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Being paid by the room? Indiana

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  • Being paid by the room? Indiana

    I had a question, and I hope that someone could help me with this.

    My mom works at a local hotel, it's a chain hotel. Recently, the new owner of the hotel has made it known that he will be paying the employees there by the room, ($3.50), and not by the hour beginning in January. This pay is believed to not include the collateral duties such as daily cleaning of the hallways and stairs, and doing the laundry. She also said that he did away with the vacation pay that they had under the previous owner. She was entitled to her vacation pay, but the new owner had said that he wasn't going to give it to her because it was under the old owners policy and not his. She works forty hours a week on average, and she's been there three years too. There is also an incentave pay,($50), to anyone that turns in another employee for being on their cell phone on the floor. The new owner said that if the current employees didn't like the changes then they can quit because he had people that he could replace them with.

    There are a lot of things that just don't seem right. But I'm not versed with the labor laws, so if anyone could please help me out with this I would really appreciate it.

    Thank you!

    Last edited by Phlebot; 11-23-2007, 12:10 AM.

  • #2
    $3.50/room is what is know as a "piece work rate". It is not necessarily illegal, but does need to be applied carefully. Assuming that the federal FLSA law is applicable ($500K in annual sales or interstate commerce), then both minimum wage and overtime rules are applicable. Piece work means that the employer needs to calcuate using both the piece work and minimum wage and pay the higher amount.

    For example, federal minimum wage is $5.85/hr (I do not know what Indiana MW is). That means assuming that exactly 40 hours is worked in the work week that the employee must be paid at least $234. At the piece work rate you quoted, that means if 66 or fewer rooms were cleaned, that MW would be paid, but if 67 or more rooms were cleaned, then the piece work rate would be used. Either way, the base pay is determined first, then Regular Rate of Pay is determined, then the overtime premium (if any) is then determined. Piece work rates can be a legally complicated calcuation.

    IN is not my state. Hopefully another responder will address address your vacation balance question and whether a higher state MW is in effect. Also, if the FLSA law is not applicable, then IN law only would be in effect.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

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    • #3
      To my knowledge, there is no law in Indiana prohibiting a use-it-or-lose vacation policy. Therefore, Phlebot, it would not be illegal for the new employer to wipe the vacation off the books.

      However, I would suggest you give the Indiana Dept. of Labor a call to make sure that there isn't a requirement that the previous owner should have paid it out. Whether or not the acquisition agreement included vacation liability that was on the books at the time, we would have no idea (and there probably isn't any way your mom could find out either).
      I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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      • #4
        The rule in In. re use it or lose it policy is: employers who don't want vacation pay to accrue until the completion of a vacation year or who don't want to pay terminated employees for accrued, unused vacation pay must formulate clear, written vacation policies & ensure that they are publicized to employees.

        I would call your state's DOL as suggested to see if you should have been paid your vacation pay by the previous employer.

        The min. wage in In. is the same as the fed. min. wage.
        Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

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