Law Office of
STUART J. OBERMAN
By Stuart J. Oberman, Esq.
Wage and hourly related labor issues are becoming more and more of a problem for dentists. The Federal Fair Labor Standards Act (FLSA) sets the standard for most wage and hour regulations. However, individual states may impose stricter regulations that in some cases supersede federal law. Unfortunately, if an employer does not fully understand what regulations they are required to follow, the failure to pay an employee correctly can be financially devastating.
In the past few years, the Wage and Hour Division of the U.S. Department of Labor (DOL) has collected millions of dollars in back wages, as a result of overtime and minimum-wage violations. Wage and hour claims include the repayment of back wages, as well as penalties and interest.
This article will address some of the most common wage and hourly issues that cause a problem for dentists.
Employee classification and overtime: Every employee should have a correct classification. Employees can be either "exempt" or "nonexempt" under the FLSA. An "exempt" employee is not subject to minimum wage and overtime requirements, but a "nonexempt" employee is.
The criteria for classifying an employee as "exempt" under the FLSA guidelines includes such items as salary amount, managerial control, and the ability to exercise independent judgment. In just about every dental office, dental employees are considered "nonexempt" and must be paid overtime.
Independent contractor: Another employee classification issue that can lead dentists into trouble is mistakenly labeling an employee as an independent contractor. Classifying an "employee" as an independent contractor could land a dentist in big trouble with the Internal Revenue Service. For a worker to qualify as an independent contractor for tax purposes, a company must follow Internal Revenue Service guidelines.
As a general rule, a worker is an independent contractor if they and only they control the time, place and manner as to how the work is performed. In reality, very few dental employees, including hygienists and associate doctors, qualify as independent contractors. However, it should be noted that in documented cases, a person may very well qualify as an independent contractor.
Continuing education: A common problem is the area of compensation requirements for continuing-education ("CE") events. Many dentists believe that paying for CE is potentially an option and really has no impact on overtime compensation. The failure to handle an employees CE compensation correctly can be a costly mistake.
The FLSA mandates that time spent at a training/seminar/meeting for continuing education should be compensated when any of the following guidelines are mandated: attendance is mandatory; attendance is during the employee’s work hours; productive work is performed; and the CE event is directly related to the employee’s current job.
Payroll deductions: In most cases, employee payroll deductions that are required by federal or state law are handled correctly. However, some employers take unlawful deductions out of an employees paycheck.
Each state imposes restrictions as to what is and is not permissible to deduct from an employee’s regular and final paycheck. Every employer should make sure that they are fully aware as to what can and can not be deducted from an employees paycheck [and this includes final paychecks for former employees].
Comp time: "Compensatory time" is time an employee is allowed to take off with pay in lieu of monetary compensation for overtime worked. While "comp time" is a fantastic employee benefit, every dental practice should make sure that they have an office policy regarding "comp time" and that they are in compliance with federal and state law.
Final paycheck: Dental practices face a common problem regarding a former employees final paycheck. It is very important that a former employees final paycheck is paid quickly, to the former employee and any "deductions" should be carefully examined. A dispute regarding an unauthorized deduction could be very time consuming and costly.
In summary, wage and salary issues are complicated, and if not dealt with quickly and throughly, the problems can cause a dental practice substantial financial hardship. It is very important that every dentist understand the essential elements of labor law in order to avoid costly errors.
