Compliance July 20, 2005

DoL: Wage Payback Can't Violate FLSA

July 20, 2005 (PLANSPONSOR.com) - The US Department of Labor (DoL) ruled that the employer of a city police officer could not require reimbursement of wages paid during mandatory training if that would cause his wages to fall below minimums set by the federal Fair Labor Standards Act (FLSA).
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The  opinion letter was in response to a question by a city employer in Oklahoma about a police officer hired in May of 2000.   The officer attended training from June 4 to August 4 of that year and resigned to start employment with another city’s police department in October of 2000.   Oklahoma state law says that if the officer terminates employment within one year of being hired, the city can request reimbursement of wages paid during training from either the former employee or the new employing agency, according to the letter.

In its opinion, the DoL refers to the FLSA which says an employee must receive at least minimum wage and overtime pay for all hours worked, including hours during training, and pay is not considered received unless it is paid finally and unconditionally.   According to the letter, “The wage requirements of the FLSA will not be met where the employee “kicks back” directly or indirectly to the employer or to another person for the employers benefit the whole or part of wage delivered to the employee, if such payments bring the employee’s pay below the required minimum wage or overtime levels.”

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The DoL stated that its opinion did not prevent the city employer from seeking reimbursement from the employee’s new employer under state law.

Compliance July 19, 2005

Appeals Judges Back Severance Benefits Denial

July 19, 2005 (PLANSPONSOR.com) - A federal appeals court has backed a lower court judge in ruling that IBM's severance plan was within its right to deny benefits to a participant who repeatedly threatened the plan administrator.
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The US 2 nd Circuit Court of Appeals said the plan rightfully denied the benefits request from plaintiff Richard Waksman, citing the “threatening conduct” exception to granting benefits.

“Here, it is rational and consistent with the plain language to interpret ‘threatening conduct’ as including Waksman’s conduct here,” the appeals judges wrote. “It is not uncommon in the modern vernacular to refer to violence against persons, and it might well be an abuse of discretion to construe ‘threatening conduct’ to include an isolated exclamation along the lines of ‘I could just kill her!’ Here, however, Waksman was unusually detailed in his wording, identifying a weapon and a mode of transport.”

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The fact that Waksman may have otherwise had a peaceful work history was not relevant because in the court’s opinion it was only important that the participant “chose to express his frustration by describing a deadly assault,” the appeals judges wrote.

The judges affirmed an earliler ruling by US District Judge Stephen Robinson of the US District Court for the Southern District of New York.

The opinion in Waksman v. IBM Separation Allowance Plan, 2d Cir., No. 04-4084-cv, unpublished 7/8/05 is  here .  

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