Passing the Test for Exempt Employees Part 1: Classifying Presented on Friday, December 9, 2016

Transcription

1 Passing the Test for Exempt Employees Part 1: Classifying Presented on Friday, December 9,

2 2

3 Housekeeping 3 Credit Questions Today s topic Speaker

4 To earn RCH credit you must 4 Stay on the webinar, online for the full 60 minutes Be watching using your unique URL Certificates delivered by , to registered , by January 9 th

5 Our Focus For Today 5 Who is subject to overtime Who is exempt from overtime What are the categories of exempt permitted under the FLSA What are the requirements for each category under the FLSA in terms of job duties

6 About the Speaker 6 Vicki M. Lambert, CPP, is President and Academic Director of The Payroll Advisor, a firm specializing in payroll education and training. The company s website offers a subscription payroll news service which keeps payroll professionals up-to-date on the latest rules and regulations.

7 Overtime Eligibility? 7 Who is automatically eligible for overtime pay? All Employees! You have to prove they are NOT subject to overtime and minimum wage You don t prove they are subject

8 White Collar Exemptions 8 Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees who are employed in a bona fide: Executive; Administrative; Professional; or Outside Sales capacity. Certain computer employees may be exempt professionals under Section 13(a)(1) or exempt under Section 13(a)(17) of the FLSA.

9 Blue Collar Workers 9 The exemptions do not apply to manual laborers or other blue collar workers who perform work involving repetitive operations with their hands, physical skill and energy. FLSA-covered, non-management employees in production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to minimum wage and overtime premium pay under the FLSA, and are not exempt under the Part 541 regulations no matter how highly paid they might be.

10 Police, Fire Fighters, Paramedics and Other First Responders 10 The exemptions also do not apply to police officers, detectives, deputy sheriffs, state troopers, highway patrol officers, investigators, inspectors, correctional officers, parole or probation officers, park rangers, fire fighters, paramedics, emergency medical technicians, ambulance personnel, rescue workers, hazardous materials workers and similar employees, regardless of rank or pay level, who perform work such as preventing, controlling or extinguishing fires of any type; rescuing fire, crime or accident victims; preventing or detecting crimes; conducting investigations or inspections for violations of law; performing surveillance; pursuing, restraining and apprehending suspects; detaining or supervising suspected and convicted criminals, including those on probation or parole; interviewing witnesses; interrogating and fingerprinting suspects; preparing investigative reports; or other similar work.

11 Three Tests for Exemption 11 Salary Level Salary Basis Job Duties

12 Three Tests for Exemption 12 Salary Level Salary Basis Job Duties

13 Executive Duties 13

14 Executive Duties 14 Primary duty is management of the enterprise or of a customarily recognized department or subdivision; Customarily and regularly directs the work of two or more other employees; and Authority to hire or fire other employees or whose suggestions and recommendations as to hiring, firing, advancement, promotion or other change of status of other employees are given particular weight.

15 Primary Duty 15 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.

16 Primary Duty 16 Factors to consider include, but are not limited to: Relative importance of the exempt duties; Amount of time spent performing exempt work; Relative freedom from direct supervision; and Relationship between the employee s salary and the wages paid to other employees for the same kind of nonexempt work.

17 Primary Duty 17 Employees who spend more than 50% of their time performing exempt work will generally satisfy the primary duty requirement However, the regulations do not require that exempt employees spend more than 50% of time performing exempt work

18 Management 18 Interviewing, selecting, and training employees Setting and adjusting pay and work hours Maintaining production or sales records Appraising employee productivity and efficiency Handling employee complaints and grievances Disciplining employees Planning and apportioning work among employees

19 Two or More 19 The phrase two or more other employees means two full-time employees or the equivalent Full-time generally means 40 hours per week The supervision of the same employees can be distributed among two or more exempt executives, but the hours worked by an employee cannot be credited more than once

20 Staffing Meets the Two Or More Requirement 20 Assistant Manager A Assistant Manager B Assistant Manager C Full-Time Employee Full-Time Employee Half-Time Employee Half-Time Employee Half-Time Employee Half-Time Employee Full-Time Employee Half-Time Employee Half-Time Employee

21 Staffing Does Not Meet the Two or More Requirement 21 Cannot share Employee X Full Time Employee Y Full Time Employee Z

22 Concurrent Duties 22 Concurrent performance of exempt and nonexempt work does not automatically disqualify an employee from exemption Exempt executives generally decide when to perform nonexempt duties and remain responsible for the success or failure of business operations Nonexempt employees generally are directed by a supervisor to perform the exempt work or perform the exempt work for defined time periods

23 Department or Subdivision 23 The phrase a customarily recognized department or subdivision is intended to distinguish between a mere collection of employees assigned from time to time to a specific job or series of jobs and a unit with permanent status and function.

24 Customarily and Regularly 24 The phrase customarily and regularly means greater than occasional but less than constant; it includes work normally done every workweek, but does not include isolated or one-time tasks.

25 Administrative Duties 25

26 Administrative Duties 26 Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer s customers; and Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

27 Management or General Business Operations 27 Refers to the type of work performed by the employee Work must be directly related to assisting with the running or servicing of the business Does not include working on a manufacturing production line or selling a product in a retail or service establishment

28 Management or General Business Operations 28 Tax Finance Accounting Budgeting Auditing Insurance Quality Control Purchasing Procurement Advertising Marketing Research Safety and Health Human Resources Employee Benefits Labor Relations Public and Government Relations Legal and Regulatory Compliance Computer Network, Internet and Database Administration

29 Employer s Customers 29 Employees acting as advisors or consultants to clients or customers

30 Discretion and Independent Judgment 30 The comparison and evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered Must be exercised with respect to matters of significance, which refers to the level of importance or consequence of the work performed Decisions and recommendations may be reviewed at a higher level and, upon occasion, revised or reversed

31 Discretion and Independent Judgment 31 Discretion and independent judgment does not include: Applying well-established techniques, procedures or specific standards described in manuals or other sources Clerical or secretarial work Recording or tabulating data Performing mechanical, repetitive, recurrent or routine work

32 Use of Manuals 32 Exempt employees may use manuals, guidelines or other established procedures if they: contain or relate to highly technical, scientific, legal, financial or other similarly complex matters that can be understood or interpreted only by those with advanced or specialized knowledge or skills Employees are not exempt if they use manuals to apply well-established techniques or procedures within closely prescribed limits

33 Human Resources 33 Human resource managers who formulate, interpret or implement employment policies generally meet the administrative duties requirements Personnel clerks who screen applicants to obtain data regarding minimum qualifications and fitness for employment generally are not exempt administrative employees

34 Other Exempt Positions 34 An employee who leads a team of other employees assigned to complete major projects Executive assistant or administrative assistant to a business owner or senior executive of a large business who has been delegated authority regarding matters of significance Management consultants who study the operations of a business and propose changes in organization

35 Learned Professional Duties 35

36 Learned Professional 36 The employee s primary duty must be the performance of work requiring advanced knowledge In a field of science or learning Customarily acquired by a prolonged course of specialized intellectual instruction

37 Advanced Knowledge 37 Predominately intellectual in character Includes work requiring the consistent exercise of discretion and judgment The advanced knowledge is generally used to analyze, interpret or make deductions from varying facts or circumstances Not work involving routine mental, manual, mechanical, or physical work Cannot be attained at the high school level

38 Field of Science or Learning 38 Occupations with recognized professional status, as distinguished from the mechanical arts or skilled trades Law Accounting Actuarial Computation Theology Teaching Physical Sciences Medicine Architecture Chemical Sciences Pharmacy Engineering Biological Sciences

39 Other Exempt Professions 39 Lawyers Teachers Accountants Pharmacists Engineers Actuaries Chefs Athletic trainers Licensed funeral directors or embalmers

40 Other Nonexempt Professions 40 Accounting clerks and bookkeepers who normally perform a great deal of routine work Cooks who perform predominantly routine mental, manual, mechanical or physical work Paralegals and legal assistants Engineering technicians

41 Prolonged Course of Specialized Intellectual Instruction 41 Specialized academic training is a prerequisite for entering the profession Best evidence that an employee meets this requirement is possession of the appropriate academic degree

42 Creative Professional Duties 42

43 Creative Professional Duties 43 The employee s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor

44 Recognized Field of Artistic or Creative Endeavor 44 Music Musicians, composers, conductors, soloists Writing Essayists, novelists, short-story writers, play writers Screen play writers who choose their own subjects Responsible writing positions in advertising agencies Acting Graphic Arts Painters, photographers, cartoonists

45 Computer Exemption 45 The employee must be compensated either on a salary or fee basis at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour; and The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described on the next slide;

46 Duties 46 The employee s primary duty must consist of: The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;

47 And 47 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;

48 And 48 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.

49 The Exemption Does Not Include 49 Employees engaged in the manufacture or repair of computer hardware and related equipment. Employees whose work is highly dependent upon, or facilitated by, the use of computers and computer software programs also not exempt under the computer employee exemption.

50 Outside Sales 50

51 Outside Sales Exemption Duties 51 The employee s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and The employee must be customarily and regularly engaged away from the employer s place or places of business.

52 Salary Basis 52 The salary requirements of the regulation do not apply to the outside sales exemption. An employee who does not satisfy the requirements of the outside sales exemption may still qualify as an exempt employee under one of the other exemptions allowed by Section 13(a)(1) of the FLSA and the Part 541 regulations if all the criteria for the exemption is met.

53 Primary Duty 53 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.

54 Making Sales 54 Sales includes any sale, exchange, contract to sell, consignment for sales, shipment for sale, or other disposition. It includes the transfer of title to tangible property, and in certain cases, of tangible and valuable evidences of intangible property.

55 Away from the Employer s Place of Business 55 An outside sales employee makes sales at the customer s place of business, or, if selling door-todoor, at the customer s home. Outside sales does not include sales made by mail, telephone or the Internet unless such contact is used merely as an adjunct to personal calls.

56 Fixed Site 56 Any fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation of sales is considered one of the employer s places of business, even though the employer is not in any formal sense the owner or tenant of the property.

57 Drivers Who Sell 57 Drivers who deliver products and also sell such products may qualify as exempt outside sales employees only if the employee has a primary duty of making sales. Several factors should be considered in determining whether a driver has a primary duty of making sales

58 These Factors Include 58 Comparison of the driver s duties with those of other employees engaged as drivers and as salespersons The presence or absence of customary or contractual arrangements concerning amounts of products to be delivered Whether or not the driver has a selling or solicitor s license when required by law The description of the employee s occupation in collective bargaining agreements, and other factors set forth in the regulation.

59 Where the States Stand 59 If they address the issue they can. 1. follow new federal rules or 2. Follow old rules exactly or 3. Follow either but have a different salary level or different job duties tests

60 Where the States Stand 60 State Follows FLSA: AR,CO, D.C., IA, KS, MD, MA, MI, MO, MT, NV, NH, NM, NC, *ND, OH, OK, RI, TX, UT, VT, State Has Own Law Right Now Stricter: AK, CA, CT, HI, IL, IN, KY, ME, NJ, NY, OR, PA, WA, WV, WI, State Has Own Law Less Strict on Salary: MN No State Statute: AL, AZ, DE, FL, GA, ID, LA, MS, NE, SC, SD, TN, VA, WY * Some parts are stricter

61 Are There Any Questions? 61

62 How Can Ascentis Help Me? 62 Do you have salaried non-exempt employees? Ascentis Timekeeper and Payroll can help you determine which hours qualify for overtime pay Do you have salaried non-exempt employees? Ascentis Timekeeper and Payroll can help you determine which hours qualify for overtime pay Hours over standard salary hours for a pay period can be automatically calculated, and all hours worked in excess of the regular pay period hours can be paid as overtime Hours can be posted to a different general ledger account for accurate liability reporting purposes Ascentis Timekeeper offers a number of configuration options based on your own tracking needs

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