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Nasir and Matt address the problem surrounding employees not taking vacation. The two also talk about overtime pay in the question of the day.

Full Podcast Transcript

NASIR: Welcome to Legally Sound Smart Business.
This is Nasir Pasha.

MATT: And this is Matt Staub.

NASIR: Episode 29. Are we ready to go?

MATT: I am ready. Let’s get to.

NASIR: First, we have to talk about SNL. It’s recorded live and it’s broadcasted live on the East Coast but then, with a little bit of a delay.

MATT: Yeah, live on the East Coast. I hear that, on the West Coast, it’s on at the same time – the 11:30 p.m. but it’s obviously not the same as it is on the East Coast. I think it even says that on the thing. It says “recorded live from a previous…” or “taped” or whatever it says. But it is live on the East Coast.

NASIR: I guess we can’t call our podcast “live” because we’re not broadcasting live on the East Coast. We’ll work on it later on.

MATT: Let’s get to the story we have for today. I like this one.
It deals with employees and vacation. There’s a lot of interesting things in here about what your employees are really doing when they’re on vacation. Vacation is supposed to be a time when you’re not working.
I know, Nasir, when you go on vacations, you never work at all.

NASIR: That is not true. I just came from a vacation to Costa Rica. I think that was the first time I had really unplugged – I don’t know – for four years. I think all my vacations have been working vacations. That’s different though. I think I’m in a different – well, apparently, to this article, I’m not different – than anyone else, apparently.

MATT: Yeah, and this also talks about it’s more focused on the employees of companies and dealing with supervisors but there’s a lot of interesting numbers in here. Let me rewind a little bit here. It’s basically saying, when employees go on vacation, they’re still working – and we’ll get to the numbers in that, no big surprise. One of the first things it discusses is Americans only used 51 percent of their available vacation time in the last twelve months.

NASIR: Meaning they won’t use all their time.

MATT: Yeah, your vacation days accrue but they’re not even using the actual vacation days.
I guess that’s not that surprising either.

NASIR: Hold on, though. I just found a loophole in that statistic because there are some states which, once your vacation accrues, you can’t lose it. Even if you do end up not using the actual vacation days, you still are maybe entitled to vacation pay. Therefore, perhaps some employers just pay them out as a bonus at the end of the year which I know some of our clients do.

MATT: Yeah.

NASIR: Technically, the employees almost have an incentive not to take vacation days.

MATT: Yeah, because you’re still getting paid the money but you’re not getting the break which would be nice. I think everyone needs some sort of break at some point – no matter who you are, in my opinion.
Let me get into more of the numbers in here. I’ll just get to the one I thought was the craziest, if I can find it. 20 percent of employees when they’re on vacation said they were contacted by their boss. This seems like a problem.

NASIR: Yeah, that’s a problem because, basically, if you’re under the control of your employer, then you are considered to be in work time. Therefore, working. Therefore, not really on vacation. And so, probably a labor law violation in pretty much every state that I can think of. I think it’s also a federal law violation.

MATT: Yeah, exactly, that’s what I was getting to – that’s the big issue there. But some of them say it was welcomed. You know, there’s a lot of different numbers always thrown around in this but the bottom-line is people are on vacation, in a sense, but not really taking vacation. Sometimes, it’s just helpful – I’ll talk from an employer’s perspective – if your employees go on vacation, let them go on vacation. Don’t contact them. That’s obvious advice.

NASIR: No doubt.

MATT: And, two, sometimes, your employees just need that time to kind of think about something else and just kind of unwind from work. I would say, even encourage them to take the vacation time that they’re entitled to – maybe not all at the same time because then you get in trouble if all your employees are gone. Just encourage them at the right times because I think that, in the long run, it’ll be better for them and for the company.

NASIR: Yeah, absolutely. I agree and I think, when it comes to working on vacation, I know some people that, when they go on vacation, they’re not going to respond to an email or a phone call. They completely unplug. I even have people who are attorneys that, when they leave the office, that’s the case. I know an attorney that doesn’t have a smartphone. He’s great with technology but, when he leaves the office, no one can contact him. He’s not doing anything so he kind of separates those worlds which I can understand that’s, I think, from the older generation, that’s pretty common.

MATT: Yeah, you’re right, I’ve come across similar people, too. Once they leave the office, even for the day, they’re gone and you’re not going to get anything from them until they get back the next day. This is a little bit different from vacation. It’s a level even higher.

NASIR: Let’s get to our question of the day.

MATT: Yeah, question of the day, and it actually relates similarly to the article we had.
“One of my employees is working over 40 hours a week even though I did not approve of this action. Do I still need to give them overtime pay?” This comes from a commercial real estate firm in California.

NASIR: This is actually a classic lawsuit that a lot of big employers suffer usually in a class action. What will happen is that employees, they’re told that you can’t work overtime but then they end up doing so anyway – sometimes, voluntarily, right? And so, the problem is what does the employer do? The law is basically such that, yeah, you have to pay overtime. If they worked, then you have to pay.

MATT: Right. It’s simple. It’s pretty cut and dry there.
I guess the thing you could do is you can discipline them. Let’s say you tell them, “You can’t work more than eight hours a day or 40 hours a week,” but they do so anyways. You can discipline them at that point but you still have to pay them that overtime pay for any hours they did work over those numbers.

NASIR: if it’s a real problem, then you pay them out and you fire them and they’re going to learn their lesson the hard way. But understand the concept here and why this is done this way. As an employer, you have control of your employee. And so, therefore, you have a duty to exercise that control. The concept is that, even if – and this is a federal law and so this is going to supersede any kind of state law but all state laws are similar as well anyway – any work, even if not requested but actually done is considered worktime. And so, the law assumes that you’re going to be able to exercise control to have them stop working at the time that you want. And so, it’s something unavoidable and I think, like Matt said, I think, if this is an actual problem, then not only do you have to pay them overtime pay but you’re going to have to discipline them to make sure it doesn’t happen again.

MATT: Right. My first job, I loved getting overtime pay. We got paid I think a time and a half, well, obviously, for overtime. And then, if you worked a holiday, you got a time and a half too. If you worked overtime on a holiday, you’re getting double your pay so that was pretty awesome for a high school job.

NASIR: That’s cool.
Keep in mind, with that example Matt gave, it’s obviously a company policy. We already covered holiday pay, right? You know, just because it’s a holiday doesn’t mean you’re entitled to overtime or double pay or whatever but a lot of companies do that anyway.

MATT: Yeah, that was just a policy within the company that later shut down and went out of business in less than a year after I started working there.

NASIR: The pizza place, right?

MATT: No, this was like an agricultural goods type store.
Shout out to Quality Farm and Fleet is what it was called. I was cashier.

NASIR: I’m sure they had some ingredients for pizza that they had.

MATT: Not really.

NASIR: It’s pizza-related.

MATT: The pizza place I ended up working for, I would go there for lunch on my lunchbreak all the time so I guess that’s where it started.

NASIR: Oh, really? Okay. There’s still a pizza connection there.

MATT: Always. Can’t get away from it.

NASIR: All right, I think that’s our episode – Episode 29. Don’t forget to keep sending in your questions at or you can go to our website and check out other past episodes as well as leaving a review on our iTunes account.

MATT: Definitely keep sending in those questions. We’ve had some really good ones recently so we want to continue that trend.

NASIR: Yeah, I appreciate it.
Okay. Well, have a good one!

MATT: Keep it sound and keep it smart.

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Legally Sound | Smart Business
A podcast covering business in the news with a legal twist by Pasha Law PC
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Legally Sound | Smart Business covers the top business stories with a legal twist. Hosted by attorneys Nasir N. Pasha and Matt Staub of Pasha Law, Legally Sound | Smart Business is a podcast geared towards small business owners.

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