Why Know About The FLSA?

FLSA: IT S ALL IN THE DETAILS Eddie Kreisberg, Principal Brandon Halter, Associate December 6, 2017 Why Know About The FLSA? Part of job Avoid violating Compliance/money 2 or 3 year statute of limitation Liquidated/double damages routinely awarded Attorneys fees for successful plaintiffs Useful for negotiations, MOUs, policies Identify/solve problems Potential good faith defense 2 Locating FLSA Problems Job Descriptions Personnel Policies / Rules MOUs and Side Letters Administrative Rules and Regulations Charter and Municipal Code Provisions Division or Department Policies or Rules Internal Memoranda re: FLSA Compliance FLSA Problem Evidence of Training or Receipt of Advice re: FLSA Legal, Administrative and Grievance Claims re: Overtime Past Practice 3 1

Locating FLSA Problems Payroll Procedures Payroll Software and Computer System Paychecks and Pay Stubs Time Cards and Department Timekeeper Practices 4 Overview Of The FLSA Who s Covered? Who s Not? White Collar Exemptions (Who is Exempt?) The Work Period Hours Worked Regular Rate of Pay (Overtime Calculations) Compensatory Time Off Record Keeping 5 Who s Covered? Who s Not? Certain Elected Officials and Staff to Elected Officials are Not Covered Non Employees Are Not Covered Independent Contractors Volunteers Trainees Prison inmates 6 2

Determining Overtime: The Process Is the employee exempt? What is the employee s work period? How many hours did the employee work during the work period? What is the employee s regular rate of pay? Identify compensation to be included Calculate overtime rate correctly 7 Exemption Determinations Need to know if FLSA exempt even if pay overtime Agency rules regarding agency overtime versus FLSA rules regarding FLSA overtime Lawsuit versus grievance Statute of limitations/time period covered Risk of liquidated/double damages Attorneys fees Evidence/relevant if sued Relevant to bargaining positions 8 Salary Basis Test Minimum of at least $455/week General rule Employee must receive full salary regardless of number of hours worked in a given workweek (i.e. even if work fewer than even if work fewer hours) O.k. if leave hours deducted Paying extra (overtime or admin pay) does not violate the salary basis test 9 3

Salary Basis Test Exceptions to Predetermined Pay Deductions of a day or more Required use of paid leave for less than a day Exception for Certain Disciplinary Deductions Suspension of a full workweek or more; or Discipline for major safety infractions Suspension of one or more days for violation of written workplace conduct rule E.g. written rule regarding harassment/discrimination, violence in workplace, drug and alcohol rules, etc. Does not apply to performance issues Exception for Furloughs for Exempt Employees 10 Duties Test Administrative Exemption Computer Professional Exemption Executive Exemption Professional Exemption Highly Compensated Employee Exemption Note: Some employees will satisfy more than one category of exemption) 11 White Collar Exemptions Do not determine By Management Label Based on Bargaining Group OK to have FLSA exempt and FLSA non FLSA exempt in same unit OK to pay all employees in a unit overtime even if not all FLSA exempt Based on whether pay City/ County/District or MOU overtime Based on whether Confidential under MMBA or Agency Policies Determine by Job Title Based on Work Schedule 12 4

Approach to Determining Exemption Status Review job description and apply duties tests Keep in mind date/accuracy of job descriptions Check if annual compensation exceeds $100,000 FLSA test is by position. Duties of persons working in classification may vary by department or position within department If cannot tell from job description if exempt, follow up on factual questions 13 Executive Exemption Primary duty of managing enterprise or recognized department or subdivision Re: primary, 50% of time or duties can be a rough/useful guide, but importance of particular duties also relevant May combine exempt duties to determine if primary duties are exempt Not just a group of people with someone working as a lead or foreperson 14 Executive Exemption Customarily and regularly directs work of two or more full time employees (or equivalent) Equivalent of 2 or more is OK, including part timers Exclude volunteers Distinguish between managing project and supervising people Assign work, direct work, evaluations, consider grievances Titles not dispositive but distinguish between lead, foreperson, coordinator, supervisor, superintendent and manager Authority to hire or fire (or recommendations on hiring, firing, promotion given particular weight) 15 5

Administrative Exemption 1. Primary duty is office or non manual work 2. Directly relates to the management or general business operations of the employer or the employer s customers 3. Exercises discretion and independent judgment regarding matters of significance Administrative exemption is the most! difficult to apply in the public sector 16 Administrative Exemption Primary duties must satisfy each of these elements Key is whether primary duties relate to general operations and policy matters Must exercise discretion and independent judgment on matters of significance rather than only coordinating efforts of others or applying checklists and standards developed by others 17 Professional Exemption Primary duty is office or non manual work Requires knowledge of advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction Exercises consistent discretion and independent judgment 18 6

Professional Exemption Doctors, lawyers, scientists, accountants, engineers, librarians usually qualify Paralegals, bookkeepers, engineering technicians do not qualify Distinguish managers or people with advanced degrees that may not satisfy test (e.g. Masters in Business or Urban Planning) though may qualify for different exemption 19 Computer Professional Earns at least $455/week for salaried employees and $27.63/hour for hourly employees Employed as computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field Primary duty of one or combination of the following: Application of systems analysis techniques and procedures Design, development, documentation, analysis, creation, testing or modification of computer systems or programs Design, documentation, testing, creation or modification of computer programs related to machine operating systems A combination of the above Distinguish between decision makers and designers and developers (exempt) with fixing, helpdesk and data entry (not exempt) 20 Highly Compensated Employees Highly Compensated Employees Exempt if Paid Over $100,000/Year Definitely if base salary over $100,000/year Safe if base salary plus pay associated with regular schedule (other than FLSA pay for regularly scheduled hours) exceeds $100,000/year Primary duty is non manual work Perform at least one exempt type duty regularly 21 7

The FLSA Workweek (Work Period) 7 day workweek Regularly re occurring 168 consecutive hours Designate start/end Schedule / hours worked will drive overtime 9/80 schedules starts/ends at mid point of 8 hour day Other alternative schedules Flexing start time, or number of hours in a day, or day(s) off 22 FLSA vs. Non FLSA Overtime Hours worked over 40 in a 7 day work period FLSA does not require overtime for: Hours over 37.5 in a week Hours over 8 or 10 in a day Hours outside regular schedule Hours worked on weekend or holiday Hours paid (as opposed to worked) over 40 in a week 23 The FLSA Workweek (Work Period) 7(k) work periods for public safety Formally adopt Establish perpetual work period calendar Calculate regular rate based on 7(k) Police/Sheriffs: 7 days/43 hours or 14 days/86 hours or 28 days/171 hours Firefighters: 24 day/182 hours or 27 days/204 hours or 28 days/212 hours Distinguish the work schedule or pay period 24 8

The 7(b) Work Period Need MOU or side letter between bona fide labor organization, as determined by the National Labor Relations Board FLSA owed for hours worked: Option 1: Over 12 in a day or over 1,040 in a 26 week period; or Option 2: Over 12 in a day or over 2,080 hours worked in 52 week period. If work more than 2,240 hours in 52 week period, 7(b) exemption is lost and 7 day workweek principles apply Useful for 24 hour operations (nurses, dispatchers, etc.) 25 Hours Worked Working Time vs. Paid Time De Minimis Time Rest Periods and Meal Periods On Call/Stand by/waiting Time Travel Time Ordinary travel to and from work no Travel during the workday yes Overnight travel yes if cuts across regular workday hours; yes if driving; no if using public transportation or offered public transportation and outside regular workday hours 26 Hours Worked Training Time Attendance must be outside of employee s regular work hours; Attendance must be voluntary; Training program must not be directly related to employee s job; and Employee must not perform any productive work during the training Pre and Post Shift Activities/Unscheduled Time Briefing time, canine care, donning and doffing, motorcycle maintenance, cleaning equipment or vehicles E mail and phone calls outside regular schedule Grievance Processing Time Hours worked if during employee s normal working hours 27 9

Hours Worked Strategies Require (written) permission to work overtime No work during lunch Discipline violations 28 Regular Rate Regular vs. Hourly Rate Includes: Shift differentials, retro pay increases, education incentives, standby, nondiscretionary bonuses, hazard, bilingual, longevity, special assignment, holiday pay, medical opt out of cash payments Doesn t Include: Reimbursements, true gifts, non discretionary bonuses, bona fide insurance benefit payments, uniform allowance, minimum call back hours not worked 29 Regular Rate Distinguish MOU overtime rate from FLSA overtime rate Should know if paying more than the law requires May determine whether grievance issue vs. FLSA lawsuit Statute of limitations, attorneys fees, liquidated damages, costs May influence agency s right to take a credit Entitled to credit against FLSA obligations certain premium pays for hours not qualifying as FLSA overtime (MOU overtime, extra holiday pay, etc.) Also entitled to credit for amounts already paid for applicable FLSA overtime hours, whether straight time as part of salary or as MOU overtime Can be challenging for Public Safety who typically have 24 or 27 or 28 day 7(k) FLSA work periods May need to do a look back every other pay period to determine if amounts paid satisfy FLSA obligations or if additional amounts are owed 30 10

Regular Rate Establish work week (or 7(k) work period) Convert monthly/semi monthly/bi weekly salary into work week (work period) equivalent Convert all other compensation to be included in FLSA regular rate into work week (work period) equivalent Alternatively, could convert to hourly increment Ex: $200/month bilingual pay = $200/month x 12 months / 2,080 hours = $1.15/hour Ex: 5% shift differential for $30/hour employee = $1.50/hour 31 Flores v. City of San Gabriel Cash paid as part of a health benefit plan/program must be included in the FLSA regular rate (opt out or cash portion of cafeteria plan); Contributions to plan need to be included in the regular rate if the plan is not bona fide, i.e. if more than an incidental amount of the overall contributions to the plan/program are taken as cash; In Flores, about 45% was taken as cash. Court said not incidental. Court questioned validity of Department of Labor s 20% standard, but did not decide the threshold for incidental. 32 Flores v. City of San Gabriel Because City had not affirmatively investigated whether these amounts should be included in the FLSA regular rate, violation was willful. So, three year statute of limitations applied. The impacts are significant. If $800/month taken as cash, will increase FLSA overtime rate by $6.92 for a 40 hour employee. 33 11

Other FLSA Reminders May not credit amounts paid in excess of FLSA requirements in one FLSA workweek toward FLSA deficiencies in another FLSA work week May credit MOU overtime premiums against FLSA obligations Important if evaluating overall amounts paid and for which a credit may be taken against overall FLSA obligations in a workweek or work period Important if union/employees bring FLSA claim or lawsuit 34 Compensatory Time Off FLSA vs. Non FLSA Comp Time Maximum accruals Up to 480 for non safety and 240 hours for non safety Rules regarding requests to use comp time Must provide within reasonable period after request unless would unduly disrupt the agency Recent cases clarify agencies ability to deny employee to use comp time on particular day, even if give notice Cash Out at FLSA Regular Rate 35 Record Keeping Duty of employer Employer s burden at trial No specifically required form 36 12

Record Keeping Non Exempt Employee Name Home address Date of birth if under 19 Sex and occupation Time of day and day of week on which employee s work week begins Regular rate, basis on which wages are paid and amount and nature of each payment Hours worked each workday and workweek 37 Record Keeping Non Exempt Employee Total daily or weekly straight time earnings Total overtime excess compensation for workweek Total additions to or deductions from wages paid during pay period along with amounts, nature and dates of additions or deductions Total wages paid each pay period Date of payment and pay period covered by payment 38 Record Keeping Exempt Employee Name Home address Date of birth if under 19 Sex and occupation Total wages paid each pay period Date of payment and pay period covered by payment Basis on which wages and fringe benefits are paid 39 13

Discussion Q&A 40 Presenters Eddie Kreisberg Principal 800.464.3559 ekreisberg@meyersnave.com Brandon Halter Associate 800.464.3559 bhalter@meyersnave.com 41 14