour variances from L&I.

This entry was written by Douglas E. Smith.

Image credit: Dbenbenn.
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The Hidden Costs of Commuter Benefits

Posted on July 24, 2009 by Wage and Hour Practice Group

Photo by JbrittoThe Obama administration recently increased commuter tax benefits making them more appealing to employers. State legislatures are also considering laws requiring employers to provide transit subsidies to employees. If an employer decides to provide commuter benefits to its employees, or such benefits are required by state law, the employer must also consider its wage and hour obligations. Most employers are, unfortunately, not aware that commuter subsidies must be included when calculating an employee’s regular rate for overtime purposes.

The federal Fair Labor Standards Act (FLSA) explicitly includes commuting expenses in the regular rate. "An employee normally incurs expenses in traveling to and from work, buying lunch, paying rent, and the like. If the employer reimburses him for these normal everyday expenses, the payment is not excluded from the regular rate". 29 C.F.R. § 778.21.

There is only one reported decision, under either federal or state law, that addresses this issue. The facts of the case are simple. The Montana Department of Transportation agreed in a collective bargaining agreement to pay its employees’ commuting expenses, but did not include these expenses in their regular rate calculations when computing overtime. See Montana Public Employee’s Association v.Dep’t of Transportation, 954 P.2d 21 (Mont. 1998). The union alleged that the state had violated the FLSA and the Supreme Court of Montana agreed, finding that the commuting expenses should have been included in the regular rate.

Section 778.217(d) undermines commuter benefits laws by acting as an inducement for employers not to provide transit subsidies. For example, employers that allow their employees to pay for commuting costs through pre-tax deductions obtain commuter tax benefits and do not incur any additional overtime liability. Conversely, more generous employers that subsidize employees commuting expenses incur overtime liability, which negates the effect of the tax benefit.

There may be a creative solution to this dilemma. Most employers who provide transit subsidies do so through a third party. Employers who provide commuter benefits through a trust or benefit plan should be able to exclude such benefits from the regular rate. The relevant DOL regulation provides that irrevocable contributions to a trust or third party that provides for “old age, retirement, life, accident, or health insurance or similar benefits for employees” are excluded from the regular rate. See 29 C.F.R. § 778.214 In order to qualify for this trust or benefits exemption, the employer must meet the five-part test outlined at 29 C.F.R. § 778.215.

It is unclear whether the DOL or a court would agree that a commuter benefit plan falls within this definition as “a similar [employee] benefit.” Some may argue that this provision should be limited to health and retirement plans. Commuter benefit plans are beneficial for employees, employers, and the environment. As it is in the public interest for employers to provide these subsidies, it is likely that if asked to opine on the issue, the Wage Hour Administrator would find that commuter subsidies are excluded from regular rate if they are provided through a qualified plan or third party. In the absence of such guidance from the DOL, employers should be cautious about structuring these benefits in consideration of their wage and hour obligations.

This blog entry was authored by Salvador Simao.
 
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