Transcript Document

Fair Labor
Standards Act
(FLSA)
Online Training
Last revised October 2008
Contents of Online Training
Real Life Cases
About Fair Labor Standard Act (FLSA)
Paid Time & Overtime
• UNM Policy
• Bargaining Unit Contracts
Compensatory Time
Contents continued
Shift Differential
Volunteers, Employees, and
Independent Contractors
Losing FLSA Exemption
DOL Audits and Damages
Trends
Department of Labor recovered over $173
Million in back wages for over 246,000
employees in 2006…up from $166 Million
for 241,000 people in 2005.
Over $10.5 million in civil money penalties
were assessed in 2005.
The number of people collecting back
wages has increased by 14% since 2001
and monetary backwage collections has
increased by 30% since 2001.
FLSA Cases
Family Dollar Stores:
Employer misclassified some employees
as managers when their primary duty was
not management.
The employees were awarded $19.1
Million
Civil Cases
Merrill Lynch settled a case
involving both state wage and
hour violations and violations of
the FLSA with a payment of $31
Million.
Civil Cases
Continued
IBM recently was ordered to pay
$65 million in unpaid overtime
back pay to workers who were
deemed to be incorrectly
classified as "exempt“ from the
FLSA.
UNM PACT
The DOL reviewed UNM jobs. 1800
jobs were misclassified as exempt that
should have been non-exempt.
1996-The University retroactively
reviewed 2 year’s pay on these
employees to determine overtime
wages that were due.
What applies to UNM?
•
The following applies in the order
below:
1. State and Federal laws and
regulations
2. Bargaining Unit Contracts
3. UNM Policies and Procedures
If you can’t find anything in the contract, then refer to the Policy Manual.
Don’t forget to use your Human Resources Consultant as a resource (see listing at the back
of training)
Fair Labor Standards Act
FLSA
What is it?
Established in 1938 to protect
employees.
Establishes basic requirements
regarding pay and work.
What Is It?
Overtime pay for time worked over 40
hours in a work week for certain jobs
Overtime payment = 1.5 times “regular
rate”
Regular rate includes shift differentials,
bonuses, and other compensation
Restrictions on the employment of
children
Record keeping requirements
FLSA applies to all non-exempt employees including students. However the minimum wage
provision does not apply to them.
Exempt vs. Non-Exempt
FLSA classifies employees in two
categories:
1. Exempt Employees (Exemption from
FLSA)
2. Non-exempt (Not Exempt from FLSA)
Who Qualifies for Exempt
Status
Executive Employees (Involved in management of business)
Administrative Employees (requires a high level of discretion and
judgment)
Professional Employees (areas requiring prolonged intellectual study)
Some sales staff
1996 Amendment includes exemption for some computer software
employees.
2004 Amendments to wage criteria-The employee must make a
minimum of $23,660 per year.
Non-exempt Employees
Non-exempt Employees are not exempt
from the FLSA and the employer is
required to compensate the individual at a
rate of time and ½ for any hours worked
over 40 hours in a work week.
The workweek is defined as the 7 day
work week defined by the employer. For
UNM that is Saturday at 12:01 am to
Friday at midnight.
Changes to Act (April 20, 2004)
Increased amount on the salary test-If the employee
makes less than $23,660/year ($455/week), he could
lose his exemption.
This is also true for part-time exempt employees. If
their pay falls below $1971.63 per month, they could
lose their exemption.
New designation requires the non-exempt employee
to have a primary duty of performing non-exempt
work (non-exempt work over 50% of the time).
UNM Policy 3305
Overtime:
Supervisors should arrange nonexempt workloads so that an employee
can complete his/her duties in a 40 hour
workweek. However, supervisors may
require employees to work overtime.
Authorization is required from the
supervisor before OT is worked
Overtime
If the employee works unauthorized
overtime, the University will still make
payment of OT in accordance with
FLSA.
However, disciplinary action may be
taken against the individual for creating
this liability without obtaining prior
supervisory approval.
How is overtime allotted?
Non-union: Management discretion
CWA (see Article 8)
• Staff are offered overtime within their job title and
work unit (as defined by management) first on the
basis of seniority and then on the basis of the
least number of OT hours credited to each
employee.
• The most readily available employee may be
utilized for emergency overtime. Emergency
overtime is not counted on the list of overtime
credited.
Overtime Allotment Cont.
USUNM (see article 12 section H)
OT is assigned on a rotating basis
within the job classification needed,
taking into consideration the needs of
the work unit
The rotation of overtime will be
offered based on the least number of
overtime hours worked and offered to
an employee.
Overtime (UNM Policy) 2610
Overtime records
The system will keep records on OT hours
worked but in order for tracking purposes to
offer overtime for CWA employees, this may
need to be tracked on one document,
including the OT offered but turned down (this
counts against the employee as if they had
worked the time in the CWA contract)
This may be requested by the Union, the
Department of Labor, or the University Audit
Department
Document…Document…Document
Union Contracts
In addition:
CWA (see article 8 section 2.1)
• Time-and-a-half is paid for hours in excess
of 10 consecutive hours is paid
• When an employee is called back to work
after having completed his/her normal
workday (minimum 2 hours pay at timeand-a-half.
What are considered hours worked?
At times employees may be required to make themselves available to work
on an as needed basis outside of their normal work hours.
Waiting time/Standby
(See contracts and Policy 3500, Wage and Salary
Administration)
Compensation for standby status will be determined by the degree
to which an employee's free time is restricted:
restrictions on the employee's location
expected response time to return to work
number of other employees available to be called
frequency and urgency of calls received
Standby Pay Continued
Employees will be paid standby pay if
while waiting to return to work they are so
restricted that they cannot pursue personal
activities.
If employees are called back to work while
on standby, they will be paid at their
regular rate of pay for the hours actually
worked or at time and a half for any
overtime that is worked. This also applies to work
done outside of the office. So if an employee has to call people
to arrange things over the phone or has to do things on the
computer when called, the person is working and has to be paid
for that time.
• It is often easier to have exempt
employees on standby since standby
pay does not apply.
Standby Pay Continued
If the employee may have to do work, he/she
must not be impaired.
He/she must be able to return to work, if needed
within a short time (30 min. to an hour is
suggested).
Carrying a beeper or leaving a phone number
where one can be reached does not require
compensation unless some of the conditions
listed are met.
Contact your HR Consultant with any questions.
The employee should be told
specifically that he or she is in an “on
standby status” for a particular
timeframe, that he/she must meet the
requirements, and that the he/she
will be compensated at a particular
rate.
Contact your HR Consultant regarding the
rates.
Hours Worked Cont.
Time required to change into or out of
uniforms or other required activities
(prep work/close out procedures) before
or after work period
Traveling from worksite to worksite
Personal visits to other UNM
Departments
• Employees must arrange visits so as not to interrupt business
operations and must notify the supervisors when they are leaving.
Hours Worked Cont.
Work related emergencies such as
fires, etc.
Inclement weather
Callback pay (CWA) (at time and ½
regardless of total hours for the week)
1 approved class per semester
Meetings and required training
Hours Worked cont.
There are special regulations surrounding
travel time.
During regular work hours
During regular work hours on weekends
(University has decided to pay beyond this).
Hours during a one day trip
Outside of work hours if
• a) driving
• b) working
The provisions around travel time can be tricky. Contact your
Consultant for specific cases.
FLSA does not govern the following:
Breaks/lunch
Vacation
Sick leave
Holidays (but UNM does pay OT over 40 hours)
Leave with Pay
Lunch Breaks-FLSA &
State Law
Although the FLSA and state law do not require lunch periods,
per state law if lunch is taken, the period shall be no less than
30 minutes.
Policy (3300-Paid Time) governs lunch. The lunch period should
be taken away from the work area. It is unpaid.
If a non-exempt employee eats lunch at his/her desk and
answers the phone or speaks with customers, that individual is
doing work and must be paid for the time.
Remember the intent of the lunch period -- to rest and return as
DON’T LET YOUR
EMPLOYEE WORK DURING LUNCH!
a productive and happy employee…
UNM Policy 3300
Unpaid Time
Meal Breaks
• Managers should give 30 minutes to 1 hour
for each 8 hour shift scheduled
approximately in the middle of the shift.
Subject to business needs.
• Managers may give 30 minutes to 1 hour
for each shift of at least 5 hours. Subject to
business needs.
UNM Policy 3300
Paid Time
Rest periods
• 15 minutes for every 4 hour period
scheduled in approximately the middle of
the 4 hour period dependent upon
business needs.
• Employees should not work during this
period as the policy is intended to allow the
employee to rest.
CWA
• CWA has very specific scheduling
language. Please review the Contract
for specific information.
Compensatory Time-UNM
Policy 3310
Because we are a public employer,
our supervisors may allow nonexempt employees to take
compensatory time off in lieu of
overtime pay.
Compensatory Time-UNM Cont.
The following criteria must be met:
Both parties have to agree to the use of
compensatory time and it must be noted in writing.
Maximum allowable accrual of 120 hours (see
individual contracts for Unions). Employee must be
paid time-and-a-half for anything above the
maximum.
It must be used within 90 days (otherwise it must be
paid)(If the employee is under a union contract, these
deadlines may vary).
Upon Separation from UNM the employee must be
paid for any unused compensatory time.
Compensatory Time-UNM Cont.
Time off is taken at a rate of time-and-a-half
for the numbers worked over 40 hours
(choose the time-and-a-half Comp Time
earnings code).
Things that can get you into trouble
• Pre-paying employees
–Employees can only get paid for
work already done or leave taken
in compliance with policy.
• Employees have to have leave
accrued to be paid for time off.
State Law
• It is against state law to knowingly make or
receive payment for services not rendered.
• The only periods during which an
employee can be paid when not working
are for approved leaves as defined under
policy.
• See the University Business Policies or
Student Handbook.
Other issues that can get you into trouble…
In other words everything is in real
time! It must be factual.
Other issues that can get you into trouble…
• Employees must be paid at the approved wage…no
more, and no less.
• If Payroll is estimated because it is turned in early
and the time changes, a payroll adjustment form
must be used to correct it in the pay period.
• The employee must not start working until the hiring
is complete.
Other issues that can get you into trouble
• Student Employment and Graduate Studies has certain
allowable maximums that an employee must not work
beyond. Circumventing their policies can have several
implications which could affect the employee. (Contact
Student Employment and Graduate Studies for
maximums)
• In addition, circumventing the process or other pay
policies by trying to make payment in another manner
inconsistent with policy could be grounds for disciplinary
action up to and including discharge.
Proper Cause for Disciplinary Action
• From UBP 3215, Performance Management
“Falsification (deliberate) or omission of
information on employment applications or
resumes, time cards/records, or other
University records” constitutes proper cause.
Proper Cause for Disciplinary Action
• UBP 2200, Whistleblower
Protection and Reporting
Suspected Misconduct and
Retaliation, Section 2 also defines
misconduct as “Falsification of
documents or reports.”
Shift Differential
Union Contracts (Subject to change with
negotiations)
CWA(see article 7 section 4):
Applies to all hours in the shift
• Normal work schedule requires more than 4 hours of
work between 4:30 pm and midnight=40 cents for the
shift
• Normal work schedule requires more than 4 hours of
work between midnight and 8:00 am=50 cents for the
shift
Shift Differential
USUNM (see article 11 section D):
Applies to all hours in the shift
• 5% per hour when at least half of regular work
hours are between 4:30 pm and midnight.
• 10% per hour when at least half of regular work
hours are between midnight and 8:00 am.
Shift Differential Cont.
Policy 3500
Non Union
• Paid when at least ½ of hours worked are
between 4:30 p.m. and 8:00 a.m. the
following day.
• Must be applied to all hours worked in the
entire shift.
Contact your HR Consultant
when setting shift differential
rates.
Separations
Payment of wages within 5 working
days of when the employee is normally
scheduled to receive pay (state law)
• In other words, turn in your separation paperwork
immediately so final checks can be cut.
• The separation will also trigger the employee to be
paid any outstanding pay due to him.
• We can not hold the final check for monies owed
to UNM or for not turning in uniforms or
equipment.
In addition, the untimely processing of separation
paperwork can result in an overpayment to
terminating exempt employees.
Volunteers
Services have to be offered freely without the expectation of
compensation for services provided
If the employee is employed by the same public employer
providing the same types of services, the employee cannot be a
volunteer
A formal volunteer program should be in place.
An employee may not volunteer in anticipation of securing a
future paid position.
Contact Safety and Risk Services regarding insurance.
Work with your HR Consultant regarding these cases.
Volunteers Cont.
Rule of thumb: If we currently have
a job description for that type of
job, the person shouldn’t be a
volunteer, particularly if you need
the person on a long term basis.
This person should be an
employee.
Independent Contractors
Will the department:
Need this individual for continuous employment?
Require him to have a UNM supervisor or direct
his work?
Require a set schedule or be on-call to the needs
of the department?
Does the contractor work exclusively out of UNM
offices and does he/she use UNM resources?
Use these individuals for short periods of time on
an annual basis i.e. summer employment?
If the answer is yes to any of the above, then most likely,
this person is not an independent contractor. Contact your
HR Consultant.
Special Assignments
If the employee is non-exempt you will
have to pay them on an extra
assignment. They will be eligible for
any overtime worked. On-call is often
used in this case.
Extra Comp is paid in extremely limited circumstances
when an individual is doing work very much outside of the
scope of their job. Contact your HR Consultant prior to
advising your employee that they will be eligible for extra
comp.
A Review-Common FLSA Misunderstandings
“I pay all my office employees a weekly salary, so I don’t
have to pay overtime.”
Weekly, salaried compensation is only
one of the requirements for exemption.
Duties must be of an executive, administrative or
professional nature and must be over 50% of the job. Also,
if salary is under $23, 660…they are non exempt!
In other words, it doesn’t matter “how”
(monthly vs. bi-weekly) you pay them. It’s
based on “what” work they do and how
much they make.
Common FLSA Misunderstandings
“Our policy says overtime must be pre-approved. If an
employee doesn’t get approval beforehand, I don’t have
to pay overtime.”
You cannot deny payment for
time worked simply because the
time was not approved. To
enforce policy, you must use
disciplinary action.
Common FLSA Misunderstandings
My employee works 80 hours a pay period (36 hours
the first week and 44 hours the second week of the pay
period so I don’t have to pay overtime.
You would have to pay the employee at 36
hours straight time for week 1 and 40 hours
straight time plus 4 hours overtime for the 2nd
week.
You can’t flex within a 2 week period. Flex is within the week and
final hours must equal 40 for a full-timer.
There are some exemptions for emergency services (police, fire,
hospitals)
Common FLSA Misunderstandings
“If an employee goes to training outside work hours, I
don’t have to pay for the time.”
It must be paid time if the
employee is required to attend the
training.
Common FLSA Misunderstandings
“If a non-exempt employee chooses to eat lunch at her
desk and ends up answering the telephone a few times,
she doesn’t need to be paid for that time.”
To be considered unpaid time, an
employee must be relieved of
duties during that period.
If you allow her to answer phones while eating, she is performing
employment-related tasks and must be compensated, regardless of
whether she chose to eat at her desk.
Common FLSA Misunderstandings
“I have a non-exempt employee who regularly works
overtime, but she never records her time on her time
sheet, so I don’t have to pay her for it.”
It is the employer’s responsibility
to pay overtime for all hours over
40 during a workweek.
If you have reason to believe an employee is working
overtime, you must pay her for that time. It’s no defense that
she didn’t record her hours on a timesheet. The employer
would have the burden of proof to show that the employee did
not work the hours.
Can I track hours worked towards a particular
grant so I know what monies to apply from that
grant?
Yes…
If it is an exempt employee, be careful it
doesn’t look like a timesheet.
If it is a non-exempt employee, have the
employee sign in and out. They’ll need to
initial the accuracy of the time sheet.
What happens if I have an exempt employee but I want
to track what time they come in and leave for
performance management?
Don’t track it on a time sheet…
You could cause their exempt status to be
lost because you are treating them as nonexempt. You could be liable for back
overtime.
What happens if I have an exempt employee but I want to
track his hours because I want to give the employee comp
time? It should be okay if I give the employee comp time on
an hour-for-hour basis as long as I don’t comp him at timeand-a-half…right?
Wrong…
You could cause the employee’s
exempt status to be lost because you
are treating him as a non-exempt
employee even if you give comp time on
just an hour-for-hour basis. You could
also be liable for back overtime pay.
Cont.
You may be able to flex an exempt
employee’s time i.e. if the employee
worked regularly well past 40 hours a
week for the month due to a project or
high volume of work, you could allow
the employee to leave a few hours
early on a Friday etc.
When does the DOL investigate?
They receive complaints of noncompliance
Targeting specific industries
Sometimes it is just a matter of the
DOL trying to make their reviews of
covered employers
What will happen if we are
investigated?
The DOL will review current and past
payroll records
The DOL will interview employees and
can conduct private interviews
DOL Audits
What are we responsible for?
……up to 2 years of back overtime pay
at the rate of 1.5 times the employee’s
regular salary (up to 3 years if “bad
faith” is shown) plus additional damages
and attorney’s fees
Bottom Line
FLSA lawsuits have and will continue to be a
‘growth industry’ for attorneys in coming years
Designed to award attorneys’ fees.
Attorneys can represent an entire class
of employees leading to large damages.
The employee doesn’t have to go
through an attorney and can easily go
through the DOL.
Bottom Line
There is such a long period that the
employee can claim.
Government has interest in
contractor statuses due to taxation
There are currently more class
action suits on FLSA than any
other suits.
Best defense
DOL will avoid penalizing employers
for mistakes made in good-faith to
comply with wage and hour laws
Know what hours your employees are
working. Refer to your policies and
contracts and work with your HR
Consultant.
Questions?
Contact your HR Consultant.
UNM Resources
HR Consultanting Teams (Web address)
Additional EOD Workshops (Web Address)
•EOD 365: FLSA for Managers
FastInfo
UNM Business Policies and Procedures (Web Address)
HR Symposia (Web Address)
HR Presents - In Service Trainings (Web address)
Student Contacts
• Student Employment
– 277-5518
• Graduate Students
– 277-7344