FLSA: Understanding Exempt and Nonexempt Overtime Regulations. Presented by Don Feltham
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1 FLSA: Understanding Exempt and Nonexempt Overtime Regulations Presented by Don Feltham
2 KEY ISSUES:» Changes effective December 1, 2016» FLSA overview» Exempt and nonexempt rules» Unique situations
3 OVERVIEW The FLSA: 1. Established a minimum wage 1938
4 11 STATES with minimum wages linked to Consumer Price Index
5 OVERVIEW The FLSA: 1. Established a minimum wage 2. Set the standard for a regular workweek to 40 hours 1938
6 OVERTIME Double time for work > 12 hours per day
7 OVERVIEW The FLSA: 1. Established a minimum wage 2. Set the standard for a regular workweek to 40 hours Prohibited long working hours for children younger than 18
8 Equal Pay Act 1978
9 1. Interstate motor carrier, airline and railroad employees 2. Outside buyers of poultry and dairy products 3. Seamen 4. Motor-vehicle dealer sales and service personnel 5. Trailer, boat or aircraft dealer salespeople not working for a manufacturer 6. Certain local delivery drivers and helpers 7. Agricultural employees 8. Individuals engaged in the initial transportation of fruits and vegetables from a farm 9. Taxi drivers 10. Employees of police and fire departments with fewer than 5 employees 11. Movie-theater employees XEMPTION
10 Certain employees of amusement or recreational establishments located in national parks Bulk or wholesale petroleum distributors Hospital or nursing-home employees if paid overtime for more than 8 hours per day or 80 hours during a 14-day period Public fire protection personnel may be paid for a consecutive 28-day work period after 212 hours of work. Law enforcement may be paid overtime for a consecutive 28- day work period after 171 hours of work. PARTIAL EXEMPTION
11 Tests Individual coverage
12 Tests Enterprise coverage
13 Categories of Exemption»Salary»Duties
14 Categories of Exemption Salary test Primary duties test Managers, directors, executives, officers, etc. 1. Executive
15 Categories of Exemption Salary test Primary duties test 2. Administrative
16 EXEMPT NONEXEMPT GRAY AREA Senior administrative Entry-level clerical administrative
17 Categories of Exemption Salary test Primary duties test 3. Professional (Learned)
18 Categories of Exemption Salary test Primary duties test 3. Professional (Creative)
19 Categories of Exemption Salary test Primary duties test 4. Computer-Related
20 Categories of Exemption Salary test Primary duties test 5. Outside Sales
21 Categories of Exemption Salary test Primary duties test 6. Highly Compensated
22 Compensating Exempt Employees for Extra Work
23 Docking Exempt Employee Pay EXCEPTIONS:» Personal absences» Sickness or disability» Serious disciplinary reasons» Life-threatening safety violations» Commencement of FMLA leave» Joining or leaving the workforce midweek
24 SICK TIME
25 The DOL has interpreted employees as working when checking and/or voice mail outside the office.
26 160-hour workweek $7.25 per hour Overtime 7 Basic Rules for Nonexempt Employee Classification 1. Minimum wage and overtime requirements
27 7 Basic Rules for Nonexempt Employee Classification 2. Makeup time
28 7 Basic Rules for Nonexempt Employee Classification 3. Compensatory time off (public sector)
29 7-minute rounding 7 Basic Rules for Nonexempt Employee Classification 4. Rounding starting and stopping times
30 Minimum of $7.25 per hour including tips 7 Basic Rules Minimum of $2.13 per hour for Nonexempt Employee Classification 5. Tip credits
31 7 Basic Rules for Nonexempt Employee Classification 6. Discretionary vs. nondiscretionary bonuses
32 7. Record-keeping requirements 7 Basic Rules for Nonexempt Employee Classification
33 Nonexempt Employees 1. Unauthorized overtime
34 Nonexempt Employees 2. Preliminary and postliminary work
35 Nonexempt Employees 3. Waiting, on-call and standby time
36 Nonexempt Employees 4. Meal and rest periods
37 Nonexempt Employees 5. Sleeping time Uninterrupted sleep for at least 5 hours
38 Nonexempt Employees 6. Training and education time
39 Nonexempt Employees 7. Travel time
40 In 2016:» Sets the standard salary level to $913 per week, or $47,476 annually FLSA» Sets the highly compensated level to $134,004» Automatic updates to salary and compensation levels every 3 years CHANGES
41 In 2004:» Elimination of the 20% nonexempt work limitation DOL» Full-day docking for serious disciplinary reasons» Separation of the professional exemption into learned and creative categories CHANGES
42 » The characteristics that define exemption have not changed Avg Hours Worked /Week Current Annual $25,000 $29,688 $34,375 $39,063 $43,750 $30,000 $35,625 $41,250 $46,875 $52,500 $35,000 $41,563 $48,125 $54,688 $61,250 $40,000 $47,500 $55,000 $62,500 $70,000 $45,000 $53,438 $61,875 $70,313 $78,750 Where do you go from here?
43 » The characteristics that define exemption have not changed» Some positions need to be moved to nonexempt status» Conduct an impact review Where do you go from here?
44 Communicating to Managers and Employees Educate management, then employees.» Overview of FLSA changes» Process of making changes» Implications of results» Cost issues» Employee pay increases» Move to nonexempt status
45 Get an expert s opinion. Attorney Consultant DOL Take a conservative perspective.
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