The Fair Labor Standards Act (FLSA)
F
a
i
r
L
a
b
o
r
S
t
a
n
d
a
r
d
s
A
c
t
:
W
h
a
t
Y
o
u
N
e
e
d
t
o
K
n
o
w
J
e
f
f
r
e
y
N
.
J
e
n
s
e
n
S
e
n
i
o
r
A
s
s
o
c
i
a
t
e
G
e
n
e
r
a
l
C
o
u
n
s
e
l
L
e
g
a
l
S
y
m
p
o
s
i
u
m
O
c
t
o
b
e
r
1
6
,
2
0
1
4
Office of Legal Affairs
O
p
e
n
i
n
g
Q
u
e
s
t
i
o
n
s
1.
Should all University employees understand the basics
of the Fair Labor Standards Act (FLSA)?
2.
Are there negative consequences if we fail to comply
with the FLSA?
3.
Are there regulatory changes on the horizon that could
result in some University employees being reclassified
so they become eligible for overtime under the FLSA?
H
I
S
T
O
R
Y
O
F
T
H
E
F
L
S
A
•
President Franklin D. Roosevelt signed the Fair Labor
Standards Act into law in 1938.
•
In its initial form, the FLSA applied only to about 20% of
the country’s industrial employers.
•
It banned oppressive child labor, set the minimum hourly
wage at 25 cents, and the maximum workweek at 44
hours.
O
R
I
G
I
N
A
L
P
U
R
P
O
S
E
FDR signed the FLSA in 1938 to “end starvation wages and
intolerable hours.”
FDR’S three goals -
•
End child labor abuses
•
Establish a minimum wage
•
Cap the number of work hours per week
•
Establishes minimum wage, overtime pay, recordkeeping,
and youth employment standards affecting full-time and part-
time workers in the private sector and in Federal, State, and
local governments.
•
The U.S. Department of Labor’s Wage and Hour Division
administers and enforces the FLSA with respect to private
employment and State and local government employment.
T
O
D
A
Y
’
S
F
A
I
R
L
A
B
O
R
S
T
A
N
D
A
R
D
S
A
C
T
W
A
G
E
&
H
O
U
R
L
A
W
’
S
B
A
S
I
C
T
E
N
E
T
S
•
Minimum wage
•
One and one-half times regular hourly rate of pay for all
hours worked over 40
Employers must pay all nonexempt employees at least the minimum wage
for all hours worked, and at lease one and one-half times their regular
hourly rate of pay for all hours worked over 40 in a singe week.
M
I
N
I
M
U
M
W
A
G
E
•
Since July 24, 2009, covered, nonexempt workers are
entitled to a minimum wage of not less than $7.25 per
hour.
•
In April of 2014, Senate’s Minimum Wage Fairness Act
would have increased the minimum wage to $10.10 per
hour.
•
Last week DOL published a rule that requires federal
contractors to pay at least $10.10 per hour beginning in
January 2015.
•
Tool available to public sector employers
•
Maximum accrual limit under law/policy
•
Employee must have a reasonable opportunity to
use comp time
•
When must the employer pay out?
C
O
M
P
E
N
S
E
A
T
I
O
N
T
I
M
E
I
N
L
I
E
U
O
F
O
V
E
R
T
I
M
E
P
A
Y
1.
Public sector employers may provide comp time in lieu of
overtime pay as long as there is an understanding prior to
the performance of the work in question.
2.
Public sector nonexempt employees in North Carolina may
accrue up to 240 hours of comp time (160 hours straight
time). Any overtime worked above this amount shall be
paid in the employee’s next regular paycheck.
C
O
M
P
E
N
S
A
T
I
O
N
T
I
M
E
3.
An employer must honor requests to use comp time within
a reasonable period of time, as long as the time off does
not unduly disrupt operations.
4.
Pursuant to North Carolina policy, the University should
allow overtime compensation to be taken
as soon as
possible
.
C
O
M
P
E
N
S
A
T
I
O
N
T
I
M
E
5.
Pursuant to North Carolina policy, nonexempt employees
shall take their compensatory leave
within twelve months
from the date the work was performed.
6.
Moreover, if comp time is not taken within 365 days, the
time shall be paid out in the employee’s next paycheck.
C
O
M
P
E
N
S
A
T
I
O
N
T
I
M
E
Employees whose jobs are governed by the FLSA are either
“exempt” or “nonexempt.”
•
Nonexempt employees are entitled to overtime pay.
•
Exempt employees are not.
E
X
E
M
P
T
o
r
N
O
N
E
X
E
M
P
T
With few exceptions, to be exempt an employee must
(a)
be paid at least $455 per week ($23,600 per year), and
(b)
be paid on a salary basis, and also
(c)
perform exempt job duties.
Most employees must meet all
three
“tests” to be exempt.
W
h
i
c
h
e
m
p
l
o
y
e
e
s
a
r
e
e
x
e
m
p
t
?
The most well-known and commonly used of the
dozens of FLSA exemptions are the so-called “white
collar” exemptions for three categories of employees:
•
Executive
•
Administrative, and
•
Professional.
T
h
e
“
W
h
i
t
e
C
o
l
l
a
r
”
E
x
e
m
p
t
i
o
n
s
•
must be paid a minimum of $455/week
($23,600/year)
•
employees paid less are nonexempt
S
a
l
a
r
y
L
e
v
e
l
T
e
s
t
Test #1
An exempt employee is paid on a salary basis …
•
For any week in which work is performed
•
Employee receives a fixed, guaranteed amount of
pay
•
Pay not subject to reduction regardless of the quality
or quantity of work, or of the hours worked
S
a
l
a
r
y
B
a
s
i
s
T
e
s
t
Test #2
•
Executive
•
Administrative
•
Professional: Learned and Creative
There are typical job duties for each of these white
collar categories.
D
u
t
i
e
s
T
e
s
t
s
b
y
J
o
b
C
a
t
e
g
o
r
y
Test #3
E
X
E
C
U
T
I
V
E
E
X
E
M
P
T
I
O
N
•
Primary duty of managing the enterprise, department or
division
•
Regularly directs two or more employees
•
Must possess the authority to hire, fire, or otherwise
affect the status of other employees or to recommend
such action
A
D
M
I
N
I
S
T
R
A
T
I
V
E
E
X
E
M
P
T
I
O
N
•
Primary duty of non-manual or office work
•
Directly related to the management or general business
operations of the employer or the employer’s customers
(i.e., the University’s students)
•
Primary duty includes the exercise of discretion and
independent judgment with respect to matters of
significance
P
R
O
F
E
S
S
I
O
N
A
L
E
X
E
M
P
T
I
O
N
“Learned Professional”
•
Primary duty is performing work that requires advanced knowledge
in a field of science or learning, customarily acquired by a
prolonged course of specialized intellectual instruction
•
Work requires consistent exercise of discretion and judgment
•
Fields of science or learning from which degreed professionals
qualify for this exemption: accounting, engineering, medicine, law
architecture, teaching, etc.
P
R
O
F
E
S
S
I
O
N
A
L
E
X
E
M
P
T
I
O
N
“Creative Professional”
•
Primary duty requires invention, imagination, originality, or talent in
a recognized field of artistic or creative endeavor
•
Work requires consistent exercise of discretion and judgment
Most employees must meet all
three
“tests” to be exempt.
With few exceptions, to be exempt an employee must:
(a)
be paid at least $455 per week ($23,600/year), and
(b)
be paid on a salary basis, and also
(c)
perform exempt job duties.
T
o
r
e
v
i
e
w
…
H
i
g
h
l
y
C
o
m
p
e
n
s
a
t
e
d
E
m
p
l
o
y
e
e
E
x
e
m
p
t
i
o
n
•
Established pursuant to the FairPay Amendments of
2004 regarding the white collar exemptions under the
FLSA.
•
Employee paid $100,000 or more will be considered
exempt from overtime if has one identifiable white collar
duty that is customarily and regularly performed.
R
E
C
O
R
D
K
E
E
P
I
N
G
•
The FLSA requires employers to keep accurate time records for all
nonexempt employees.
•
Federal law does not require any particular method of record
keeping.
•
A method which requires nonexempt employees to clock in or write
in their own time, or at least sign off on their time is strongly
preferred, as this limits the employees ability to later say the time
recorded is not accurate.
•
Records of hours worked must be preserved for at least three
years.
H
o
w
d
o
w
e
c
o
u
n
t
“
h
o
u
r
s
w
o
r
k
e
d
”
?
As the FLSA does not prescribe a method, an employer can use:
•
a time clock
•
manual time sheets, or
•
computerized timekeeping tool
Most nonexempt employees at UNC Charlotte are required to fill out
weekly time sheets that are signed by their supervisor.
A computerized timekeeping tool is being piloted on campus.
T
i
m
e
C
l
o
c
k
s
&
C
o
m
p
u
t
e
r
i
z
e
d
T
i
m
e
k
e
e
p
i
n
g
•
Many employers utilize time clocks and computerized timekeeping
systems, in an effort to increase efficiency, decrease cost, and
eliminate some of the human error that goes along with time
keeping.
•
Caution: No system is foolproof!
•
U.S. Department of Labor can factor in work time not reflected on
an employee’s official time records, if there is evidence work is
being performed but not recorded.
C
a
l
c
u
l
a
t
i
n
g
A
r
r
i
v
a
l
a
n
d
D
e
p
a
r
t
u
r
e
T
i
m
e
s
•
Issues might arise during transition from time sheet to computer
timekeeping system
•
DOL allows use of 7-minute rule
•
Must pay if nonexempt employee regularly clocks in more than 7
minutes early
•
Establish clear punch-in and punch-out policy and expectations
M
e
a
l
P
e
r
i
o
d
s
•
A meal period of at least 30 consecutive minutes (never less) during
which a nonexempt employee is completely relieved of duty and
free to use the time for her/his own purposes.
•
It is not counted as hours worked or paid time.
•
Any so-called “meal period” of less than 30 consecutive minutes
must be paid as hours worked.
M
e
a
l
P
e
r
i
o
d
s
Q.
If an employee is merely asked to sit by a telephone during lunch,
is that passive activity compensable?
A.
Yes, the employee is not relieved of duty if he or she is required to
perform any duties, including passive activities such as sitting by a
phone.
Employees who “volunteer” to work through meal breaks should either
be prohibited from doing so or paid for their time. Otherwise, you may
end up with claims for unpaid wages and overtime.
R
e
s
t
P
e
r
i
o
d
s
Although the FLSA does not require that employees
receive rest periods, University supervisors have the
discretion to permit a rest period of up to 15 minutes during
each four-hour period of work.
Rest periods are compensable time.
T
r
a
i
n
i
n
g
Time spend at a conference, meeting or seminar is compensable if:
1.
Attendance is during normal work hours;
2.
Attendance is required by the university;
3.
Event is directly job-related; or
4.
University work is performed
Note: Meal breaks, sleeping, and voluntary social events that are part
of a training event are not compensable work time.
T
r
a
v
e
l
b
y
N
o
n
e
x
e
m
p
t
E
m
p
l
o
y
e
e
s
All travel time within a single day is compensable work
time.
Overnight travel not compensable if:
•
Outside of normal working hours (not working days)
•
Employee does not drive
•
Employee does not work while traveling
N
u
r
s
i
n
g
M
o
t
h
e
r
s
’
B
r
e
a
k
s
The Patient Protection and Affordable Care Act (PPACA)
amended the FLSA in March of 2010:
•
to require employers to grant reasonable breaks for an
employee to express breast milk for up to one year after
giving birth, and
•
to provide a private location (other than a bathroom) for
the employee to do so.
See UNCC’s Lactation Policy, UP 101.20
E
m
a
i
l
,
T
e
x
t
i
n
g
&
T
w
i
t
t
e
r
a
s
w
o
r
k
i
n
g
t
i
m
e
?
Q.
If nonexempt employees are using electronic devices to receive
and reply to work-related messages during nonworking hours, is
that time compensable under the FLSA?
A.
It depends.
B
e
s
t
P
r
a
c
t
i
c
e
-
S
u
p
e
r
v
i
s
o
r
s
h
o
u
l
d
e
s
t
a
b
l
i
s
h
a
c
l
e
a
r
e
x
p
e
c
t
a
t
i
o
n
,
p
r
e
f
e
r
a
b
l
y
a
d
v
i
s
i
n
g
a
l
l
n
o
n
e
x
e
m
p
t
e
m
p
l
o
y
e
e
s
t
o
n
o
t
u
s
e
t
h
e
i
r
h
o
m
e
c
o
m
p
u
t
e
r
,
l
a
p
t
o
p
,
s
m
a
r
t
p
h
o
n
e
,
P
D
A
o
r
t
a
b
l
e
t
t
o
p
e
r
f
o
r
m
w
o
r
k
o
u
t
s
i
d
e
o
f
w
o
r
k
i
n
g
h
o
u
r
s
o
r
d
u
r
i
n
g
t
h
e
i
r
u
n
p
a
i
d
m
e
a
l
b
r
e
a
k
s
.
E
m
a
i
l
,
T
e
x
t
i
n
g
&
T
w
i
t
t
e
r
a
s
w
o
r
k
i
n
g
t
i
m
e
?
Best Practice
- Supervisors should be careful not to encourage nonexempt
employees to check or respond to work-related emails during nonworking
hours.
Best Practice
- If such work is permitted or expected, however, supervisors
should carefully manage and record all such work by requiring nonexempt
employees to record all time spent checking, sending, or receiving work-
related emails, and then compensate the employee for that time.
•
In the spring of 2011, the U.S. Department of Labor launched “DOL –
Timesheet,” a free application for smart phone with an easy-to-use
electronic timesheet.
D
e
M
i
n
i
m
u
s
D
o
c
t
r
i
n
e
•
FLSA’s general rule is that all work is compensable.
•
The de minimus doctrine permits employers to treat very
small increments of time as non-compensable (e.g., 10
minutes or less).
•
This means that if an nonexempt employee occasionally
works for a few minutes “off the clock” either at home or
before clocking in at work, the employer does not need
to track this time.
E
m
a
i
l
,
T
e
x
t
i
n
g
&
T
w
i
t
t
e
r
a
s
w
o
r
k
i
n
g
t
i
m
e
?
1.
Use 10-minute (de minimus) rule as guideline
2.
Consider regularity and aggregate amount of time spent
3.
Establish clear expectations regarding use of electronic devices
outside of normal work hours
4.
When possible, prohibit nonexempt employees from using
electronic devices to work outside of their normal business hours
5.
Be prepared to record and pay for compensable working time
•
Wage and Hour Division investigations and lawsuits
•
Private lawsuits
To enforce the minimum wage and overtime provisions of the FLSA, the
U.S. Department of Labor’s Wage and Hour Division (WHD) has the
authority to investigate and gather data from employers regarding wage,
hours, and other conditions and practices of employment; to enter and
inspect an employer’s place of business and its records; to question
employees; and to investigate all facts, conditions, practices and matters
the investigator deems necessary to determine whether the FLSA has
been violated.
F
L
S
A
E
n
f
o
r
c
e
m
e
n
t
M
e
c
h
a
n
i
s
m
s
Recent increase in enforcement activity – since 2009 WHD has hired 40%
more investigators and annually completed 40% more compliance actions
A WHD investigation can be trigged by a complaint of an employee or a
former employee
WHD may commence a lawsuit on behalf of impacted employees seeking:
•
unpaid minimum wages,
•
overtime,
•
liquidated damages (equal to the unpaid wages), and
•
injunctive relief
W
a
g
e
a
n
d
H
o
u
r
D
i
v
i
s
i
o
n
(
W
H
D
)
E
n
f
o
r
c
e
m
e
n
t
•
An employee may sue an employer for violating the FLSA’s
minimum wage or overtime provisions
•
Private lawsuits to enforce non-willful violations of the FLSA
must be brought within two years whereas the limitation period
for willful violations is three years
•
The damages available to employees in FLSA actions are
potentially huge
P
r
i
v
a
t
e
L
a
w
s
u
i
t
s
U
n
d
e
r
t
h
e
F
L
S
A
Available civil remedies include:
1.
All unpaid compensation for time worked but not paid, or time
paid at an incorrect amount
2.
Mandatory liquidated damages (equal to the amount of unpaid
compensation) that effectively doubles unpaid wages for a
period of up to three years back (for willful violations, two
years for non-willful)
3.
Interest
4.
Attorneys’ fees
W
h
y
a
r
e
F
L
S
A
c
l
a
i
m
s
p
o
t
e
n
t
i
a
l
l
y
s
o
e
x
p
e
n
s
i
v
e
?
Collective Actions
•
Multiply the total exposure for one employee by the total
number of similarly-situated employees
Recent collective FLSA actions have concerned:
•
Misclassification of workers
•
Working on work-related matters during non-work time
•
Deducting time for breaks without ensuring that employees
were not, in fact, working
W
h
y
a
r
e
F
L
S
A
c
l
a
i
m
s
p
o
t
e
n
t
i
a
l
l
y
s
o
e
x
p
e
n
s
i
v
e
?
Goal
= Narrow exemptions so more workers qualify for overtime pay by
raising salary threshold level and changing the primary duties test
The salary threshold has been changed only eight times in the 75 years
since the FLSA passed in 1938.
•
In 1975, the weekly salary threshold was set at $155/week and in 2004
it was raised to $455/week.
•
The Obama Administration proposes adjusting the threshold for
inflation since 1975, thereby raising the salary level to $970/week
($50,440/year).
O
b
a
m
a
A
d
m
i
n
i
s
t
r
a
t
i
o
n
P
r
o
p
o
s
a
l
t
o
N
a
r
r
o
w
W
h
i
t
e
C
o
l
l
a
r
E
x
e
m
p
t
i
o
n
s
New FLSA rule may also require performance of a minimum percent of
“executive” work before an employee can be exempted from qualifying for
overtime pay.
For example, in California the duties test for white-collar exempt
employees requires exempt employees to spend more than half their time
engaged in exempt work. If less, they would be classified as nonexempt.
O
b
a
m
a
A
d
m
i
n
i
s
t
r
a
t
i
o
n
P
r
o
p
o
s
a
l
t
o
N
a
r
r
o
w
W
h
i
t
e
C
o
l
l
a
r
E
x
e
m
p
t
i
o
n
s
There are approximately 400 UNC Charlotte employees who earn at or
below the $50,000 annually, the proposed new salary level, who are
currently classified as exempt from the FLSA.
There are University employees in the “executive” White Collar exemption
category who may not spend at least 50% of their time on exempt work.
Under the new rule, they may need to be reclassified as nonexempt.
Bottom Line
- The proposed new FLSA regulations could require the
University to reclassify dozens of employees as nonexempt, making them
eligible to earn comp time for all overtime hours they work.
O
b
a
m
a
A
d
m
i
n
i
s
t
r
a
t
i
o
n
P
r
o
p
o
s
a
l
t
o
N
a
r
r
o
w
W
h
i
t
e
C
o
l
l
a
r
E
x
e
m
p
t
i
o
n
s
The best way for an employer to be prepared for a DOL
audit or investigation is to conduct periodic reviews or
self-audits.
As DOL audits focus on record-keeping, overtime pay,
and ensuring that all employees are being paid for
hours worked, a self-audit should ensure compliance
with these targeted areas.
S
e
l
f
-
A
u
d
i
t
It is wise to audit the exempt classifications of the workforce periodically to
ensure that employees are properly classified as exempt or nonexempt.
Remember that the job duties attached to a particular position may
change over the years, and a position that was exempt ten years ago may
no longer be exempt today. Realistically analyze the actual duties
performed by the employee to determine whether the employee is
properly classified as exempt. Carefully consider what the employee
actually does on a daily basis. If appropriate, modify the job title or revise
the job description to reflect changes of job duties.
E
x
e
m
p
t
v
.
N
o
n
e
x
e
m
p
t
C
l
a
s
s
i
f
i
c
a
t
i
o
n
s
Issue #1
During a self-audit, employer should be especially wary of any
close cases. The employer has the burden to prove an exemption
applies.
Just because an employer could treat a position as exempt,
doesn’t mean it is required to do so. Paying a nonexempt
employee overtime pay may be the least risky approach in some
difficult classification cases.
C
l
o
s
e
C
a
l
l
s
Issue #2
Before determining that an employee falls within the
executive exemption, ensure that the employee has
actual supervisory duties and management is her/his
primary duty.
S
u
p
e
r
v
i
s
o
r
s
Issue #3
To fall within the executive exemption, the employee
must have actual authority to hire or fire or to have
his/her suggestions given particular weight.
Consider whether the person has ever been involved in
the hiring or firing of any employee. If not, then the
employer may want to reevaluate the employee’s
exempt status.
P
o
w
e
r
t
o
H
i
r
e
o
r
F
i
r
e
Issue #4
Carefully analyze the significance of the employee’s
decisions and how much independence the employee
has.
D
i
s
c
r
e
t
i
o
n
a
n
d
I
n
d
e
p
e
n
d
e
n
t
J
u
d
g
m
e
n
t
Issue #5
Possessing a college degree is not enough to be
exempt as a learned professional. The employee must
actually use the knowledge gained from her/his
advanced, specialized degree. A general four-year
degree is not an advanced degree.
C
o
l
l
e
g
e
D
e
g
r
e
e
s
Issue #6
Ensure that all working time is compensated.
Implement and enforce policies requiring all nonexempt
employees to document all working time, including time
spent out of the office on a cell phone, home computer,
PDA or tablet on anything work-related.
Employers should also verify that no work is occurring
during unpaid meal periods.
W
o
r
k
i
n
g
T
i
m
e
Issue #7
Ensure that the University maintains the appropriate documents,
either on paper or electronically, to substantiate classification and
payroll practices.
Audit payroll practices periodically to ensure that time is tracked
and that overtime worked is allocated as comp time or paid out
correctly. Pay special attention to units or departments where
there is a spike or sudden drop off in the comp/overtime hours
worked by nonexempt employees.
R
e
c
o
r
d
k
e
e
p
i
n
g
Issue #8
Confirm that compensation (“comp”) time is allocated to
employees at one and a half times the number of overtime hours
worked.
Confirm that nonexempt employees who accrue 240 hours of
comp time are paid time and a half for any additional overtime they
might work in their next regular paycheck.
Confirm that any earned comp time that is not taken by an
employee within 365 days is paid out as overtime in their next
paycheck.
C
o
m
p
T
i
m
e
a
n
d
O
v
e
r
t
i
m
e
Issue #9
When terminating an employee, make sure that the
employee is paid properly for all time worked.
T
e
r
m
i
n
a
t
i
o
n
Issue #10
The Fair Labor Standards Act (FLSA) was signed into law in 1938 by President Franklin D. Roosevelt to address child labor, establish minimum wage, and regulate work hours. It sets standards for minimum wage, overtime pay, recordkeeping, and youth employment, impacting both private and government sectors. Nonexempt employees must be paid minimum wage and overtime rates, and recent changes aim to increase the minimum wage for workers. Compliance with FLSA is crucial for all employees to avoid negative consequences.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. Download presentation by click this link. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
E N D
Presentation Transcript
Fair Labor Standards Act: What You Need to Know Jeffrey N. Jensen Senior Associate General Counsel Legal Symposium October 16, 2014 Office of Legal Affairs
Opening Questions 1. Should all University employees understand the basics of the Fair Labor Standards Act (FLSA)? 2. Are there negative consequences if we fail to comply with the FLSA? 3. Are there regulatory changes on the horizon that could result in some University employees being reclassified so they become eligible for overtime under the FLSA?
HISTORY OF THE FLSA President Franklin D. Roosevelt signed the Fair Labor Standards Act into law in 1938. In its initial form, the FLSA applied only to about 20% of the country s industrial employers. It banned oppressive child labor, set the minimum hourly wage at 25 cents, and the maximum workweek at 44 hours.
ORIGINAL PURPOSE FDR signed the FLSA in 1938 to end starvation wages and intolerable hours. FDR S three goals - End child labor abuses Establish a minimum wage Cap the number of work hours per week
TODAYS FAIR LABOR STANDARDS ACT Establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting full-time and part- time workers in the private sector and in Federal, State, and local governments. The U.S. Department of Labor s Wage and Hour Division administers and enforces the FLSA with respect to private employment and State and local government employment.
WAGE & HOUR LAWS BASIC TENETS Minimum wage One and one-half times regular hourly rate of pay for all hours worked over 40 Employers must pay all nonexempt employees at least the minimum wage for all hours worked, and at lease one and one-half times their regular hourly rate of pay for all hours worked over 40 in a singe week.
MINIMUM WAGE Since July 24, 2009, covered, nonexempt workers are entitled to a minimum wage of not less than $7.25 per hour. In April of 2014, Senate s Minimum Wage Fairness Act would have increased the minimum wage to $10.10 per hour. Last week DOL published a rule that requires federal contractors to pay at least $10.10 per hour beginning in January 2015.
COMPENSEATION TIME IN LIEU OF OVERTIME PAY Tool available to public sector employers Maximum accrual limit under law/policy Employee must have a reasonable opportunity to use comp time When must the employer pay out?
COMPENSATION TIME 1. Public sector employers may provide comp time in lieu of overtime pay as long as there is an understanding prior to the performance of the work in question. 2. Public sector nonexempt employees in North Carolina may accrue up to 240 hours of comp time (160 hours straight time). Any overtime worked above this amount shall be paid in the employee s next regular paycheck.
COMPENSATION TIME 3. An employer must honor requests to use comp time within a reasonable period of time, as long as the time off does not unduly disrupt operations. 4. Pursuant to North Carolina policy, the University should allow overtime compensation to be taken as soon as possible.
COMPENSATION TIME 5. Pursuant to North Carolina policy, nonexempt employees shall take their compensatory leave within twelve months from the date the work was performed. 6. Moreover, if comp time is not taken within 365 days, the time shall be paid out in the employee s next paycheck.
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.
Which employees are exempt? With few exceptions, to be exempt an employee must (a) be paid at least $455 per week ($23,600 per year), and (b) be paid on a salary basis, and also (c) perform exempt job duties. Most employees must meet all three tests to be exempt.
The White Collar Exemptions The most well-known and commonly used of the dozens of FLSA exemptions are the so-called white collar exemptions for three categories of employees: Executive Administrative, and Professional.
Test #1 Salary Level Test must be paid a minimum of $455/week ($23,600/year) employees paid less are nonexempt
Test #2 Salary Basis Test An exempt employee is paid on a salary basis For any week in which work is performed Employee receives a fixed, guaranteed amount of pay Pay not subject to reduction regardless of the quality or quantity of work, or of the hours worked
Test #3 Duties Tests by Job Category Executive Administrative Professional: Learned and Creative There are typical job duties for each of these white collar categories.
EXECUTIVE EXEMPTION Primary duty of managing the enterprise, department or division Regularly directs two or more employees Must possess the authority to hire, fire, or otherwise affect the status of other employees or to recommend such action
ADMINISTRATIVE EXEMPTION Primary duty of non-manual or office work Directly related to the management or general business operations of the employer or the employer s customers (i.e., the University s students) Primary duty includes the exercise of discretion and independent judgment with respect to matters of significance
PROFESSIONAL EXEMPTION Learned Professional Primary duty is performing work that requires advanced knowledge in a field of science or learning, customarily acquired by a prolonged course of specialized intellectual instruction Work requires consistent exercise of discretion and judgment Fields of science or learning from which degreed professionals qualify for this exemption: accounting, engineering, medicine, law architecture, teaching, etc.
PROFESSIONAL EXEMPTION Creative Professional Primary duty requires invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor Work requires consistent exercise of discretion and judgment
To review Most employees must meet all three tests to be exempt. With few exceptions, to be exempt an employee must: (a) be paid at least $455 per week ($23,600/year), and (b) be paid on a salary basis, and also (c) perform exempt job duties.
Highly Compensated Employee Exemption Established pursuant to the FairPay Amendments of 2004 regarding the white collar exemptions under the FLSA. Employee paid $100,000 or more will be considered exempt from overtime if has one identifiable white collar duty that is customarily and regularly performed.
RECORDKEEPING The FLSA requires employers to keep accurate time records for all nonexempt employees. Federal law does not require any particular method of record keeping. A method which requires nonexempt employees to clock in or write in their own time, or at least sign off on their time is strongly preferred, as this limits the employees ability to later say the time recorded is not accurate. Records of hours worked must be preserved for at least three years.
How do we count hours worked? As the FLSA does not prescribe a method, an employer can use: a time clock manual time sheets, or computerized timekeeping tool Most nonexempt employees at UNC Charlotte are required to fill out weekly time sheets that are signed by their supervisor. A computerized timekeeping tool is being piloted on campus.
Time Clocks & Computerized Timekeeping Many employers utilize time clocks and computerized timekeeping systems, in an effort to increase efficiency, decrease cost, and eliminate some of the human error that goes along with time keeping. Caution: No system is foolproof! U.S. Department of Labor can factor in work time not reflected on an employee s official time records, if there is evidence work is being performed but not recorded.
Calculating Arrival and Departure Times Issues might arise during transition from time sheet to computer timekeeping system DOL allows use of 7-minute rule Must pay if nonexempt employee regularly clocks in more than 7 minutes early Establish clear punch-in and punch-out policy and expectations
Meal Periods A meal period of at least 30 consecutive minutes (never less) during which a nonexempt employee is completely relieved of duty and free to use the time for her/his own purposes. It is not counted as hours worked or paid time. Any so-called meal period of less than 30 consecutive minutes must be paid as hours worked.
Meal Periods Q. If an employee is merely asked to sit by a telephone during lunch, is that passive activity compensable? A. Yes, the employee is not relieved of duty if he or she is required to perform any duties, including passive activities such as sitting by a phone. Employees who volunteer to work through meal breaks should either be prohibited from doing so or paid for their time. Otherwise, you may end up with claims for unpaid wages and overtime.
Rest Periods Although the FLSA does not require that employees receive rest periods, University supervisors have the discretion to permit a rest period of up to 15 minutes during each four-hour period of work. Rest periods are compensable time.
Training Time spend at a conference, meeting or seminar is compensable if: 1. Attendance is during normal work hours; 2. Attendance is required by the university; 3. Event is directly job-related; or 4. University work is performed Note: Meal breaks, sleeping, and voluntary social events that are part of a training event are not compensable work time.
Travel by Nonexempt Employees All travel time within a single day is compensable work time. Overnight travel not compensable if: Outside of normal working hours (not working days) Employee does not drive Employee does not work while traveling
Nursing Mothers Breaks The Patient Protection and Affordable Care Act (PPACA) amended the FLSA in March of 2010: to require employers to grant reasonable breaks for an employee to express breast milk for up to one year after giving birth, and to provide a private location (other than a bathroom) for the employee to do so. See UNCC s Lactation Policy, UP 101.20
Email, Texting & Twitter as working time? Q. If nonexempt employees are using electronic devices to receive and reply to work-related messages during nonworking hours, is that time compensable under the FLSA? A. It depends. Best Practice - Supervisor should establish a clear expectation, preferably advising all nonexempt employees to not use their home computer, laptop, smartphone, PDA or tablet to perform work outside of working hours or during their unpaid meal breaks.
Email, Texting & Twitter as working time? Best Practice - Supervisors should be careful not to encourage nonexempt employees to check or respond to work-related emails during nonworking hours. Best Practice - If such work is permitted or expected, however, supervisors should carefully manage and record all such work by requiring nonexempt employees to record all time spent checking, sending, or receiving work- related emails, and then compensate the employee for that time. In the spring of 2011, the U.S. Department of Labor launched DOL Timesheet, a free application for smart phone with an easy-to-use electronic timesheet.
De Minimus Doctrine FLSA s general rule is that all work is compensable. The de minimus doctrine permits employers to treat very small increments of time as non-compensable (e.g., 10 minutes or less). This means that if an nonexempt employee occasionally works for a few minutes off the clock either at home or before clocking in at work, the employer does not need to track this time.
Email, Texting & Twitter as working time? 1. Use 10-minute (de minimus) rule as guideline 2. Consider regularity and aggregate amount of time spent 3. Establish clear expectations regarding use of electronic devices outside of normal work hours 4. When possible, prohibit nonexempt employees from using electronic devices to work outside of their normal business hours 5. Be prepared to record and pay for compensable working time
FLSA Enforcement Mechanisms Wage and Hour Division investigations and lawsuits Private lawsuits To enforce the minimum wage and overtime provisions of the FLSA, the U.S. Department of Labor s Wage and Hour Division (WHD) has the authority to investigate and gather data from employers regarding wage, hours, and other conditions and practices of employment; to enter and inspect an employer s place of business and its records; to question employees; and to investigate all facts, conditions, practices and matters the investigator deems necessary to determine whether the FLSA has been violated.
Wage and Hour Division (WHD) Enforcement Recent increase in enforcement activity since 2009 WHD has hired 40% more investigators and annually completed 40% more compliance actions A WHD investigation can be trigged by a complaint of an employee or a former employee WHD may commence a lawsuit on behalf of impacted employees seeking: unpaid minimum wages, overtime, liquidated damages (equal to the unpaid wages), and injunctive relief
Private Lawsuits Under the FLSA An employee may sue an employer for violating the FLSA s minimum wage or overtime provisions Private lawsuits to enforce non-willful violations of the FLSA must be brought within two years whereas the limitation period for willful violations is three years The damages available to employees in FLSA actions are potentially huge
Why are FLSA claims potentially so expensive? Available civil remedies include: 1. All unpaid compensation for time worked but not paid, or time paid at an incorrect amount Mandatory liquidated damages (equal to the amount of unpaid compensation) that effectively doubles unpaid wages for a period of up to three years back (for willful violations, two years for non-willful) Interest Attorneys fees 2. 3. 4.
Why are FLSA claims potentially so expensive? Collective Actions Multiply the total exposure for one employee by the total number of similarly-situated employees Recent collective FLSA actions have concerned: Misclassification of workers Working on work-related matters during non-work time Deducting time for breaks without ensuring that employees were not, in fact, working
Obama Administration Proposal to Narrow White Collar Exemptions Goal = Narrow exemptions so more workers qualify for overtime pay by raising salary threshold level and changing the primary duties test The salary threshold has been changed only eight times in the 75 years since the FLSA passed in 1938. In 1975, the weekly salary threshold was set at $155/week and in 2004 it was raised to $455/week. The Obama Administration proposes adjusting the threshold for inflation since 1975, thereby raising the salary level to $970/week ($50,440/year).
Obama Administration Proposal to Narrow White Collar Exemptions New FLSA rule may also require performance of a minimum percent of executive work before an employee can be exempted from qualifying for overtime pay. For example, in California the duties test for white-collar exempt employees requires exempt employees to spend more than half their time engaged in exempt work. If less, they would be classified as nonexempt.
Obama Administration Proposal to Narrow White Collar Exemptions There are approximately 400 UNC Charlotte employees who earn at or below the $50,000 annually, the proposed new salary level, who are currently classified as exempt from the FLSA. There are University employees in the executive White Collar exemption category who may not spend at least 50% of their time on exempt work. Under the new rule, they may need to be reclassified as nonexempt. Bottom Line - The proposed new FLSA regulations could require the University to reclassify dozens of employees as nonexempt, making them eligible to earn comp time for all overtime hours they work.
Self-Audit The best way for an employer to be prepared for a DOL audit or investigation is to conduct periodic reviews or self-audits. As DOL audits focus on record-keeping, overtime pay, and ensuring that all employees are being paid for hours worked, a self-audit should ensure compliance with these targeted areas.
Issue #1 Exempt v. Nonexempt Classifications It is wise to audit the exempt classifications of the workforce periodically to ensure that employees are properly classified as exempt or nonexempt. Remember that the job duties attached to a particular position may change over the years, and a position that was exempt ten years ago may no longer be exempt today. Realistically analyze the actual duties performed by the employee to determine whether the employee is properly classified as exempt. Carefully consider what the employee actually does on a daily basis. If appropriate, modify the job title or revise the job description to reflect changes of job duties.
Issue #2 Close Calls During a self-audit, employer should be especially wary of any close cases. The employer has the burden to prove an exemption applies. Just because an employer could treat a position as exempt, doesn t mean it is required to do so. Paying a nonexempt employee overtime pay may be the least risky approach in some difficult classification cases.
Issue #3 Supervisors Before determining that an employee falls within the executive exemption, ensure that the employee has actual supervisory duties and management is her/his primary duty.
Issue #4 Power to Hire or Fire To fall within the executive exemption, the employee must have actual authority to hire or fire or to have his/her suggestions given particular weight. Consider whether the person has ever been involved in the hiring or firing of any employee. If not, then the employer may want to reevaluate the employee s exempt status.
