The Fair Labor Standards Act: Old Law, Brand New Regulations Carrie Hoffman Board Certified in Labor and Employment La

1. The Fair Labor Standards Act:Old Law, Brand New Regulations Carrie Hoffman Board Certified in Labor and Employment LawTexas Board of Legal Specialization

2. Why should you concerned about the FLSA? • Audit from the DOL/Private lawsuit/Collective Actions • Exemptions • Rules on compensable time • Wait time • Travel time • Break time • Overtime

3. New Regulations – Exemptions • DOL issued final regulations on April 20, 2004 • Became effective on August 23, 2004 • Not all of the proposed regulations remain, especially the elimination of the “discretion and independent judgment” duty requirement • The increased salary requirements remain in the final regulations, but were increased • The final rule includes many significant changes that take into account 75,280 comments from the public

4. “Fair Pay” Regulations • So-called “white collar” overtime exemptions • Eliminates the short and long tests and replaces them with one “standard test” per exemption • Increases the minimum salary paid to a white collar exempt employee (executive, administrative, professional) • From $155/week ($8,060/year) – Former long test • To $455/week ($23,660/year) – New standard test

5. “Fair Pay” Regulations • Overtime exemptions do not apply to certain classifications of employees, regardless of salary: • “Blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy • Police officers, fire fighters, paramedics, emergency medical technicians and similar safety and first responder employees • Licensed practical nurses and other similar health care employees

6. “Fair Pay” Regulations • Highly Compensated Employees Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties or responsibilities of an exempt executive, administrative or professional employee identified in the standard tests for exemption.

7. Executive Exemption • NEW: The employee must be compensated on a salary basis at a rate not less than $455 per week; • The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise; • The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and • NEW: The employee 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. Administrative Exemption • NEW: The employee must be compensated on a salary or fee basis at a rate not less than $455 per week; • The employee’s primary duty must be 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 • The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

9. Professional Exemption - Learned • NEW: The employee must be compensated on a salary or fee basis at a rate not less than $455 per week; • The employee’s primary duty just be the performance of work requiring advanced knowledge, defined as work which is predominately intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; • 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.

10. Professional Exemption - Creative • NEW: The employee must be compensated on a salary or fee basis at a rate not less than $455 per week; • The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic endeavor.

11. Computer Employee To qualify for the computer employee exemption, the following tests must be met: • 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 per hour; • 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 below; • 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; • The design, development, documentation, analysis, creation, testing or modification of computer systems or program, including prototypes, based on and related to user or system design specifications; • The design, documentation, testing, creation or modification or computer programs related to machine operating systems; or • A combination of the aforementioned duties, the performance of which requires the same level of skills.

12. Outside Sales • 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. • Salary requirements do not apply.

13. Minimum Wage • Covered, non-exempt employees must be paid not less than the MW for all hours worked • Currently $5.15 per hour • Cash or equivalent – free and clear • Each week stands by itself, although there is no requirement to pay weekly (once a month – exempt (salaried) twice a month – hourly)

14. Compensable Time • Covered, non-exempt employees must be paid for all hours worked in a workweek • “Hours Worked,” generally include all the time an employee is: • Required to be on duty • Required to be on the employer’s premises, or any other prescribed place of work • Allowed (suffered or permitted) to work

15. Compensable Time It is the duty of management to exercise its control to see that work is not performed if it does not want it to be performed

16. Examples of Compensable Time Attendance at meetings, lectures, training programs and similar activities unless all of the following criteria are met: • Attendance is outside the employee’s regular working hours • Attendance is voluntary • Activity is not related to the employee’s job • No productive work is done during the activity

17. Examples of Compensable Time • Work done in the home if the employer knows or has reason to believe the work is being performed • Work done during lunch periods • Work done before or after scheduled hours • Rest periods of 20 minutes or less

18. Examples of Compensable Time • Get ready work prior to the start of the shift • Clean up work after the end of a shift • The entire meal period, if the employee is not completely relieved from all duties and responsibilities • Transporting or delivering materials or equipment to a job site prior to the start of the workday

19. Examples of Compensable Time • Returning materials or equipment after the end of the workday • Transporting employees to worksites, office, or to their homes, either before or after the paid workday, at management’s request or directive • Travel from job site to job site during the workday

20. Examples of Compensable Time • “On call” time by an employee who must remain on the employer’s premises or so close thereto that he/she cannot use the time effectively for his/her own purposes

21. Overtime Pay • Due to covered, non-exempt employees • Calculated at time and one-half the employee’s regular rate of pay • Required for each hour worked in a workweek in excess of the maximum allowable in the given type of employment (usually 40 hours per workweek) • Workweeks may not be averaged • No “comp” time

22. Overtime Pay • Regular Rate (RR) • It is a rate per hour • Is determined by dividing total earnings for all hours worked in any work week by the total number of hours worked in the week • It may not be less than the applicable MW • If RR is higher than the MW, OT must be computed at the higher rate

23. Overtime Pay • Regular Rate (continued) • Includes all remuneration for employment except: • Gifts, such as Christmas or Birthday money • Payments for time not worked, such as holiday or vacation pay • Discretionary bonuses • Premium payments

24. Overtime Time Must Include • shift differentials • bonuses • on-call fees • retention bonuses • attendance bonuses • tips

25. Legal Wage Deductions • Deductions authorized by state or federal law • Income tax withholdings • FICA • Child support • By Court Order • On written authorization of the employee for a lawful purpose • In any event, deductions cannot result in wages paid below the minimum wage rate

26. Illegal Deductions from Wages • Wages must be paid unconditionally on a free and clear basis • Employers may not make deductions for: • Cash shortages • Uniforms • Walk-outs/punctuality • Breakages • Any other reason not authorized by law • Reduce wages below MW

27. Common Errors to Avoid • Assuming that paying a salary automatically makes an employee “exempt” • Failing to pay for all hours an employee is “suffered or permitted” to work • Limiting employees to reporting 40 hours (or limited overtime) and directing them to “get the job done” and ignoring the time it takes to accomplish the task

28. Common Errors to Avoid • Employee works during meal break and is not paid • Employee takes work home and the hours are not recorded or paid • Not paying for compensable travel time • Not paying for employee meetings

29. The FLSA Does Not Require • Vacation, holiday, severance or sick pay • Meal or rest periods, holidays off, or vacations • Premium pay for weekend or holiday work • A discharge notice, reason for discharge, or immediate payment of final wages to terminated employees • Any limit on the number of hours in a day or days in a week an employee at least 16 years old may be required or scheduled to work • Pay raises or fringe benefits

30. Additional Information • Visit the WHD homepage at: www.dol.gov/esa/whd/ • Call the WHD toll-free information and helpline at 1-866--487-9243 • Use the DOL interactive advisor system - ELAWS(Employment Laws Assistance for Workers and Small Businesses at: www.dol.gov/elaws • Call or visit the nearest Wage and Hour Division Office