Transcript Taxable Fringe Benefits

It’s About Time
Presented by
City of Titusville, Florida
John McKinney
[email protected]
321.383.5804
Today’s Objectives
 To provide education about the Federal
FLSA law and regulations.
 To provide an overview of the Exempt
versus Non-Exempt status
 To provide you with your rights
 To provide an overview of the reporting and
record retention process for employees
FLSA – Background
 Fair Labor Standards Act (FLSA)
– Established in 1938 by the Department of Labor (DOL)
– Purpose
• Establishes standards for:
– Minimum Wage
– Overtime Pay
– Child Labor
– DOL first issued exempt status regulations in 1940
• Last modification in 1954
– Recent regulation revisions effective August 23, 2004
• Section 541 (29 CFR 541 et al) – White Collar Exemptions
Fair Labor Standards Act
The Fair Labor Standards Act (FLSA) establishes
minimum wage, overtime pay, recordkeeping, and
child labor standards affecting full-time and parttime workers in the private sector and in Federal,
State, and local governments. Covered nonexempt
workers are entitled to a minimum wage of not
less than $5.85 an hour (Florida $6.67). Florida’s
minimum wage is $.82 more than the current
$5.85 federal minimum wage. Overtime pay at a
rate of not less than one and one-half times their
regular rates of pay is required after 40 hours of
work in a workweek.
FLSA - Background
 FLSA generally requires that employees be paid:
– At least federal minimum wage of $5.85 per hour
– Overtime premium pay of time-and-one-half of the
employee’s regular rate of pay for all hours worked
over 40 in a workweek for employees in hourly nonexempt status.
– Overtime premium pay of one-half of the employee’s
regular rate of pay for all hours worked over 40 in a
workweek for employees in salaried non-exempt
status.
Fair Labor Standards Act - Web
 http://www.dol.gov/esa/whd/flsa/ - Law
 http://www.dol.gov/esa/regs/compliance/wh
d/hrg.htm - Reference
 http://www.dol.gov/esa/regs/compliance/wh
d/fairpay/fact_exemption.htm - Exemptions
Exempt or Nonexempt
 Employees whose jobs are governed by the
FLSA are either "exempt" or "nonexempt."
Nonexempt employees are entitled to
overtime pay. Exempt employees are not.
Most employees covered by the FLSA are
nonexempt. Some are not
White-Collar Exemptions
 White-collar exemptions allow for
exemptions from these requirements.
 Salary Test
1. Employee must be paid at least a certain
compensation level;
2. Employee is paid on a salary ,rather than
hourly, basis; and
 Duty Test
3. Employee performs certain exempt duties.
White Collar Exemption
Requirement #1 (Salary Test)
 Salary level
– Minimum paid must = $455 per week or more.
– If paid less than $455 per week, cannot be
exempt even if he/she meets the duties test.
– If paid $455 per week or more, can be exempt
only if he/she also satisfies the duties test.
– Salary cannot be prorated based on FTE.
White Collar Exemption
Requirement #2 (Salary Test)
 Form of payment
– Employee must be paid a flat salary, not by the
hour
– Employee must regularly receive a
predetermined amount that cannot be reduced
because of variations in the quantity or quality
of work performed
White Collar Exemption
Requirement #3 (Duties Test)
 FLSA, Section 12(a)(1) provides exemption
from minimum wage and overtime pay for
bona fide employees in the following areas:
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Executive
Administrative
Professional
Outside Sales
Highly Compensated
 Section 13(a)(17) also exempts certain
computer employees.
Eligibility for Overtime
 Compensation
– Paid on predetermined salary on a biweekly
basis
– Eligible for overtime pay at one-half the hourly
rate for all hours worked over 40 for each
workweek
• Monetary Compensation
• Compensatory Time
Compensation
• Monetary Compensation
– Paid at one-half the regular hourly rate
– Paid in the form of an adjustment on the job that the overtime
was worked, following the end of the pay period in which the
overtime was worked
– Overtime paid in increments of 15 minutes for hours worked
over 40 in a work week
• 0-7 minutes = 0
• 8-22 minutes = 15 (.25)
• 23-37 minutes = 30 (.5)
• 38-59 minutes = 45 (.75)
Compensation
• Compensatory Time
– Employees discretion
– Used at one-half time the number of hours worked over 40
– At time of termination/separation, paid out all unused
compensatory time at one-half the regular hourly rate at the
time of termination/separation
– Balances and usage maintained within the unit
– Maximum compensatory time accumulation allowed = 240
hours
For More Information
 Other resources on the Part 541 exemptions
are available at www.dol.gov\fairpay
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Regulations
Preamble
Fact Sheets
Field Operations Handbook
Frequently Asked Questions
 To ask a specific question or register a
comment:
– Email: [email protected]
– Telephone, toll-free: 1-866-4US-WAGE
Review
 Minimum Salary Level: $455 per week
 Highly Compensated Level: $100,000 per year
 Salary Basis:
– A predetermined amount paid for every week in which
the employee performs any work, which is not subject
to reduction because of variations in the quality or
quantity of work performed
 The salary level and salary basis tests do not apply to
outside sales employees, doctors, lawyers, teachers, and
certain computer-related occupations paid at least $27.63
per hour
Rights of Exempt Employees
 An exempt employee has virtually "no rights at all" under
the FLSA overtime rules. About all an exempt employee is
entitled to under the FLSA is to receive the full amount of
the base salary in any work period during which s/he
performs any work (less any permissible deductions).
Nothing in the FLSA prohibits an employer from requiring
exempt employees to "punch a clock," or work a particular
schedule, or "make up" time lost due to absences. Nor does
the FLSA limit the amount of work time an employer may
require or expect from any employee, on any
schedule. ("Mandatory overtime" is not restricted by the
FLSA.)
Rights of nonexempt
 Nonexempt employees are entitled under
the FLSA to time and one-half their "regular
rate" of pay for each hour they actually
work over the applicable FLSA overtime
threshold in the applicable FLSA work
period.
FLSA Salaried Non-Exempt
Timesheet
• Report total hours worked per day
• Automatic Calculations
– Hours worked over 40 in each workweek
– Number of hours due to employee in the form of comp time or
overtime payment for each monthly pay period
• Employee and Supervisor signature required on all
timesheets in which overtime hours were accrued
• Units may choose to collect employee timesheets and
signatures for all months for documentation and
retention purposes
• Spreadsheet/paper form retained in payroll
Timesheet Review
 Decentralized
 Dept Balance hours
 HR reviews for contractual compliance
 Payroll validates total time
 HR / Payroll agree to final Register
Record Retention Requirements
 Highlights: The FLSA sets minimum wage,
overtime pay, recordkeeping and child labor
standards for employment subject to its
provisions.
Record Retention Requirements
 Posting: Employers must display an official
poster outlining the provisions of the Act,
available at no cost from local offices of the
Wage and Hour Division and toll-free, by
calling 1-866-4USWage (1-866-487-9243).
This poster is also available electronically
for downloading and printing at
http://www.dol.gov/osbp/sbrefa/poster/main
.htm
Record Retention Requirements
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What Records Are Required: Every covered employer must keep certain records for
each non-exempt worker. The Act requires no particular form for the records, but does
require that the records include certain identifying information about the employee and
data about the hours worked and the wages earned. The law requires this information to
be accurate. The following is a listing of the basic records that an employer must
maintain:
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Employee's full name and social security number.
Address, including zip code.
Birth date, if younger than 19.
Sex and occupation.
Time and day of week when employee's workweek begins.
Hours worked each day.
Total hours worked each workweek.
Basis on which employee's wages are paid (e.g., "$6 an hour", "$220 a week", "piecework")
Regular hourly pay rate.
Total daily or weekly straight-time earnings.
Total overtime earnings for the workweek.
All additions to or deductions from the employee's wages.
Total wages paid each pay period.
Date of payment and the pay period covered by the payment
State Library & Archives of Florida
 http://dlis.dos.state.fl.us/index_researchers.cfm
 http://dlis.dos.state.fl.us/barm/genschedules/GS1-SL-
2006.pdf
FLSA & Direct Deposit
 Fair Labor Standards Act (federal law)
– Requires payment in “cash or negotiable
instrument payable at par”
– Paycards technically violate FLSA
– DOL does not pursue complaints about
payment by paycard
– DOL’s own position approving direct deposit is
inconsistent with letter of law
LOCAL DOL CONTACt
Orlando Field Office
Wage & Hour Division 407-648-6471
www.wagehour.dol.gov
Summary
• No employees will be changed from exempt to nonexempt
• All Professional employees not meeting the minimum
salary requirement ($455/wk) should be reviewed to be
changed from exempt to salaried non-exempt status
• Professionals not meeting salary requirement should
begin tracking hours per FLSA Salaried Non-Exempt
• Departments should be responsible for determining
FLSA exemption status and verifying FLSA Indicators
• Exempt employees report absences in 4 and 8 hour
increments only (full- and half-day for part-time
employees)
Questions