Understanding Fair Labor Standards Act Basics

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Fair Labor Standards Act Basics
 
 
Mark Bachmeier, Director, Human Resources
 
What You Should Know About
Wage and Hour Law
 
March 29, 2018
 
Session Goals:
 
1.
To help you understand essential fair labor standards principles.
2.
To help you understand common misconceptions about wage
and hour laws.
3.
To help you understand how wage and hour laws impact you.
 
Fair Labor Standards Act of 1938
 
Immigration
Growth of Cities
Industrialization/Manufacturing
Organized Labor Movement
Great Depression
New Deal
Response to “oppressive child labor, starvation
wages and intolerable work hours” (FDR)
 
Fair Labor Standards Act of 1938
 
Fair Labor Standards Act (FLSA) Established:
Minimum Wage
Maximum Workweek (Overtime)
Record-Keeping Requirements
Child-Labor Laws
Amended to Include Lactation Support for Nursing Mothers
 
Minimum Wage
 
Federal Minimum Hourly Rate of Pay:
1938: $0.25 ($4.15 in 2014 dollars)
1956: $1.00 ($8.61)
1968: $1.60 ($10.75)
1974: $2.00 ($9.49)
1980: $3.10 ($8.80)
1991: $4.25 ($7.30)
1997: $5.15 ($7.51)
2008: $6.55 ($7.12)
2009: $7.25 ($7.80)
 
Maximum Workweek
 
40 Hour Workweek
Workweek = 7 Consecutive 24 Hour Periods
Established by Employer
May Differ within Organizations, Based on Business Need
Must be Fixed/Recurring
Allowable Exceptions to 40 Hour Workweek:
Law Enforcement and Fire Protection
Healthcare Workers
 
Overtime Pay
 
Premium Pay for Hours Over 40 in Any Workweek
1.5 Times “Regular Hourly Rate”
Each Workweek Stands Alone
Paid Time Off Hours Do Not Count
All Hours Worked for the Same Employer Count Together
Weighted Average for Multiple Rates of Pay
Compensatory Time Allowed in Public Employment Only
 
Compensatory Time
 
Paid Time Off in Lieu of Cash Overtime (Recommended Method)
1.5 Hours Awarded for Each Overtime Hour Worked
Maximum Allowable Accrual is 240 Hours
Must Be Used Before Vacation
Must Be Used Within 12 Months or Cashed Out
Cashed Out Upon Separation from Employment
Illegal in Private Employment
 
Regular Hourly Rate
 
Total Pay Divided by Hours Worked
Regular Hourly Rate Includes:
Wages
Commissions
Non-Discretionary Bonus Payments
Value of Certain Goods or Facilities (e.g., Room and Board)
Shift Differentials
 
Regular Hourly Rate
 
Regular Hourly Rate Does Not Include:
Premium Pay for Working Weekends or Holidays
Discretionary Bonus Payments
Gifts
Payments for Not Working (e.g., Sick Leave, Vacation)
Expense Reimbursements
Value of Benefits
 
FLSA Record Keeping Requirements
 
Employers Must Maintain, for Every Covered Employee:
Name, Address, SSN, Birth Date (if under 19), Gender, Occupation
Applicable Workweek (beginning and ending days/times)
Hours Worked by Day and Workweek
Basis of Pay (e.g., hourly or weekly rate)
Detailed Record of Pay, Including All Calculations and Deductions
Pay Dates and Pay Period Dates
Payroll Records Must Be Maintained for at Least Three Years
 
FLSA Exemptions
 
The FLSA provides exemptions from the minimum wage,
overtime and certain record-keeping requirements for
employees in positions meeting specific criteria.
Generally, these criteria involve a defined “duties test”,
payment on a salary basis, and a minimum weekly salary
amount.
Generally, exempt employees are paid a fixed amount without
regard to hours of work.  They are not entitled to overtime and
pay may not be reduced for working less than 40 hours in a
workweek (except under limited circumstances).
 
FLSA Exemptions
 
FLSA Exemptions Include:
Executive
Administrative
Professional
Computer Employee
Outside Sales
Highly Compensated Employee
 
Executive Exemption Criteria
 
Paid on salary basis at a rate of not less than $455 per week;
Primary duty
 is managing enterprise or recognized department
or subdivision of the enterprise;
Customarily and regularly direct the work of at least two other
full-time employees, or equivalent; and
Ability to hire and fire other employees or recommendations
regarding personnel decisions are given particular weight.
 
Administrative Exemption Criteria
 
Paid on salary basis at a rate of not less than $455 per week;
Primary duty is 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
Primary duty includes the exercise of discretion and
independent judgment with regard to matters of significance.
 
Professional Exemption Criteria
 
Learned Professional:
Paid on salary basis at a rate of not less than $455 per week;
Primary duty is performance of work requiring advanced
knowledge, defined as work which is predominantly intellectual in
character and which includes work requiring the consistent
exercise of discretion and judgment;
Advanced knowledge must be in a field of science or learning; and
Advanced knowledge must be customarily acquired by a prolonged
course of specialized intellectual instruction.
 
Professional Exemption Criteria
 
Creative Professional:
Paid on salary basis at a rate of not less than $455 per week; and
Primary duty is performance of work requiring invention,
imagination, originality or talent in a recognized field of artistic
or creative endeavor.
 
Computer Employee Exemption Criteria
 
Paid on salary basis at a rate of not less than $455 per week or
an hourly rate not less than $27.63; and
Employed as a computer systems analyst, computer
programmer, software engineer or other similarly skilled
worker in the computer field.
 
Other Exemption Criteria
 
Outside Sales Exemption:
Primary duty is making sales or obtaining orders or contracts for
services or for the use of facilities; and
Customarily and regularly engaged away from the employer’s
place or places of business.
Highly Compensated Employee Exemption:
Perform office or non-manual work and paid total annual
compensation of $100,000; and
Perform at least one of the duties of an exempt executive,
administrative or professional employee.
 
Hours of Work
 
What Constitutes Compensable Work Time?
FLSA:  “Employ” means to “suffer or permit to work”
Requiring or allowing work to be performed
Productive work from which the employer derives benefit
Employers may not benefit from labor without paying for it
 
“Off the Clock”
 
Voluntarily Working Outside of Regular Hours
Examples:
Coming in Early or Staying Late
Taking Work Home
Work-Related Emailing, Texting or Phone Calls
Knowledge of Employer?
Volunteering Versus Working
Cannot Waive FLSA Rights
 
 
 
Meeting and Training Time
 
To be unpaid, four conditions must be met:
1.
Attendance must be completely voluntary;
2.
Must occur outside of the employee’s regular work hours;
3.
Must be unrelated to the employee’s job; and
4.
Employee may not perform any productive work
 
Travel Time
 
Home to Work:  
Not Work Time
“All in a Day’s Work” (e.g., job site to job site):  
Work Time
Special One-Day Assignments:  
Work Time
Travel Away from Home (overnight):
During Regular Work Hours, Including Non-Work Days:  
Work Time
Outside of Regular Work Hours as a Passenger:  
Not Work Time
Outside of Regular Work Hours as a Driver:  
Work Time
 
Breaks and Meal Periods
 
Breaks and Meal Periods are not required by the FLSA.
If offered, short rest breaks must be paid breaks.
Meal periods are not work time, if:
The employee is completely relieved of all duties for at least 30
uninterrupted minutes.
If any productive work is performed during the meal period, the
entire period must be considered work time.
Employees eating at their work station?
 
 
 
On-Call Time
 
“Engaged to Wait” Versus “Waiting to Be Engaged”
If required to remain on the employer’s premises, on-call
time is work time.
On-call time at home but available to be called in is not work
time.
 
What FLSA Does Not Require
 
Breaks
Paid Time Off (e.g., vacation or sick leave)
Other Benefits
 
Risks of Non-Compliance with FLSA
 
DOL Investigations and Audits
Back Pay of Unpaid Wages/Overtime (2-3 years)
Liquidated Damages (e.g., double damages)
Civil Penalties
Criminal Penalties
Lowest Risk Approach
 
FLSA Versus State Labor Laws
 
In Most Respects, States Mirror FLSA
State Laws May Cover Employees Not Covered by FLSA
States May Include Additional Provisions
Where FLSA and State Laws Differ, the “More Stringent”
Standard Applies – Most Beneficial to the Worker
 
Supervisor Responsibilities
 
Manage Work Hours and Overtime
Communicate Work Time Rules to Employees
Address Employee Non-Compliance
Ensure Accurate Reporting of Hours for Payroll
Manage Employee Use of Accrued Compensatory Time
Report FLSA Compliance Concerns to HR or OGC
When in Doubt, Seek Assistance
 
In Closing . . .
 
 
Questions?
Comments?
Thank you!
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Learn about the Fair Labor Standards Act of 1938, its impact on minimum wage, maximum workweek regulations, and overtime pay. Explore key principles and misconceptions, along with how these laws affect employees and employers.


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  1. Fair Labor Standards Act Basics Mark Bachmeier, Director, Human Resources What You Should Know About Wage and Hour Law March 29, 2018

  2. Session Goals: To help you understand essential fair labor standards principles. 1. To help you understand common misconceptions about wage and hour laws. 2. To help you understand how wage and hour laws impact you. 3.

  3. Fair Labor Standards Act of 1938 Immigration Growth of Cities Industrialization/Manufacturing Organized Labor Movement Great Depression New Deal Response to oppressive child labor, starvation wages and intolerable work hours (FDR)

  4. Fair Labor Standards Act of 1938 Fair Labor Standards Act (FLSA) Established: Minimum Wage Maximum Workweek (Overtime) Record-Keeping Requirements Child-Labor Laws Amended to Include Lactation Support for Nursing Mothers

  5. Minimum Wage Federal Minimum Hourly Rate of Pay: 1938: $0.25 ($4.15 in 2014 dollars) 1956: $1.00 ($8.61) 1968: $1.60 ($10.75) 1974: $2.00 ($9.49) 1980: $3.10 ($8.80) 1991: $4.25 ($7.30) 1997: $5.15 ($7.51) 2008: $6.55 ($7.12) 2009: $7.25 ($7.80)

  6. Maximum Workweek 40 Hour Workweek Workweek = 7 Consecutive 24 Hour Periods Established by Employer May Differ within Organizations, Based on Business Need Must be Fixed/Recurring Allowable Exceptions to 40 Hour Workweek: Law Enforcement and Fire Protection Healthcare Workers

  7. Overtime Pay Premium Pay for Hours Over 40 in Any Workweek 1.5 Times Regular Hourly Rate Each Workweek Stands Alone Paid Time Off Hours Do Not Count All Hours Worked for the Same Employer Count Together Weighted Average for Multiple Rates of Pay Compensatory Time Allowed in Public Employment Only

  8. Compensatory Time Paid Time Off in Lieu of Cash Overtime (Recommended Method) 1.5 Hours Awarded for Each Overtime Hour Worked Maximum Allowable Accrual is 240 Hours Must Be Used Before Vacation Must Be Used Within 12 Months or Cashed Out Cashed Out Upon Separation from Employment Illegal in Private Employment

  9. Regular Hourly Rate Total Pay Divided by Hours Worked Regular Hourly Rate Includes: Wages Commissions Non-Discretionary Bonus Payments Value of Certain Goods or Facilities (e.g., Room and Board) Shift Differentials

  10. Regular Hourly Rate Regular Hourly Rate Does Not Include: Premium Pay for Working Weekends or Holidays Discretionary Bonus Payments Gifts Payments for Not Working (e.g., Sick Leave, Vacation) Expense Reimbursements Value of Benefits

  11. FLSA Record Keeping Requirements Employers Must Maintain, for Every Covered Employee: Name, Address, SSN, Birth Date (if under 19), Gender, Occupation Applicable Workweek (beginning and ending days/times) Hours Worked by Day and Workweek Basis of Pay (e.g., hourly or weekly rate) Detailed Record of Pay, Including All Calculations and Deductions Pay Dates and Pay Period Dates Payroll Records Must Be Maintained for at Least Three Years

  12. FLSA Exemptions The FLSA provides exemptions from the minimum wage, overtime and certain record-keeping requirements for employees in positions meeting specific criteria. Generally, these criteria involve a defined duties test , payment on a salary basis, and a minimum weekly salary amount. Generally, exempt employees are paid a fixed amount without regard to hours of work. They are not entitled to overtime and pay may not be reduced for working less than 40 hours in a workweek (except under limited circumstances).

  13. FLSA Exemptions FLSA Exemptions Include: Executive Administrative Professional Computer Employee Outside Sales Highly Compensated Employee

  14. Executive Exemption Criteria Paid on salary basis at a rate of not less than $455 per week; Primary duty is managing enterprise or recognized department or subdivision of the enterprise; Customarily and regularly direct the work of at least two other full-time employees, or equivalent; and Ability to hire and fire other employees or recommendations regarding personnel decisions are given particular weight.

  15. Administrative Exemption Criteria Paid on salary basis at a rate of not less than $455 per week; Primary duty is 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 Primary duty includes the exercise of discretion and independent judgment with regard to matters of significance.

  16. Professional Exemption Criteria Learned Professional: Paid on salary basis at a rate of not less than $455 per week; Primary duty is performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; Advanced knowledge must be in a field of science or learning; and Advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

  17. Professional Exemption Criteria Creative Professional: Paid on salary basis at a rate of not less than $455 per week; and Primary duty is performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

  18. Computer Employee Exemption Criteria Paid on salary basis at a rate of not less than $455 per week or an hourly rate not less than $27.63; and Employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field.

  19. Other Exemption Criteria Outside Sales Exemption: Primary duty is making sales or obtaining orders or contracts for services or for the use of facilities; and Customarily and regularly engaged away from the employer s place or places of business. Highly Compensated Employee Exemption: Perform office or non-manual work and paid total annual compensation of $100,000; and Perform at least one of the duties of an exempt executive, administrative or professional employee.

  20. Hours of Work What Constitutes Compensable Work Time? FLSA: Employ means to suffer or permit to work Requiring or allowing work to be performed Productive work from which the employer derives benefit Employers may not benefit from labor without paying for it

  21. Off the Clock Voluntarily Working Outside of Regular Hours Examples: Coming in Early or Staying Late Taking Work Home Work-Related Emailing, Texting or Phone Calls Knowledge of Employer? Volunteering Versus Working Cannot Waive FLSA Rights

  22. Meeting and Training Time To be unpaid, four conditions must be met: Attendance must be completely voluntary; 1. Must occur outside of the employee s regular work hours; 2. Must be unrelated to the employee s job; and 3. Employee may not perform any productive work 4.

  23. Travel Time Home to Work: Not Work Time All in a Day s Work (e.g., job site to job site): Work Time Special One-Day Assignments: Work Time Travel Away from Home (overnight): During Regular Work Hours, Including Non-Work Days: Work Time Outside of Regular Work Hours as a Passenger: Not Work Time Outside of Regular Work Hours as a Driver: Work Time

  24. Breaks and Meal Periods Breaks and Meal Periods are not required by the FLSA. If offered, short rest breaks must be paid breaks. Meal periods are not work time, if: The employee is completely relieved of all duties for at least 30 uninterrupted minutes. If any productive work is performed during the meal period, the entire period must be considered work time. Employees eating at their work station?

  25. On-Call Time Engaged to Wait Versus Waiting to Be Engaged If required to remain on the employer s premises, on-call time is work time. On-call time at home but available to be called in is not work time.

  26. What FLSA Does Not Require Breaks Paid Time Off (e.g., vacation or sick leave) Other Benefits

  27. Risks of Non-Compliance with FLSA DOL Investigations and Audits Back Pay of Unpaid Wages/Overtime (2-3 years) Liquidated Damages (e.g., double damages) Civil Penalties Criminal Penalties Lowest Risk Approach

  28. FLSA Versus State Labor Laws In Most Respects, States Mirror FLSA State Laws May Cover Employees Not Covered by FLSA States May Include Additional Provisions Where FLSA and State Laws Differ, the More Stringent Standard Applies Most Beneficial to the Worker

  29. Supervisor Responsibilities Manage Work Hours and Overtime Communicate Work Time Rules to Employees Address Employee Non-Compliance Ensure Accurate Reporting of Hours for Payroll Manage Employee Use of Accrued Compensatory Time Report FLSA Compliance Concerns to HR or OGC When in Doubt, Seek Assistance

  30. In Closing . . . Questions? Comments? Thank you!

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