FLSA & Overtime Rules Jennifer Thompson HR Consultant

Transcription

1 FLSA & Overtime Rules Jennifer Thompson HR Consultant

2 Materials, information, advice and recommendations provided by MWG Employer Services are intended as general guidance only and are not a substitute for legal or other professional services. You should always seek appropriate legal or other professional services when dealing with specific facts or circumstances. MWG Employer Services, its employees, agents and representatives do not provide legal, tax or accounting services.

3 Topics of What is the FLSA Deeper definition of FLSA Understanding of an Employee Work Week and Work Day New FLSA requirements Exempt VS Non-Exempt Best Practices Record keeping requirements Fines/Penalties

4 What is FLSA? The Fair Labor Standards Act (FLSA) is a federal law which establishes minimum wage, overtime and part-time workers in the private sector and in federal, state, and local governments. Who is covered by FLSA? Over 135 million workers in more than 7 million workplaces Enforcement - Wage and Hour Division of the U.S. DOL. Enterprise Coverage" and Individual Coverage. The FLSA "covers" or applies to all employees of certain "enterprises." All employees of an enterprise, as defined by the FLSA, are covered regardless of the duties they perform.

5 The Bottom Line Almost every employee in the United States is covered under FLSA. Elected government officials are one of the few exceptions.

6 What is Enterprise Coverage? DOL refers to a business as an Enterprise These enterprises, which must have at least two employees, are: (1) Those that have an annual dollar volume of sales or business done of at least $500,000. (2) Hospitals, businesses providing medical or nursing care for residents, schools, preschools, and government agencies. ( Note: Common ownership, unified operation, common control or common business purpose qualifies as ONE company for many DOL Requirements including FLSA.

7 What is Individual Coverage? Even when there is no enterprise coverage, employees are protected by the FLSA if their work regularly involves them in commerce between States ("interstate commerce"). The FLSA covers individual workers who are "engaged in commerce or in the production of goods for commerce.

8 Interstate Commerce Any work involving or related to the movement of persons or things (including intangibles, such as information) across state lines or from foreign countries. Examples: Any form of communication with persons in another state. An employee who travels to another state. Receipt of goods from another state or country. Sale of any goods or services used outside of the state. Any credit card purchase. Wickard v. Filburn (1942)

9 The Bottom Line Almost every employer s business, product or service is involved in Interstate Commerce. Almost every employer is considered an Enterprise ; or their employee is covered as an Individual. Therefore, just about everyone is impacted by FLSA regulations and subject to its requirements.

10 Who is an Employee? To be considered an Employee, an employment relationship must exist between the worker and the employer. Employ is defined as suffer or permit to work, which covers work the employer directs or allows to take place Employees or Contract Employees are independent workers who are in business for themselves. These workers are NOT employees.

11 Defining a Workweek A 7-day work period must be designated by the Employer to determine a 40-hour work week. You must notify your Employee(s) of designated work week. Non-Exempt Employees must be paid overtime for more that 40 hours within the work week. (unless classified as emergency personnel). Some states define overtime as more than 8 hours a day.

12 Defining a Workday The time an Employee starts and ends their job duties required by the Employer. Work not requested but be performed is work time that must be paid by employer. Some states require employees to be paid overtime for any hours in excess of 8 in a day.

13 Exempt vs. Non-Exempt In order to determine if an employee is EXEMPT you must qualify employee in all 3 Test requirements: 1. Salary Basis ONLY 2. Minimum Salary 3. Job Duties Test

14 Salary Base Test Fixed salary paid to employee for work performed. The salary IS NOT subject to reduction due to work quality or quantity. Salary Level Test Current minimum is $455/Wk., $23,660/Yr. December 1, $913/Wk., $47,476/Yr. Maximum 10% - nondiscretionary bonuses, incentive payments, or commissions.

15 Duties Test Job duties must meet required definition of Executive Administrative Professional Outside sales Certain computer employees Highly Compensated A manager title does not automatically provide an exempt status. Executive Employee Duties Regularly supervises two or more employees Has management as the primary DUTY of position Has some genuine input into the job status of employees (such as hiring, firing, etc.)

16 Administrative Employee Duties Office or non-manual work, which is: Directly related to management or general business operations of the employer or the employer's customers, A primary component of which involves the exercise of independent judgment and discretion about Matters of significance: In other words, the job duties are designed for relatively high-level employees whose main job is to "keep the business running"

17 Professional Employee Duties Professional exempt employee job duties are: DOL classification of a Learned Professions Lawyers Doctors Dentist Teachers Architects Clergy RN (not LPN) Accountants (not bookkeepers) Engineers Pharmacists Scientists (not Technicians) Employee s job duties would be that of a traditional role of learned professions. Example: an RN working as a bookkeeper would NOT be exempt. Exempt Outside Sales Employee Outside Sales exempt employee job duties are: Primary duty must be that of making sales, obtaining orders or contracts for services; and Duties must be customarily and regularly performed away from employer s place of business.

18 Computer Employee Duties Systems Analyst, Programmer, Software Engineer Primary Duties 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 programs, including prototypes, based on and related to user or system design specifications; The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or A combination of the aforementioned duties, the performance of which requires the same level of skills.

19 Highly Compensated Employee Current minimum is $100,000 annually December 1, 2016 Minimum is $134,004; and Primary duty includes performing office or non-manual work; and Perform at least 1 of the duties of the other exemptions

20 Non-Exempt Employee Non-Exempt Employees: Did not pass ALL 3 testing requirements. Must be paid federal minimum wage of $7.25 or more per hour worked. Entitled to overtime pay. Overtime for Mississippi are more than 40 hours worked in a work week. Must record employee s worked time. Additional Note: A manual laborer or other blue-collar workers WILL NEVER be Exempt. Emergency Personal - Fire Fighters, Police, Paramedics and other First Responders are Non-Exempt employees that have specific overtime requirements.

21 Comp Time IS NOT ALLOWED unless business is federal, state or local government. Certain requirements apply. Emergency personal may accrue up to 480 hours all other government personal may accrue up to 240 hours. The Bottom Line If an employee is NON-Exempt you MUST pay employee for hours worked over 40 hours as overtime.

22 Best Practices Do not procrastinate! Identify all salaried employees. Determine who will not meet the minimum salary level. Determine who meets the duties requirements. Communicate any changes to employees affected. Reevaluate time keeping records for Non-Exempt employee(s). Record Keeping Requirements Employee name Social Address DOB Sex & Occupation Week schedule time + days Hours worked each day + Week total Wage based on pay Regular Hourly Wage Total daily or weekly straight pay Total overtime earning for week All additions or deductions to/from wages Total wages paid each pay period Pay date + dates of pay period Keep for 3 years of payroll records Keep 2 years of employee time cards Must be kept for easy access or review

23 Fines/Penalties Payment of ALL Back Wages and Underpayments Additional fines or penalties: Violations my result in criminal or civil. Fines or penalty up to $1,100 per violation. Repeated violations up to $11,000 per employee. $50,000 penalty for child labor violations

24 Jennifer Thompson