Q. For the past four years, my employer has given me an annual 3 1/2 percent raise. But the company breaks the raise up in a peculiar way: 1 1/2 percent in my biweekly paycheck, and the remaining 2 percent in a separate check.
I want my entire raise in my paycheck so I can budget my daily living expenses better. But I think the company has found a clever way to hold down overtime costs, since my hourly wage includes the smaller amount. Is this legal?
A. Whether the slicing and dicing is legal depends on your status. I’m assuming you’re non-exempt, because you mentioned that you receive overtime pay. If that’s the case, your company’s action sounds illegal.
And it sounds illegal for precisely the concern you raised. The apportioning does affect the overtime rate the company pays you. That rate kicks in after you work more than 40 hours a week. And under federal law, that rate must be at least 1 1/2 times your hourly rate of pay. As you pointed out, the company holds down your hourly rate by splitting your raise.
That raised a red flag with Irv Miljoner, who heads the Long Island office of the U.S. Labor Department. It doesn’t matter how many ways the company separates out the raise, he said, but it does matter how the company acts on that split.
The 2 percent “is still pay for work during that pay period,” he said, “and all such pay counts toward determining what an employee’s regular rate of pay is for the purposes of computing overtime.”
For exempt employees, the apportioning would be legal because those employees don’t qualify for overtime. They fall into the professional, executive, administrative or outside-sales category. In exchange for those exemptions, which save employers money, the exempt employees must be paid a salary and make at least $455 a week.
For citation buffs who like to delve into statutes, look up Title 29, Part 778, of the Code of Federal Regulations. Or for more general information call the U.S. Labor Department at 866-487-2365.
Q. I don’t need the health benefits my company offers because I am covered by my husband’s plan. So must the company give me the money it would have otherwise spent on me? Does labor law require them to pay me?
A. Sorry, but that’s a “no” on both counts, according to lawyer Richard Kass, a partner at Bond, Schoeneck & King in New York. Many companies offer incentives to encourage employees to opt out of health insurance benefits, he said, “but there is no legal requirement that they do so.” So whether employees receive money in exchange for passing up company-sponsored health benefits is entirely up to their employer.
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Carrie Mason-Draffen is a columnist for Newsday, a Tribune Co. newspaper. E-mail her at yourmoney@tribune.com.
