Navigating the New FLSA Overtime Rules

Transcription

1 Crawford Advisors Webinar Series July 2016 Navigating the New FLSA Overtime Rules Presented by: Cindy Wagner, Manager of HR Professional Services

2 About The Webinar Lines Are Muted Use Arrow To Minimize Menu View Slides in Full Screen Mode Enter Questions for Q&A Session

3 HRCI* & SHRM Pre-Approved In order to receive the HRCI & SHRM Credits: Must have signed in with your unique registration link Must attend the entirety of the webinar Must answer the applicable polls for HRCI credits An HRCI certificate with ID# will be sent to you upon completion of all of the above *The use of this seal confirms that this activity has met HR Certification Institute s (HRCI) criteria for recertification credit pre-approval. This activity has been approved for 1 HR (General) recertification credit hours toward aphr, PHR, PHRca, SPHR, GPHR, PHRi, and SPHRi recertification through HRCI. **Crawford Advisors is recognized by SHRM to offer Professional Development Credits (PDCs) for SHRM-CP or SHRM- SCP. This program is valid for 1 PDC for the SHRM-CP or SHRM-SCP. For more information about certification or recertification, please visit shrmcertification.org.

4 About Our Speaker Cindy Wagner, Manager of HR Professional Services Cindy possesses 30+ years of progressive and diverse human resources, compliance, and leadership experience that spans from start-up to established organizations. She has extensive hands-on experience leading HR initiatives including policy design, performance management, recruiting, compliance reporting, compensation, benefits administration, HRIS implementation, HR workflow development, leadership development and training, safety management, mergers and acquisitions, and payroll administration. Cindy s employment history includes positions in both the private and public sectors supporting employers with employee populations of 100 7,500 employees. Her vast level of expertise includes seven recent years as a Vice President of Human Resources and Payroll Services in a leadership and operations role. She recently joined the Crawford Advisors/HRtactix Team as Manager, HR Consulting Services and is focused on providing human resources strategic based solutions and compliance support to our clients. She is active in the HR business community and is a member of SHRM, CHRA, CC SHRM and the Hunt Valley Business Forum.

5 Agenda A baseline review of the Fair Labor Standards Act (FLSA) history and intent of the law Review of the final FLSA Overtime rules New thresholds for exemption status Impact on business operations Considerations for compliance with new requirements

6 Introduction Fair Labor Standards Act (FLSA) of 1938 Establishes minimum wage, overtime pay, recordkeeping, and Youth Employment Standards Affects full-time and part-time employees Applies to private sector and federal, state and local governments

7 Administration & Enforcement The Wage and Hour Division private, state and local government employment. Plus, federal employees of the Library of Congress, U.S. Postal Service, Postal Rate Commission, and the Tennessee Valley Authority. The U.S. Office of Personnel Management Employees of other Executive Branch Agencies The U.S. Congress for covered employees of the Legislative Branch

8 Minimum Wage for Non-Exempt Workers Federal: Entitled to a minimum wage of no less than $7.25 per hour ($2.13 for tipped employees) Not adjusted since 2009 State (MD): Entitled to a minimum wage of no less than $8.75 (effective 7/1/16) per hour ($3.63 for tipped employees) Special provisions apply to workers in American Samoa and the Commonwealth of the Northern Mariana Islands Non-exempt workers must be paid overtime pay One and one-half times regular rate of pay After 40 hours of work in a work week

9 Payment of Wages Due on regular pay date for the pay period covered Certain deductions are ineligible: When below minimum rate required Creates reduction of overtime pay

10 FLSA Does Not Regulate Vacation, holiday, severance or sick pay Meal or rest periods, holidays off, or vacations Premium pay for weekend or holiday work Pay raises or fringe benefits Discharge notices, reasons for discharge Immediate payment of final wages

11 Who is Covered Under the FLSA? All employees of certain enterprises having workers engaged in interstate commerce, producing goods for interstate commerce or handling, selling, or otherwise working on good or materials having been moved in or produced for commerce.

12 The Details Tipped employees Employer-furnished facilities Industrial homework Subminimum wage provisions Youth minimum wage

13 Definition of Tipped Employees Individuals receiving more than $30 a month in tips Employer may include tips as part of the wages Must pay at least $2.13 per hour in direct wages

14 What are Employer-Furnished Facilities? Reasonable cost or fair value: Board Lodging Other facilities

15 What is Industrial Homework? Performance of certain work prohibited in employee s home unless employer obtains certification from the Department of Labor (DOL). Types of work include: Manufacture of knitted outerwear, gloves and mittens, buttons and buckles, handkerchiefs, embroideries, and jewelry Manufacture of women s apparel Enforced by Wage and Hour Division of the DOL

16 Subminimum Wage Provisions Employment of certain individuals at wages below statutory minimum. Student learners Full-time students in retail or service establishments, agriculture or higher learning institutions Physical or mental disability limitations

17 Youth Minimum Wage $4.25 per hour employees under 20 years of age during first 90 consecutive calendar days of employment Restrictions apply for displacement of workers at higher wages

18 Exemptions 3 types: Exemptions from both minimum wage and overtime pay Exemptions from overtime pay only Partial exemptions from overtime pay

19 Exemptions from Minimum & Overtime Pay Executive, administrative, professional, outside sales and certain computer-related occupations Certain seasonal amusement or recreational establishments Certain small newspapers, seaman employed on foreign vessels, engaged in fishing operations and newspaper delivery Certain farmworkers Casual babysitters and elderly companions

20 Exemptions from Overtime Pay Only Certain commissioned employees of retail or service establishments (i.e., auto, truck, trailer, farm implement, boat or aircraft sales) Parts clerks and mechanics servicing autos, trucks, or farm implements Railroads, air carriers, taxi drivers, motor carriers, seamen on American vessels, and local delivery workers Announcers, news editors and chief engineers Domestic service workers Motion picture theaters Farmworkers

21 Partial Exemptions from Overtime Pay Certain operations on agricultural commodities Certain bulk petroleum distributors Hospitals and residential care establishments 14 day work period alternative Minimum education requirements remedial training Public agency police and fire departments special work week requirements

22 Other Important Components of the FLSA Youth employment provisions Nonagricultural jobs (youth employment) Farm jobs (youth employment) Recordkeeping

23 Computing Overtime Pay Overtime must be paid at a rate of at least 1 ½ times the employee s regular rate of pay for each hour worked in a workweek in excess of the maximum allowable in a given type of employment. Generally, most employers determine overtime based on a 40 hour workweek.

24 Rates of Pay Hourly Rate regular rate of pay paid by the hour Piece Rate regular rate of pay for an employee paid on a piecework basis Salary salary is the regular rate for an employee paid a salary for a regular or specified number of hours in a workweek.

25 The Salary Basis Test Employee must be paid on a salary basis in order for an employer to claim a white collar exemption from minimum wage and overtime for an employee: Employee regularly receives a predetermined amount of money each pay period on a weekly or less frequent basis Pre-determined amount cannot be reduced due to variations

26 Effective Date Department of Labor s Final Rule released on May 18, 2016 Effective Date December 1, 2016

27 Final Rules Addressed the Following: Annual salary threshold for exempt positions No changes to the duties test High compensated employees (HCEs) Nondiscretionary bonuses, incentive payments, and commissions December 1, 2016 new rules take effect!

28 Annual Threshold for Exempt Positions Increased from $23,660 to $47,476 From $455 to $913 per week DOL updates via federal register every 3 years (or at least 150 days before updated amounts take effect) beginning on January 1, 2020

29 Estimated Automatic Increase Projections Year Minimum Salary Level HCE Level 2017 $47, , $51, , $55, , $59, , , , $69, , $74, ,558 *Projections based on DOL s estimated increases from 2017 to 2020

30 No Changes to the Duties Test Used to Determine Exemption Status To qualify for white collar exemptions, employees must meet certain tests regarding job duties. The same categories apply: Executive Administrative Professional Outside Sales Computer Employees

31 HCE Annual Salary Threshold HCA Annual Salary Threshold raised from $100,000 to $134,004 Employees with primary duty of office or nonmanual work who meet the HCE compensation requirements are exempt if the employees customarily and regularly performs at least one of the exempt duties of a bona fide executive, administrative, or professional employee. Employees performing those exempt duties on an isolated or occasional basis will not concur the minimal duties requirements.

32 Nondiscretionary Bonuses, Incentive Payments & Commissions May use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level Must be paid on a quarterly or more frequent basis Considered compensation promised to induce more efficient work or remain with the company Catch-up payments allowed to avoid loss of exemption status

33 Recommended Next Steps for Employers: Step 1 Apply the salary basis test to your workforce Step 2 Determine which exemption applies to each employee Step 3 Conduct job analysis

34 Other Considerations Review state wage/hour laws Capture payroll costs and budgetary needs HRIS/payroll system updates Collective bargaining agreements

35 How old is the FLSA? A. 56 B. 78 C. 76 D. None of the above

36 FLSA requires that records must be kept at a place of employment or the business central record keeping office. Wage computation records are required to be kept for years and payroll records including collective bargaining agreements and sales purchase records must be kept for years. A. 3 years, 4 years B. 2 years, 2 years C. 2 years, 3 years D. None of the above

37 The FLSA includes a Statute of Limitations for filing of non-willful and willful violations. The statute for non-will violations is years and the statute for willful violations is years. A. 2 years, 2 years B. 2 years, 3 years C. 3 years, 4 years D. None of the above

38 The Final Rule sets the standard salary level at the 40 th percentile of earnings for full-time salaried workers in the lowest-wage Census Region; currently the Southern Region. Effective December 1, 2016, the level will increase to $913 per week or $47,476 annually for a full-year of work. How often will the DOL increase the salary level? A. Every 3 years B. Every 2 years C. Every 4 years D. The salary level won t be adjusted

39 The U.S. Department of Labor estimates that a large percentage of employers are not in full compliance with the FLSA. Non-compliance can result in heavy fines, lawsuits, and even criminal charges. Companies that contract with the government can be debarred from government contracts for up to three years. What percentage of employers does the DOL estimate are not in full compliance? A. 10% B. 25% C. 50% D. 70%

40 In Summary

41 Questions If you have any further questions about the information discussed in this webinar please feel free to contact us at: Crawford Advisors, LLC HQ: 200 International Circle Suite 4500 Hunt Valley, MD Sweetbay Drive Suite 10 Salisbury, MD King of Prussia Road Suite 650 Radnor, PA Granite Run Drive Suite 250 Lancaster, PA W. Executive Parkway Lehi, UT (800) HRtactix (443) Download Slides Questions & Requests