Do You Pay Your Workampers?

Transcription

1 Do You Pay Your Workampers? Published for the benefit of CalARVC Members

2 Do you pay your Workampers? Revised February 2016 The Fair Labor Standards Act (FLSA) is a federal law enacted by Congress in 1938 to establish minimum wage, overtime pay, child labor, and equal pay requirements that apply as provided in the Act. Every employer, if covered by the FLSA, is required to pay to each of his/her employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in a business engaged in commerce or in the production of goods for commerce a minimum wage not less than $7.25 an hour (as of 9/1/97). You are a covered employer under the FLSA if your park and/or campground grosses over $500,000 annually. Federal law allows the employer to pay a training rate of $4.25 an hour to employees under 20 years of age during their first 90 days on the job. The employer is not allowed to displace employees so a younger worker can be hired and pay them the training wage. The FLSA requires that men and women receive equal pay for equal work. Many states have their own minimum wage and overtime standards. These standards are either contained in the state's labor statutes or may be periodically issued by a commission or agency. When there is no statute, the federal minimum wage prevails. The states are free to set a minimum wage which is higher than that required by the FLSA. For example, California's minimum wage is $10.00 per hour as of January 1, The minimum wage must be paid for all hours worked. Employers failing to pay at least the minimum wage are subject to fines or imprisonment or both. When paying workampers, the minimum wage must be paid if the enterprise is a covered employer. However, under the FLSA an employer may credit the "reasonable cost" of meals and lodging that are furnished for the benefit of the employee and are accepted voluntarily by the employee and without coercion. Courts have agreed that federal law allows a meal credit even where employees are required to take the meals and are not given an option to take cash. When meals and lodging are credited toward the employer's federal minimum wage obligations ($7.25), the employer must maintain and preserve records substantiating the cost of furnishing the meals and lodging. The "reasonable cost" of meals and lodging is defined by the regulations as an amount no greater than the lesser of: The actual cost to the employer, exclusive of any profit; AND the fair rental value of any lodging or fair price of the meals.

3 The "FAIR VALUE" of meals and lodgings which, if made, must be used in lieu of the "reasonable cost." It will be based on: 1. the average cost to the employer or to groups similarly situated; 2. the average value to groups of employees; or 3. other appropriate measures of a value. In order to reduce the minimum wage obligation, California law does allow an offset of lodging provided against the minimum wage obligation. California law is more restrictive in determining than the FLSA and must be followed. The value of meals and lodging can be credited toward the employer's minimum wage obligation only when: they are furnished as part of employee's written agreement to credit the meals and lodging; when credit for meals or lodging is used to meet part of the employer's minimum wage obligation, the amounts credited may not be more than the new approved amounts, listed below; they are actually received or used; and the employee enters a voluntary written agreement to credit the meals and lodging. Each of the wage orders, specifically IWC Wage Order No. 5 for the campground and recreation industry, establishes the maximum limits on the values for meals and lodging to be credited toward the employer's minimum wage obligation. The following is the maximum amount creditable in California. Maximum Amount Creditable - California Lodging: as of July 1, 2014 as of January 1, 2016 Meals: Room occupied alone $42.33/week $47.03/week Room shared $34.94/week $38.82/week Apartment (RV site) - 2/3rds of the ordinary rental value and in no event more than... Where a couple are both employed by the employer, 2/3rds of the ordinary rental value and in no event more than... $508.38/month $752.02/month $564.81/month $835.49/month Breakfast $3.26 $3.62 Lunch $4.47 $4.97 Dinner $6.01 $6.68 Generally, employers must pay wages for all the hours that individuals are permitted or required to work, even if workers want to volunteer. The definition of "employee" under state and federal law wage and hour law is very broad and covers almost every person who works. The term employee means any person who performs services that benefit another person or business, whether or not the work is done for pay. The FLSA defines the term "employ" as including "to suffer or permit to work." The answer on whether the person is a "volunteer' or an "employee" depends on whether the services performed are sufficient to create an employee-employer relationship.

4 However, the Supreme Court has made it clear that the FLSA was not intended "to stamp all persons as employees who, without any express or implied compensation agreement, might work for their own advantage on the premises of another." Following this guide, the US Department of Labor does not consider an individual to be an employee if s/he volunteers or donates his/her services, usually on a part-time basis; and without contemplation of pay If these criteria are met, the individuals will not be considered employees of religious, charitable, and similar nonprofit corporations that receive their services, however, this does not include private profit making organizations. If a person offers to work for nothing for the purpose of gaining experience, or who works in expectation of "payment" to be paid in another form rather than cash (i.e., goods and merchandise, RV space discount), he/she will be considered an employee, not a volunteer. The term "volunteer" may not be used to circumvent the wage-and-hour laws when an employment relationship exists. For those parks that use "workampers" and do not compensate those campers who perform "volunteer" services, BEWARE. Under California and federal wage and hour laws, the services performed may not meet the above "volunteer" definition. Additional Considerations: If someone truly volunteers, without expectation of payments or pressure from the employer, and solely for personal pleasure, the person might not be covered by employment laws. But, if a for-profit business benefits from a volunteer's services, or if a paid employee could perform the services, the volunteer might later be considered an employee and entitled to wages. Workers Compensation and other tax considerations Remember that as an employee, even if their pay is an RV site, goods and merchandise, meals, etc., you are required to carry workers compensation insurance and pay appropriate payroll taxes. Consult an HR expert to verify you are in compliance. Housing provision that should be included in employment contracts when parks provide accommodations: As to Compensation: EMPLOYEE agrees that the value of the space rent provided to him/her by EMPLOYER, shall be credited against any minimum wage obligation of EMPLOYER to EMPLOYEE. At the time this contract is signed, it is agreed that the ordinary rental value of the provided space is $ per month, which is subject to increase during the life of this Agreement due to market conditions in the rental market and changes to the statutory law regarding hourly compensation. EMPLOYEE shall receive written notice of any increase in the value of lodging. The EMPLOYEE shall not have any rights of tenancy, and shall not be entitled to the protections of the RVPOL, Civil Code , et seq.

5 [Note: the amount of free rent cannot exceed 2/3 of the fair rental value of the home. There are limitations for single ($564.81) and married ($835.49) employees. See Wage Order No. 5 in this regard.] Another variation where the park provides the home/rv/space: Employer shall additionally compensate the Manager by providing the Manager the use of a RV and space, and utilities to the RV and space. The Manager shall not have any rights of tenancy, and shall not be entitled to the protections of the RVPOL, Civil Code , et seq. The Parties agree that the RV and space have a fair rental value of $ per month. The Parties further agree that the value of the housing provided shall be credited against the minimum wage to the maximum extent permitted by law, which is currently $ per month for a single employee and $ per month for an employed couple.