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Top 10 Violations Investigated By The Kentucky Labor Cabinet (And How To Avoid Them!) Part 2

Top 10 Violations Investigated by the Kentucky Labor CabinetHow to avoid the investigations by the Kentucky Labor Cabinet is quite a hot topic right now!

In case you missed the first blog, here’s a little recap about how this all came about. We were curious about the top violation complaints the Kentucky Labor Cabinet investigates to better advise our readers on how to avoid those sticky situations (and fines). So we drove down to Frankfort, KY and met with program managers from the Kentucky Labor Cabinet to get some answers.

The first part of this blog (which you can read here) got more hits in the first day than any other blog posts. This tells us that this is something you are really worried about!

So we want to give you more information to help you avoid these investigations especially after the controversy that filled the local news last week. The story of Lynn’s Paradise Café’s abrupt closing reminded Louisvillians that labor laws are no joke.

This iconic Louisville restaurant known for its quirky decorations and decadent food turned off its ovens for good after it came under fire from the Kentucky Jobs with Justice for allegedly breaking labor laws.

(Note: Owner Lynn Winter will not comment on the reason why she closed the restaurant after 22 years in business. She simply said, “The time has come to more on to new creative ventures.” To see this entire story, read this article on the Courier Journal’s website.)

This story has definitely reminded employers that it only takes one disgruntled employee (with the access to a Facebook account—and let’s be honest who doesn’t have a Facebook?) to put you in hot water.

So let’s avoid this situation shall we? Without further ado, let’s get back to the Top 10 Violations Investigated By The Kentucky Labor Cabinet (And How To Avoid Them!).

Here are issues 6- 10:

Top 10 Violations [As We Heard Them] Investigated By The Kentucky Labor Cabinet (And How To Avoid Them!) Part 2

Paying Employees Overtime

6. Overtime

The Violation: The employer fails to pay overtime appropriately or fails to calculate overtime correctly in dual capacity roles.

The Right Way:

Overtime for non-exempt employees goes like this: According to 803 KAR 1:060, employees must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. There is no limit in the Act on the number of hours employees (over age 18) may work in any workweek. The Act does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, unless overtime is worked as part of the workweek calculations.

So what is the workweek? An employee’s workweek is a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods. It doesn’t need to coincide with the calendar week, but may begin on any day and at any hour of the day.

Averaging the hours worked over two or more weeks to accommodate payroll runs is not permitted. Normally, overtime pay earned in a particular workweek must be paid on the regular payday for the pay period in which the wages were earned.

Dual Capacity Roles: Where an employee in a single workweek works at two (2) or more different types of work for which different non-overtime rates of pay have been established, his/her hourly rate for that week is the weighted average of such rates.

That is, his/her total earnings are computed to include his/her compensation during the workweek from all such rates, and are then divided by the total number of hours worked at all jobs.

Exempt Employees:Since the word “exempt” means “not subject to overtime payments,” typically, exempt employees do not receive any additional wages outside of their normal salary.  However, if an employer chooses to pay overtime to exempt employees, the Labor Cabinet told us that it generally will not jeopardize the employee’s exempt status.

For some light reading (HA!), check out the statute 803 KAR 1:060.

7. Break Time

The Violation: The employer does not provide breaks.

The Right Way: In Kentucky, employees are entitled to 10 minutes of paid breaks for every four hours of work. This is in addition to lunch breaks.

An employee must have a lunch or meal break between the third and fifth hour of his/her shift. This time does not have to be paid by the employer and the employee is completely free of any work obligations to the employer during this time. Thirty minutes is considered the standard amount of time.

However, the employer can waive a meal period if the employee chooses not to take it. But employers must be careful to keep good records of this in case there are any questions raised about practices.

unpaid wages8. Unpaid Wages

The Violation: The employer fails to pay for all hours worked. Also the employer does not pay the employee the final paycheck or the employer does not pay out vacation at termination.

The Right Way: Does work ever turn off? This becomes an issue especially with telecommunicating and social networking. If the employer suffers, permits or allows an employee to work, the employee much be paid. It is the responsibility of the employer to control work by putting clear policies in place.

Sometimes employers fail to pay out vacation at termination. In Kentucky, employers are not required to provide employees with vacation benefits, either paid or unpaid. However, if an employer chooses to provide such benefits, it must comply with the terms of its established policy.

For example, an employer may lawfully establish a policy or enter into a contract denying employees payment for accrued vacation leave upon separation from employment, and may also lawfully establish a policy or enter into a contract disqualifying employees from payment of accrued vacation upon separation from employment if they fail to comply with specific requirements, such as giving two weeks notice or being employed as of a specific date of the year.

However, an employer is not required to pay accrued vacation leave upon separation from employment if the employer’s established policy is silent on the matter.

And what about employers not paying a final paycheck? KRS 337.055 states that any employee who leaves or is discharged from his/her employment must be paid in full all wages or salary earned no later than the next normal pay period following the date of termination or 14 days following such date whichever is later.

Employers need to be careful not to delay paying the separating employee under any circumstances.  Stiff fines can be issued to employers who refused to provide final paychecks to employees out of anger or spite!

9. Prevailing Wage

The Violation: The employer does not pay prevailing wage rates (Construction industry only).

The Right Way: Before you can pay them, it helps to know what they are. The single question the Labor Cabinet gets asked the most is to define prevailing wages.

For the purpose of Kentucky Revised Statutes 337.505 to 337.550, the term prevailing wage for each classification of laborers, workmen, and mechanics engaged in the construction of public works within the Commonwealth of Kentucky, means the sum of base rate and fringe rate.

If you would like to learn more about this, please consult the Labor Cabinet’s website here. (http://www.labor.ky.gov/dows/doesam/pw/Pages/Prevailing-Wage.aspx)

Misclassifying employees as independent contractors10. Independent Contractor

The Violation: The employer misclassifies employees as independent contractors.

The Right Way: The rule of thumb is that if the employer retains any control over the conditions of the employment relationship (i.e., where the work is performed, when the work is performed, etc.), this constitutes an employment relationship.

It is important for employers to know that the misclassification of employees as independent contractors presents a serious problem for affected employees, employers, and to the entire economy.

Misclassified employees are often denied access to critical benefits and protections – such as family and medical leave, overtime, minimum wage and unemployment insurance – to which they are entitled.

Employee misclassification also generates substantial losses to the Treasury and the Social Security and Medicare funds, as well as to state unemployment insurance and workers compensation funds.

To learn more about, check out 803 KAR 1:005 or visit the Department of Labor’s website here. 

Final Tips:

So how can you avoid a lengthy and messy investigation? In order to avoid complaints, employers should keep accurate time records and have clear policies in place. Of course, the employer must follow the policies they outline or that is just asking for trouble!

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Have more questions for the Kentucky Labor Cabinet?

Visit their Frequently Asked Questions page here.