Transcript Brighton Homes LTD

The Fair Labor Standards Act:
Old Law, Brand New Regulations
Carrie Hoffman
Board Certified in Labor and Employment Law
Texas Board of Legal Specialization
Why should you concerned about the FLSA?
• Audit from the DOL/Private lawsuit/Collective
Actions
• Exemptions
• Rules on compensable time
• Wait time
• Travel time
• Break time
• Overtime
New Regulations –
Exemptions
• DOL issued final regulations on April 20, 2004
• Became effective on August 23, 2004
• Not all of the proposed regulations remain, especially the
elimination of the “discretion and independent judgment” duty
requirement
• The increased salary requirements remain in the final
regulations, but were increased
• The final rule includes many significant changes that take into
account 75,280 comments from the public
“Fair Pay” Regulations
• So-called “white collar” overtime exemptions
• Eliminates the short and long tests and replaces them with
one “standard test” per exemption
• Increases the minimum salary paid to a white collar
exempt employee (executive, administrative, professional)
– From $155/week ($8,060/year) – Former long test
– To $455/week ($23,660/year) – New standard test
“Fair Pay” Regulations
• Overtime exemptions do not apply to certain classifications
of employees, regardless of salary:
– “Blue collar” workers who perform work involving
repetitive operations with their hands, physical skill and
energy
– Police officers, fire fighters, paramedics, emergency medical
technicians and similar safety and first responder employees
– Licensed practical nurses and other similar health care
employees
“Fair Pay” Regulations
• Highly Compensated Employees
Highly compensated employees performing office or non-manual work
and paid total annual compensation of $100,000 or more (which must
include at least $455 per week paid on a salary or fee basis) are exempt
from the FLSA if they customarily and regularly perform at least one
of the duties or responsibilities of an exempt executive, administrative
or professional employee identified in the standard tests for exemption.
Executive Exemption
• NEW: The employee must be compensated on a salary basis at a rate
not less than $455 per week;
• The employee’s primary duty must be managing the enterprise, or
managing a customarily recognized department or subdivision of the
enterprise;
• The employee must customarily and regularly direct the work of at
least two or more other full-time employees or their equivalent; and
• NEW: The employee must have the authority to hire or fire other
employees, or the employee’s suggestions and recommendations as to
the hiring, firing, advancement, promotion or any other change of
status of other employees must be given particular weight.
Administrative Exemption
• NEW: The employee must be compensated on a salary or fee
basis at a rate not less than $455 per week;
• The employee’s primary duty must be the performance of office
or non-manual work directly related to the management or
general business operations of the employer or the employer’s
customers; and
• The employee’s primary duty includes the exercise of discretion
and independent judgment with respect to matters of
significance.
Professional Exemption - Learned
• NEW: The employee must be compensated on a salary or fee
basis at a rate not less than $455 per week;
• The employee’s primary duty just be the performance of work
requiring advanced knowledge, defined as work which is
predominately intellectual in character and which includes work
requiring the consistent exercise of discretion and judgment;
• The advanced knowledge must be in a field of science or
learning; and
• The advanced knowledge must be customarily acquired by a
prolonged course of specialized intellectual instruction.
Professional Exemption - Creative
• NEW: The employee must be compensated on a
salary or fee basis at a rate not less than $455 per
week;
• The employee’s primary duty must be the
performance of work requiring invention,
imagination, originality or talent in a recognized
field of artistic endeavor.
Computer Employee
To qualify for the computer employee exemption, the following tests must be met:
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The employee must be compensated either on a salary or fee basis at a rate not less than $455 per
week or, if compensated on an hourly basis, at a rate not less than $27.63 per hour;
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The employee must be employed as a computer systems analyst, computer programmer, software
engineer or other similarly skilled worker in the computer field performing the duties described
below;
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The employee’s primary duty must consist of:
- The application of systems analysis techniques and procedures, including consulting with
users, to determine hardware, software or system functional specifications;
- The design, development, documentation, analysis, creation, testing or modification of
computer systems or program, including prototypes, based on and related to user or system
design specifications;
- The design, documentation, testing, creation or modification or computer programs related
to machine operating systems; or
- A combination of the aforementioned duties, the performance of which requires the same
level of skills.
Outside Sales
• The employee’s primary duty must be making sales (as
defined in the FLSA), or obtaining orders or contracts for
services or for the use of facilities for which a
consideration will be paid by the client or customer; and
• The employee must be customarily and regularly engaged
away from the employer’s place or places of business.
• Salary requirements do not apply.
Minimum Wage
• Covered, non-exempt employees must be paid not
less than the MW for all hours worked
• Currently $5.15 per hour
• Cash or equivalent – free and clear
• Each week stands by itself, although there is no
requirement to pay weekly
(once a month – exempt (salaried)
twice a month – hourly)
Compensable Time
• Covered, non-exempt employees must be
paid for all hours worked in a workweek
• “Hours Worked,” generally include all the
time an employee is:
– Required to be on duty
– Required to be on the employer’s premises, or
any other prescribed place of work
– Allowed (suffered or permitted) to work
Compensable Time
It is the duty of management to exercise its
control to see that work is not performed if it
does not want it to be performed
Examples of Compensable Time
Attendance at meetings, lectures, training programs and
similar activities unless all of the following criteria are met:
– Attendance is outside the employee’s regular working
hours
– Attendance is voluntary
– Activity is not related to the employee’s job
– No productive work is done during the activity
Examples of
Compensable Time
• Work done in the home if the employer
knows or has reason to believe the work is
being performed
• Work done during lunch periods
• Work done before or after scheduled hours
• Rest periods of 20 minutes or less
Examples of
Compensable Time
• Get ready work prior to the start of the shift
• Clean up work after the end of a shift
• The entire meal period, if the employee is not
completely relieved from all duties and
responsibilities
• Transporting or delivering materials or equipment
to a job site prior to the start of the workday
Examples of
Compensable Time
• Returning materials or equipment after the
end of the workday
• Transporting employees to worksites,
office, or to their homes, either before or
after the paid workday, at management’s
request or directive
• Travel from job site to job site during the
workday
Examples of
Compensable Time
• “On call” time by an employee who must
remain on the employer’s premises or so
close thereto that he/she cannot use the time
effectively for his/her own purposes
Overtime Pay
• Due to covered, non-exempt employees
• Calculated at time and one-half the employee’s regular rate
of pay
• Required for each hour worked in a workweek in excess of
the maximum allowable in the given type of employment
(usually 40 hours per workweek)
• Workweeks may not be averaged
• No “comp” time
Overtime Pay
• Regular Rate (RR)
– It is a rate per hour
– Is determined by dividing total earnings for all
hours worked in any work week by the total
number of hours worked in the week
– It may not be less than the applicable MW
– If RR is higher than the MW, OT must be
computed at the higher rate
Overtime Pay
• Regular Rate (continued)
• Includes all remuneration for employment except:
– Gifts, such as Christmas or Birthday money
– Payments for time not worked, such as holiday or
vacation pay
– Discretionary bonuses
– Premium payments
Overtime Time
Must Include
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shift differentials
bonuses
on-call fees
retention bonuses
attendance bonuses
tips
Legal Wage Deductions
• Deductions authorized by state or federal law
– Income tax withholdings
– FICA
– Child support
• By Court Order
• On written authorization of the employee for a lawful
purpose
• In any event, deductions cannot result in wages paid below
the minimum wage rate
Illegal Deductions from Wages
• Wages must be paid unconditionally on a free
and clear basis
• Employers may not make deductions for:
– Cash shortages
– Uniforms
– Walk-outs/punctuality
– Breakages
– Any other reason not authorized by law
– Reduce wages below MW
Common Errors to Avoid
• Assuming that paying a salary automatically
makes an employee “exempt”
• Failing to pay for all hours an employee is
“suffered or permitted” to work
• Limiting employees to reporting 40 hours (or
limited overtime) and directing them to “get the
job done” and ignoring the time it takes to
accomplish the task
Common Errors to Avoid
• Employee works during meal break and is
not paid
• Employee takes work home and the hours
are not recorded or paid
• Not paying for compensable travel time
• Not paying for employee meetings
The FLSA Does Not Require
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Vacation, holiday, severance or sick pay
Meal or rest periods, holidays off, or vacations
Premium pay for weekend or holiday work
A discharge notice, reason for discharge, or immediate
payment of final wages to terminated employees
• Any limit on the number of hours in a day or days in a
week an employee at least 16 years old may be required or
scheduled to work
• Pay raises or fringe benefits
Additional Information
• Visit the WHD homepage at:
www.dol.gov/esa/whd/
• Call the WHD toll-free information and helpline
at 1-866--487-9243
• Use the DOL interactive advisor system ELAWS(Employment Laws Assistance for
Workers and Small Businesses at:
www.dol.gov/elaws
• Call or visit the nearest Wage and Hour Division
Office