1 Managing the Changes in the Fair Labor Standards Act 2016 Summer Conference June 29, 2016 Linda Bond Edwards Linda Bond Edwards
2 Overview of Changes Become effective December 1, 2016; Increases minimum salaries for exempt employees; the amount has not been changed since 2004; Sets a rule that updates the threshold every 3 years; Increases the highly compensated employee from $100,000 to $134,000 annually and allows bonuses to comprise 10% of the threshold.
3 Public Employees: What We Know Compensatory time No Changes Must be established with employees through notice or other means (e.g. collective bargaining agreements) before the performance of work; Compensatory time must be accrued at time and one half. When used, comp time is paid at the regular rate of pay; Can accrue up to 240 hours of compensatory time; Use as requested unless unduly disruptive ; Special rules apply to public safety employees.
4 What we know Hourly workers: no change Exempt salaried workers who work no more than 40 hours per week no change Salaried workers who are not exempt and already receiving overtime no change Elected officials, their policy making appointees and their personal staff and legal advisors not subject to career or civil service are exempt --- no change
5 Primary Duty Means the principal, main, major or most important duty that the employee performs. Determination of an employee s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee s job as a whole. Job titles do not matter!
6 Definition of Executive Primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise.
7 Definition of Executive Must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; Must have the authority to hire or fire other employees, or the employee s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
8 Managing the Enterprise Interviewing, selecting and training employees; Setting employee pay and hours of work; Handling employee complaints and grievances; Imposing employee discipline; Providing for workplace safety and security; Budget planning and control; Ensuring legal compliance.
9 Management of Enterprise or Subdivision Must have a permanent status and a continuing function; Includes person in charge of each establishment if enterprise has more than one establishment; Employees may be located at multiple locations
10 Two or More Other Employees Must be full time or full time equivalent Supervision may be shared; however each supervisor must direct the work or two or more employees
11 Particular Weight of Suggestions and Recommendations Requirement to make suggestions and recommendations; Frequency of suggestions; Frequency of reliance upon suggestions; Must pertain to subordinate s work; Employee not required to have ultimate decision making ability
12 Concurrent Duties Exempt and Non Exempt Allowed to perform nonexempt work at the exempt executive s discretion; Executive retains the responsibility for business success and failure even while performing nonexempt work; Generally must perform exempt work more than 50% of the time to meet primary duty test, however time is not the sole factor Customarily and primarily Greater than occasional, less than constant Occurs every workweek
13 Example of Concurrent Duties An assistant manager may operate the cash register without losing the exemption. However, if assistant manager is closely supervised and earns little more than non-exempt employees, may lose exemption.
14 Directly and Closely Related to Exempt Work Physical and menial tasks that arise out of exempt duties; Recordkeeping, distribution of materials; Using the computer to create documents or presentations; Opening mail for the purpose of reading and making decisions; Examining work to ensure performance standards are met; does not include go/no go inspection work;
15 Directly and Closely Related to Exempt Work Examples include: Observing and taking notes necessary for analysis and making recommendations; Teacher who drives the van to take students on a field trip
16 Use of Manuals Use of highly technical, scientific, legal or financial or other highly complex manuals, guidelines or other established procedures understood or interpreted by those with advanced or specialized knowledge does not destroy an exemption. This does not include How To manuals.
17 Administrative The primary duty must be the performance of office or nonmanual work directly related to the management or general business operations of the employer or the employer s customers; and The employee s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
18 Administrative, continued Directly related to the business includes functional areas such as: Tax, finance, accounting, budgeting, auditing; Insurance; Quality control; Marketing, advertising; Human Resources, employee benefits, labor relations; Legal and regulatory compliance; Advisers or consultants to clients and customers
19 Discretion and Independent Judgment Includes: Comparison and evaluation of possible courses of conduct Acting or making a decision after various possibilities have been considered
20 Discretion and Independent Judgment Does the employee have the authority to: substantially and significantly commit the employer? waive or deviate from established policies and procedures? negotiate and bind the company on significant matters? engage in long or short term planning? investigate and resolve matters of significance?
21 Discretion and Independent Judgment Does the employee have the authority to: formulate, affect, interpret, or implement management policies and practices? carry out major assignments in conducting the operations of the business? perform work that affects business operations to a substantial degree? represent the company in handling disputes, arbitrating disputes and resolving grievances?
22 Who Exercises Discretion and Independent Judgment? Examples: Insurance claims adjusters; Employees in financial services; Team leaders of major projects such as purchasing or selling business; Executive or Administrative Assistant to business owner or senior executive; HR managers; Purchasing agents
23 The FLSA Regulations: Professional The primary duty must be the 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;
24 The FLSA Regulations: Professional The advanced knowledge must be in a field of science or learning; and The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
25 The FLSA Regulations What degree or knowledge is required? Knowledge may be attained by a specialized degree or advanced knowledge and intellectual instruction; Academic degree in any field generally will not qualify for the professional exemption
26 Examples of Professional Lawyers, doctors, engineers, actuaries, theologians, accountants, architects, teachers, chemists, biologists, pharmacists Athletic trainers Licensed funeral directors Registered nurses Registered or certified medical technologists Four-year degreed dental hygienists Four-year degreed physician assistants Four-year degreed executive and sous chefs
27 Salary Basis A predetermined amount received each pay period that includes all or part of an employee s compensation which is not subject to reduction because of the quality or quantity of work Must receive (with specified exceptions) the full salary for any week in which the employee performs any work without regard to the number of days or hours worked
28 Exceptions to Salary Basis Deductions may be made when an exempt employee is absent for one or more full days for personal reasons other than sickness or disability; Deductions may be made for absences for one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary for absences due to sickness or disability.
29 Deductions May Be Made for Penalties imposed in good faith for safety infractions of major significance; Unpaid disciplinary suspensions for one or more full days imposed for violations of workplace conduct rules. Disciplinary deductions must be made pursuant to a written policy applicable to all employees
30 Employer Does Not Pay If: Sick or disability benefits are exhausted or not yet accrued; Employee does not perform any work during the work week, including the initial week of employment; partial week payment is permissible in the initial or terminal week of employment; On unpaid leave pursuant to the Family Medical Leave Act.
31 Penalties for Improper Deductions Lost exemption for time period of improper deductions for all employees in the classification working for the same manager responsible for the improper deductions. The exemption will not be lost if the improper deduction is isolated and inadvertent if the employer reimburses the employees for the improper deduction.
32 Special Provisions for Public Employers May make deductions for partial day absences for personal reasons or illness if the employee accrues personal or sick leave pursuant to a policy that requires a reduced salary or no salary at all if: Employee failed to obtain proper authorization for the leave; Leave has been exhausted; Employee requests leave without pay.
33 Good News for the Employer!! A clearly communicated policy that: prohibits improper pay deductions; includes a complaint mechanism, reimburses for improper deductions; and states that the employer makes a good faith commitment to comply in the future protects the employer from losing the exemption unless the violation is willful.
34 Sample Policy Language Best Employer is committed to paying employees minimum wage and overtime consistent with the provisions of the Fair Labor Standards Act (FLSA). Employees who believe that their pay is not in compliance with the Act should contact or submit a complaint in accordance with.
35 Self Auditing Allows employers the opportunity to determine when to review positions and when to make policy changes; Reduces possibility of willful violations penalties
36 Damages in FLSA cases are wages owed, not compensatory damages and always includes attorney fees. Caution!
37 Steps to Ensure Compliance Review all existing positions to ensure that the exemption has been properly applied. Raise the salary of any exempt employee who meets the duties test and is below the minimum. Closely monitor employee time and attendance records. Implement and strictly enforce policies regarding use of overtime. Do not allow incidental overtime (e.g. working lunches, working a few minutes extra)
38 Steps to Compliance Continue to pay exempt employee a salary and pay overtime or compensatory time for hours worked over 40 in a work week, no need to convert employee to hourly. Employees who work a fix schedule and rarely work overtime can be paid a salary. When extra time is required, plan and budget extra pay. Keep a record of the schedule and keep a record of the hours actually worked only when the actual hours vary from the schedule.
39 Steps to Compliance Use comp time for the period when the hours increase. Consult an employment lawyer if you have any questions.
40 Disclaimer The information provided during this presentation is not intended for legal advice. The presentation, and any handouts which may accompany it, provide general information on this topic and answers to common questions about this issue. Please consult an attorney to assure that this information, and your interpretation of it, is appropriate to your particular situation.
41 Thank you! Linda Bond Edwards, Esquire Rumberger, Kirk & Caldwell, P.A. P.O. Box Tallahassee, FL (850)
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