Ask The Waldmans 7930

Ask The Waldmans

Working for Free

Dear Waldmans: I am an assistant manager of aself-storage facility, where I work a 27-hour work week. BecauseI live on the premises, however, my employer expects me to beon-call at all times for security reasons. I am required to liveon the premises, where my employer pays the rent and utilities. Iam paid a salary of $200 per month, which totals approximately$1.85 an hour. In addition, I receive bonuses depending on howmany units I rent throughout the month. My question is whether myroom and board and bonuses should be included in my compensationor is my employer breaking the law by not paying me a minimumwage?

--Short-changed in Mass.

Dear Short-changed in Mass.: If you are stillabsolutely sure you are working for free after reading thisarticle, you have an obligation to say, "no."

Generally, the minimum wage prescribed by the Fair LaborStandards Act (FLSA) must be paid in cash or negotiableinstruments, such as a check. However, the FLSA does not requirethat all wages be paid in cash. It permits an employer to offsetthe minimum wage obligation by the reasonable cost or fair marketvalue of board, lodging or other facilities furnished by theemployer to its employee, even if this offset reduces anemployee's cash wages below the statutory minimum wage.

In order for board, lodging and facilities to be included inan employee's compensation, an employee must receive a benefitfor which he is charged. Over the years, courts have found thatwhen an employer provides a free apartment to its employee, andthe employee accepts the contractual agreement, the apartmentalong with the amenities will be part of the employee'scompensation, even where the primary benefit of the arrangementwas not necessarily derived by the employee.

Moreover, time worked under the FSLA depends on the particularcircumstances of each case, in accordance with general conceptsof employment. Some factors to be considered in determining iftime devoted to a particular activity is time worked include 1.)whether the employer controls or requires the hours spent in theparticular activity; 2.) whether the employee has any freedom toleave the premises during those hours; and 3.) whether there isrelief from on-call status.

Generally, an employee who resides on the employer's premiseson a permanent basis or for an extended period of time is notexpected to work all the time. He should be able to have periodsof complete freedom from all duties, during which he may leavethe premises. Moreover, the mere fact that an employee is givenno relief from his on-call status does not make the timecompensable, as long as he is free to use the time for his ownpurposes.

As to your question regarding bonuses, the FLSA mandates thatbonuses can be included in an employee's compensation only inlimited circumstances. In most cases, where bonuses are providedas compensation for services rendered, they can be creditedagainst minimum wages due, subject of course to a few exceptions.For example, bonuses promised to an employee to induce him towork more steadily, rapidly or efficiently or to remain with theemployer, do not qualify for exclusion from an employer'scompensation. On the other hand, where bonuses are in the natureof gratuities (i.e., Christmas gifts), they may not be includedin an employee's compensation.

Based on the above, it appears that your board and lodging andbonuses may be included in your compensation. However, we do nothave all the facts to make a definite determination as we wouldneed to know all the specific details. If you feel that youremployer is violating the FLSA, we recommend that you discussyour situation with an attorney who specializes in employmentlaw.

A father-daughter team, Stanleyand Jill Waldman are self-storage owners/operators and attorneys.In addition, Ms. Waldman holds a master's degree in labor andemployment law from Georgetown University. Together they haveco-authored a number of books on self-storage operations,including Getting Started in the Self-Storage Business,Self-Storage Business Management Forms, The Policy &Procedure Manual for the Self-Storage Business, Selling YourSelf-Storage Business and The South Carolina Tools Manual forSelf-Storage Operators. Comments and questions may be sent to:Ask The Waldmans, P.O. Box 21416, Charleston, SC 29413; or viatheir Web site: www.askthewaldmans.com.