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Noncash compensation counts toward minimum wage

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in Compensation and Benefits,Human Resources

You probably don't have employees living in your workplace, but a recent case illustrates your vulnerability to lawsuits if you keep workers tethered to the job, either physically or by phone, e-mail or pager.

The case: Twelve couples worked in county parks in exchange for free housing and water access. They were required to be present in the park virtually around the clock to deter vandalism, call for fire or medical help, clean the restrooms, open and close the park, tour it twice a day and maintain a log of required maintenance.

The caretakers sued, alleging that because they received no pay and were required to stay in the park all day, the county violated the FLSA's minimum wage and overtime rules.

A federal appeals court dismissed the suit, ruling the workers weren't entitled to additional wages. Reason: Even though the work and hours were unpredictable and difficult to determine, the rental value of the free housing surely compensated them at a rate above minimum wage. (Myers v. Baltimore County, Md., No. 01-2356, 4th Cir., 2002)

Advice: In cases like this, the critical question is whether the so-called "waiting time" is spent primarily for your company's benefit or the employee's benefit. These caretakers spent a good amount of the day pursuing personal activities. In addition, they had agreed in writing to this lodging-as-pay deal.

This case also confirms that you can count other forms of compensable benefits, such as free rent, toward a worker's minimum-wage requirement.

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