How Retailers Can Support Wage and Hour Compliance During the Holidays

For retailers, the holiday season is marked by long lines and increased customer demands. But it can also be characterized by a surge in sales that is crucial to business. During this busy time, it's important to continue compliance with wage and hour laws, the specifics of which may vary by state or city. Employee work behavior that is not aligned with wage and hour laws can be an area of vulnerability for employers. This article describes common areas where violations may occur, including:

• Recording work time.
• Meal and rest breaks.
• Work schedules.
• Manager exemptions.

Here are steps retailers can take to support wage and hour compliance this holiday season.

Recording Work Time

Time clocks are typically used in the workplace for hourly, nonexempt employees to record their work time. Many employers then use this information to calculate compensation. It can be helpful if the work record reflects the actual time the employee performed work.

If employees perform work-related activities before clocking in or after clocking out, this time might not be included in their work hours. For example, even if they are not clocked in, employees may feel compelled to respond to customer questions or requests as they walk through the store. Similarly, while not clocked in, an employee could talk to a co-worker about how the store is being merchandised for the holidays. If the employee informs their employer of such activities, the employer can evaluate whether this time is compensable and respond accordingly. It is therefore important that employees communicate with employers regarding how they spend their time.

Meal and Rest Breaks

Meal and rest break laws vary by state or city, but requirements can specify the timing and duration of breaks during the work shift. Further, some jurisdictions require that meal or rest breaks be uninterrupted—that is, the employee performs no work during them. Employers should anticipate events and activities that can interrupt employee breaks, such as questions from co-workers or customer interactions, and attempt to mitigate them to the extent possible.

If violations do occur, employers may need to take remedial action, such as paying a penalty or implementing additional training. Some time clock systems have evolved and now include specialized features that can facilitate accurate reporting of time worked and breaks taken. Employers may want to consult their timekeeping program or vendor to evaluate whether their system can support their needs sufficiently.

Work Schedule Considerations

Managers typically prepare and communicate employee work schedules in advance, but they may need to adjust schedules this holiday season due to unanticipated absences or tardiness. When making such changes, managers may want to consider how these adjustments could affect other employees' work hours and breaks. For example, if an employee calls in sick and a co-worker agrees to work additional hours to cover their shift, the co-worker could be entitled to overtime pay and/or additional meal and rest breaks.

Scheduling guidelines also vary by state and city, but requirements in some jurisdictions specify that schedules must be posted at least 14 days in advance. Some guidelines also state that employees have the right to decline shifts not on the schedule and must be paid for schedule changes made with inadequate notice. When adjusting schedules this holiday season, employers and managers may want to consider if and how any scheduling laws in their jurisdictions pertain to these changes.

Manager Exemptions

Some store managers are classified as exempt from overtime and are paid a salary, regardless of the number of hours or days they work in a week. Under the Fair Labor Standards Act (FLSA), which dictates how employees are classified for compensation purposes, a general criterion for a retail store manager requires that their primary duty includes the management of the store. In addition, the FLSA states that the manager should direct the work of two or more employees, have the authority to hire and fire other employees, and be compensated above a designated threshold. Some states, such as California, have additional or more stringent criteria for compliance.

Multiple factors help determine a manager's primary duty. When applied to a traditional retailer, the factors generally include the extent to which a manager is free from direct supervision, the importance of the work the manager performs compared to other employees, and the amount of time the manager spends performing managerial activities. Spending more time on hourly work activities, such as cashiering or stocking, could signify that the store manager's role is inconsistent with FLSA standards. Retailers may consider whether the manager role at their retail locations changes during the holiday season and evaluate whether this variation could impact their current manager job classification.

Training

Retailers are largely accustomed to prioritizing customers and sales during the holiday season, but dedicating attention to maintaining compliance with wage and hour laws benefits both employees and employers.

Retailers may benefit from providing training to employees and managers that emphasizes the importance of compliance. Training content can go beyond the basics of employer policies, such as timekeeping policies, and expectations. It can also include examples of scenarios that employees are likely to encounter, such as a customer attempting to engage an employee during their meal break, as well as demonstrations of how employees should respond.

Retailers can further reinforce the training content with the frequent repetition of this messaging across store meetings, visual media and other communication channels, such as breakroom bulletins.

Employers that take action to support wage and hour compliance will ultimately see value throughout the holiday season and beyond.

Elizabeth Arnold is labor and employment director at Berkeley Research Group in San Francisco. Samantha Stelman is associate director at Berkeley Research Group in Salt Lake City.