We have heard recent reports of cotton gin inspections being done by the U.S. Department of Labor Wage and Hour Division in the Southeast and Oklahoma. Now, Texas gins are receiving inspections as well.
Texas had quite a few inspections in 2016 and 2017 around Lubbock, and now we are seeing Wage and Hour inspectors show up in South and Central Texas member gins.
So far, they have only hit three gins in Texas. But all the inspections were in November, and it is likely that other Texas gins will be checked before the season is complete. One of the inspections is specifically checking on H-2A workers.
Check Citations Carefully
The DOL Wage and Hour inspection and citation processes are different from state agencies. Be sure you have someone knowledgeable to review any citations before you sign off on or pay them. We have seen problems with citations being written in a way that it is impossible to tell exactly what the problem was.
If you sign off on a vague violation without knowing the exact reason for the citation, you have no way of proving you corrected the violation. If the agency returns later and writes you a repeat violation, the fines can go up by a factor of 10. Under the new presidential administration, we can expect to see inspectors looking for repeat violations, if the past is any indication.
If you provide housing for your workers, you must have it licensed and inspected by the appropriate agency, depending on state laws. In addition, if you employ H-2A workers, you must have your housing inspected by an agency that is authorized to conduct inspections for H-2A housing. These may or may not be the same folks who would be allowed to inspect regular migrant housing.
While ginning, the most important item to watch for is proper worker payment. Be sure to pay overtime correctly. Remember, in 48-hour overtime weeks, double check overtime for employees who did not work the full week.
During a 48-hour overtime week, you must pay workers for any hours worked over 10 per day or any hours worked over 48 per week, whichever is greater. This calculation must be applied to any employee who exceeds 40 worktime hours.
We have many examples you can review on our website — tcga.com. But as a quick example, if a worker worked three 12-hour days and one five-hour day, they would have worked a total of 41 hours. But they would be owed six hours of overtime, due to the daily overtime on the three 12-hour days.
Had this same worker only worked four hours on that final day, they would be owed no overtime, as the employee must work more than 40 hours before the calculation even applies. Please call your gin association for questions related to worker pay.
Employee Bonus Pay
Another issue we have seen regularly in gin inspections is related to paying bonuses. When it comes to bonuses, just remember you typically must pay overtime on a bonus. There are exceptions to this rule, but an inspector will normally assume overtime is due on a bonus unless you can prove that you meet an exception.
The easiest way to pay a bonus and meet the Wage and Hour requirements is to calculate the bonus based on a percentage of the gross pay of an employee. Gross pay automatically includes overtime pay, so using this method will allow you to prove an overtime payment.
You can pay any worker any percentage of gross as a bonus. One worker may receive 2%, and another one 1%. That is fine. You just have to base the calculation on a percentage of straight time and the same percentage applied to overtime for each worker.
If you have H-2A workers on site, they must be paid overtime in the same manner as all the other employees in their work group. For example, if you pay overtime on a 48-hour basis for your gin workers, then all H-2A employees in the gin must be paid on the same basis.
This also applies to H-2A workers on the trucking crew. If you pay the other workers on the same crew on a 40-hour overtime basis, then the H-2A workers would be paid overtime on the same basis. You cannot treat H-2A employees differently than non-H2A workers.
The second H-2A issue relates to wage rates. Most H-2A workers are paid based on the Adverse Effect Wage Rate. The part that trips folks up is that all workers in the same job classification must also be paid this same wage rate.
For example, if the job description in your H-2A application specified workers for a gin press crew, then all of the workers on the gin press crew must be paid the AEWR, regardless of whether they are H-2A or regular workers.
When Wage and Hour inspectors have checked gins in the past, we typically have seen relatively few problems. Cotton gins have historically done a good job of managing their payroll accurately. But it never hurts to double check.
As always, if you or any of your staff have payroll related questions, please give your association office a call.
J. Kelley Green, TCGA director of technical services, contributed this article. Contact him at email@example.com.