The views and opinions expressed in this presentation are those of the authors and do not necessarily reflect those of CASBO.

Transcription

1 WAGE AND HOUR ISSUES PART 1 PRESENTED BY: TODD M. ROBBINS, PARTNER ATKINSON, ANDELSON, LOYA, RUUD & ROMO The views and opinions expressed in this presentation are those of the authors and do not necessarily reflect those of CASBO.

2 Agenda: PART 1 Introduction Minimum Wage Increases Overview of the Fair Labor Standards Act ( FLSA ) California Exemptions The Key Differences Between California & Federal Guidelines DOL Audits

3 Wage and Hour Litigation Trends Average workweek for full-time adults in U.S. is now 47 hours 50% of full-time employees say they work more than 40 hours per week Hours Percentage % % % 40 42% Less than 40 8% Source : Gallup data from Work and Education Polls

4 Wage and Hour Litigation Trends Salaried workers work longer hours Hourly workers still average over 40 per week Hours Paid Salary Paid Hourly % 9% % 17% % 12% 40 37% 56% Less than 40 3% 8% Source : Gallup data from Work and Education Polls

5 Wage and Hour Litigation Trends Increase in technological capabilities 9-5 workday is becoming 24/7 Higher demands on responsiveness, shorter turnaround times More telecommuting, remote work

6 Wage and Hour Litigation Trends Workplace flexibility 67% of HR professionals think EEs have a balanced work-life 45% of employees don t 64% of managers expect employees to be reachable outside of the office on personal time Source: Gallup Business Journal, Dec 18, 2012

7 Wage and Hour Litigation Trends Workplace flexibility Gallup study on employee well-being: Engagement > more time off Flextime > more vacation, paid time off Flexibility = strongest factor in overall well-being Source: Gallup Business Journal, Dec 18, 2012

8 Wage and Hour Litigation Trends Corresponding focus of DOL and plaintiffs bar: Misclassification claims (e.g., independent contractor) Off-the-clock and overtime work Telecommuting, donning and doffing Travel time and expense reimbursement

9 Wage and Hour Litigation Trends Employment Litigation Nationwide Source : Civil Cases Filed, by Nature of Suit report from

10 Wage and Hour Litigation Trends Discrimination Case Filings Nationwide Source : Civil Cases Filed, by Nature of Suit report from

11 Wage and Hour Litigation Trends Wage and Hour Case Filings Nationwide Source : Civil Cases Filed, by Nature of Suit report from

12 Wage and Hour Litigation Trends Year Empl Cases Wage/Hr Cases % of Total ,689 6, % ,875 6, % ,416 8, % ,309 7, % ,504 8, % ,603 8, % Source : Civil Cases Filed, by Nature of Suit report from

13 Wage and Hour Litigation Trends DOL Wage and Hour Division budget increased 33.6% since 2007: Year Appropriations to WHD 2007 $170,220, $193,092, $227,491, $215,184, $227,500,000 Requested for 2017 $276,599,000 Source : FY2017 Congressional Budget Justification; U.S. DOL Wage and Hour Division

14 Wage and Hour Litigation Trends DOL-Timesheet App: EEs track hours and determine wages owed EEs can forward time records directly to WHD

15 Wage and Hour Litigation Trends Workers Owed Wages website: [W]orkers can look up in Spanish or English whether they are owed back wages. Recouped $1 million in back wages since 2015.

16 Wage and Hour Trivia What is the minimum wage be in California effective January 1, 2017? A. $9.50 B. $10.00 C. $10.50 D. $12.00

17 California Minimum Wage Increases Non-Exempt Employees: Effective Date Non-Exempt Employees Jan. 1, 2017 $10.50 Jan. 1, 2018 $11.00 Jan. 1, 2019 $12.00 Jan. 1, 2020 $13.00 Jan. 1, 2021 $14.00 Jan. 1, 2022 $15.00

18 California Minimum Wage Increases Exempt Employees: Effective Date Exempt Employees Jan. 1, 2017 $43,680 Jan. 1, 2018 $45,760 Jan. 1, 2019 $49,920 Jan. 1, 2020 $54,080 Jan. 1, 2021 $58,240 Jan. 1, 2022 $62,400

19 Local Minimum Wage Ordinances City/County Current Min. Wage Next Increase Berkeley $ /1/16 - $12.53 El Cerrito $ /1/17 - $12.25 Long Beach Same as state 1/1/18 - $12.00 Los Angeles City $ /1/17 - $12.00 Los Angeles County $ /1/17 - $12.00 (unincorporated areas) Malibu $ /1/17 - $12.00 Mountain View $ /1/17 - $13.00 Pasadena $ /1/17 - $12.00 Richmond $ /1/17 - $12.30 Sacramento Same as state 1/1/18 - $11.00 San Diego $ /1/17 - $11.50 San Francisco $ /1/17 - $14.00 Santa Monica $ /1/17 - $12.00 Sunnyvale $ /1/17 - $13.00

20 Overview of the Fair Labor Standards Act (FLSA) Exemptions Executive Exemptions Administrative Exemptions Professional Exemption Highly Compensated Exemption 2016 Increases in Federal Salary Basis Test Nevada v. Department of Labor (2016 E.D. TX) 4:16-cv Currently on appeal to the Fifth Circuit Court of Appeals

21 FLSA Exempt Employees To be exempt from overtime under the FLSA, the employee must meet: The salary basis test and The duties test Executive Administrative Professional California Education Code requirements are similar but not identical.

22 FLSA Exempt Employees The salary basis test requires: The employee regularly receives each pay period A predetermined amount constituting all or part of his or her compensation That cannot be reduced because of variations in the quality and quantity of work. (29 C.F.R )

23 FLSA Exempt Employees Executive: An executive employee s primary duties typically include: selection, evaluation, and discipline of employees with regular direction over two (2) or more employees. Employee must earn a salary of at least $455 ($913 on 12/1/16) per week; Employee s primary duty must be management of the enterprise or a department or subdivision; and Employee customarily and regularly directs the work of two (2) or more employees. (29 C.F.R )

24 FLSA Exempt Employees Administrative: An administrative employee s primary duties typically include office or nonmanual work that is directly related to the management policies or general business operations of the employer or its customers. The position must require the exercise of independent judgment and discretion. Employee earns a salary of at least $913 per week; and, Employee s primary duty: Is office or non-manual work; Directly related to the employer s management policies or the general business operations of the employer or its customers; and, Includes work requiring the exercise of discretion and independent judgment. (29 C.F.R )

25 FLSA Exempt Employees Professional: A professional employee s primary duties typically include work requiring advanced knowledge in a field of science or learning, involving the exercise of creative talent. Employee earns a salary of at least $913 per week; and, Employee s primary duty is either: Work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course (as opposed to general academic education or apprenticeship) of specialized intellectual instruction; or, Teaching, tutoring, instructing, or lecturing if the employee is employed in such activities as a teacher in a school system or similar institution. (29 C.F.R ) The salary amount test does not apply to those covered by this section.

26 Special Computer Employees Exemption: FLSA Exempt Employees Special provision for some computer employees not otherwise professionally exempt. (29 U.S.C. 213(a)(17).) Applies to: Systems analysts Programmers (who write code ) Software engineers Workers who apply systems analysis techniques and procedures to determine hardware, software, or system functional specifications, or Workers who design, develop, test, or modify computer systems or programs based on user or design specifications

27 Special Computer Employees Exemption: FLSA Exempt Employees Need not be paid on a salary basis! May be paid: At least $913 per week on a salary basis, or At least $27.63 per hour on an hourly basis. Does not include: Employees whose primary duties are manufacturing or repair of computer hardware, or Employees who are not primarily engaged in systems analysis, programming, or software engineering.

28 Overview of the Fair Labor Standards Act (FLSA) Flores v. City of San Gabriel, 824 F.3d 890 (9 th Cir. 2016) City's cash payments to police officers in lieu of medical benefits under the city's flexible benefits plan were not excludable from the calculation of the officers' regular rate of pay for overtime purposes under the FLSA...

29 Overtime: Calculating the Regular Rate The regular rate is generally computed by dividing the employee s total compensation in any workweek by the total hours actually worked in that workweek. Examples of Compensation Included In Regular Rate: Cash in lieu of benefits Longevity Pay Shift differential payments Coaching Stipend Examples of Payments Excluded From Regular Rate: Perfect attendance bonus (maybe) Expense reimbursements

30 Overtime: Calculating the Regular Rate Example: Employee works 46 hours during the week, receives cash in lieu of benefits of $500 annually, and receives $15 per hour before any adjustment for the bonus. His regular rate and overtime premium rate is calculated as follows:

31 Calculating the Regular Rate Step 1 Step 2 Step 3 Step 4 Multiply the total number of hours worked in the pay period by the straight hourly rate. Add the weekly amount of the $500 cash in lieu payment ($9.62) to the amount calculated in Step 1. Divide the amount calculated in Step 2 by the total number of hours worked in the pay period to determine the employee s regular rate. Multiply the regular rate calculated in Step 3 by 1.5 to determine the employee s premium rate. $15 x 46 hours = $690 $ $690 = $ $ = $15.21 / per hour $15.21 x 1.5 = $22.82/ per hour

32 California s Exemptions Salary Basis Test Two times state minimum wage

33 FLSA v. California Salary Level Test ** pending outcome of Nevada v. Department of Labor (2016 E.D. TX) 4:16-cv CALIFORNIA FLSA December 1, 2016 $41,600 $47,476** January 1, 2017 $43,680 $47,476** January 1, 2018 $45,760 $47,476** January 1, 2019 $49,920 $47,476** January 1, 2020 $54,080 TBD January 1, 2021 $58,240 TBD January 1, 2022 $62,400 TBD

34 California s Exemptions Duties Test Executive Exemption: A person employed in an executive capacity Administrative Exemption: A person employed in an administrative capacity Professional Exemption: A person employed in a professional capacity

35 The Key Differences Between California and Federal Guidelines Be engaged in work that is primarily (more than 50% of the time) intellectual, managerial, or creative, and that requires exercise of discretion and independent judgment. The federal duties test does not require exempt employees to spend more than 50% of their time performing exempt work. Receive a monthly salary equivalent to two times the state minimum wage.

36 The Key Differences Between California and Federal Guidelines Additionally, the professional exemption under California guidelines specifically includes employees who are: Licensed or certified by the State of California to practice law, medicine, dentistry, pharmacy, optometry, architecture, engineering, teaching, or accounting; or Engaged in commonly recognized learned or artistic professions.

37 Selected Issues Concerning Classification of Exempt Employees Customarily and Regularly Exercises Discretion and Independent Judgment Determination of Primary Activity of Employee: Quantitative vs. Qualitative Test Education Code section Supervisory, Administrative or executive Certified by the Governing Board in writing

38 Hypothetical #1: Classified Manager Maintenance Crew Lead Duties: Responsible for maintaining the school buildings and grounds. Coordinates the work of three groundskeepers and makes recommendations for their terminations and promotions. Salary: $38,000

39 Hypothetical #2: Academic Administrator Principal/Division Dean Duties: Assist in the management of instructional programs and operations of the school site/division. Salary: $125,000

40 Hypothetical #3: Psychologist Psychologist Duties: Perform psycho-educational assessments to determine appropriate programs and instructional processes to enable students to achieve maximum achievement and adjustment. Salary: $95,000

41 Hypothetical #4: Executive Assistant Executive Assistant to the Superintendent Duties: Plan, coordinate and perform efficient, timely and highly complex advanced-level executive assistant duties requiring independent judgment and analysis; perform substantive and procedural administrative work. Salary: $46,000

42 When the DOL Performs an Audit A DOL audit can be triggered by a call or complaint from a single employee or other person. The DOL can investigate by interviewing employees and reviewing payroll records. Generally, a settlement can be reached with the employer agreeing to: Provide back pay to employees who reasonably show they have been denied overtime Alter practices to avoid uncompensated regular or overtime work Adopt accurate recordkeeping practices

43 Question Answer

44 Thank You For questions or comments, please contact: Todd M. Robbins (951)

45 Disclaimer This AALRR presentation is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation/publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process Atkinson, Andelson, Loya, Ruud & Romo