Business lunch

HRinNH

Our purchasing administrator is an hourly employee. If she goes to lunch with a vendor, should she get paid for this time out of the office? I say yes, boss says no.

Cheryl C.

System

If the company derives any benfit at all from this lunch meeting, it is compensable. Typically, if it can be construed as a "business meeting", even if it does involve eating, it would be viewed as work, thus, needs to be paid. It is no different than if she were sitting at a desk on lunch break eating a sandwich, and answers the company phone, that is considered by D.O.L standards as "suffering" work, whereas the company must compensate the employee for that time. To be on the safe side, either prohibit the employee from going to lunch with clients/vendors, or allow it but pay her for the time. One hours pay at $15/hour (or whatever her hourly rate is) is a hell of a lot cheaper than defending a wage and hour claim.

ray a

If it doesn't happen that often I would pay. If it seems to happen on a regular basis I may suggest a different method of meeting other than lunch.

davids

I think it depends on the circumstances. If your Purchasing Administrator is going to lunch with the vendor socially rather than for business purposes, then no, the time is not compensable. If the purpose of the lunch is to conduct business, then yes, the time is compensable. If it is a social lunch, but business gets discussed, the employee could claim it as work time. It sounds like you need some clear guidelines as to whether such business lunches are appropriate; and if the lunch is social, then business should not be discussed.

HRinNH

Thanks everyone. You confirmed what I believed but now I need to find a NH ruling to present to my boss.

Oh, the lunches are definitely business related. The Purchasing Admin. doesn't like going on them but occasionally does and gets pissed when we don't pay her for promoting our company.

I'll have to contact the DOL next.


Cheryl C.

pork1

HRinNH: STATE LAW DOES NOT TRUMP THIS SITUATION AS YOU LAID IT OUT! Your boss is wrong and the company must pay. You should be able to get a free copany of the FLSA from your friendly DOL office. You can also to a search on the web for FLSA and probably pull up FLSA.

We are making an assumption here that the employee comes back from these luncheon situations with some proof of a business action obtained or provided in the form of a Purchase Order or or a sales order for the company.

Just spending association time overlunch is nothing more than "social intercourse", the transfer of verbal conversation and this time is not chargeable as work and I would be concerned that the IRS/State TAX Auditors would seek to look into these events very closely as the company would have to discribe this time in some catagory as an expense if paid to the employee as a business expense.

PORK

System

I disagree with your explanation. First of all,IRS regulations governing proper recording of business expenses have nothing to do with how the Wage and Hour division of the DOL views compensable vs non-compensable time. If the DOL deems the lunch time to be even partly committed to business discussion, it can (and most likley will) be viewed as compensable. The core questions are "was business discussed for any length of time and did the company dervie any benefit from that discussion?" Tax codes are irrelevent to this anaysis.

pork1

VPHR: You certainly have a right to disagree. I have been there and done that; the IRS wants the employee paid to the maximum amount possible, as compensation including lunch hours. EXAMPLE: Vendor takes secretary out to lunch and pays for the luncheon and gives the Secretary credit for obtaining a given contract or purchase. The company expects all merchandising secretaries to go to lunch with the vendors. The employee never turns the time spent with vendor in as a time worked, because the vendor took care of lunch. The retail company encouraged this idea and we had 15 merchandising secretaries.

I tried to put a stop to the practice when I became aware, but was unable. Then one day one of the secretaries decided to turn the time in as "time worked" to acquire the sale of merchandise to the company and she was denied by her boss the shoe buyer. Guess what, DOL and IRS both came to audit the situation and it cost plenty to get beyond the fear of a law suite. Not only did we have to generate how many hours were owed to the employees, but the IRS both put punishment fees on the case and we paid. thus my experience with this arena came home to haunt me and the company.

It was stupid things like this that drove the business "out of business"! Not bought off the street but liquidation of assets was the outcome.

In my current company, We do not deal with any situation where a labor person is involved with business lunches and expenses and I am happy for it.

PORK