The Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA) Basics for West Virginia Higher Education Employers 2011 WVAHEFO Spring Conference May 5, 2011 Presented by Office of Human Resources Fairmont State University/ Pierpont Community & Technical College

Fair Labor Standards Act What is the FLSA?  Federal law passed in 1938, during the Depression • Federal Department of Labor (DoL) • Most recent major revisions in 2004 • Covers: Minimum Wage Overtime Child Labor Recordkeeping by Employers HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Exempt vs. Non-Exempt --Non-exempt—overtime eligible and covered by FLSA --Exempt—not eligible for overtime nor covered by FLSA HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act Why is this important? Some recent Northeastern Region recoveries by the DoL: NY: $181,000 for 61 employees—pizzerias NYC: $792,396 for 79 employees—construction company OH: $18,000 for 96 employees –hotel Boston: $219,390 for 44 employees—restaurants RI: $42,274 for 9 employees—wholesale grocer NY: $780,000 for 40 employees—pizzerias NYC: $54,000 for 14 employees—parking garage CT: $934,551 for 479 employees—health care HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act Over $3 million in the Northeast Region alone (there are 5 regions total) since just February 7, 2011 (3 months) Does not include any liquidated damages or fines that may have also been assessed. HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Exempt Employees • Must pass: • Salary Test • Duties Test HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Exempt Employees To be considered EXEMPT: $455/week $23,660/year HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act Exempt Employees—5 Main Types Higher Education is Concerned With:  Highly Compensated  Executive Administrative  Professional (Learned & Creative)  Computer Professionals HR Office– FSU/ Pierpont C&TC

Exemption Test Determination Factors • Based on primary duties, not title (50% rule) • Regularly exercises discretion and independent judgment • Paid on a salaried basis for the job, not the number of hours worked; “works to get the job done.” HR Office– FSU/ Pierpont C&TC

Highly Compensated Employees Perform non-manual work • Perform at least one of the duties of an executive, administrative or professional employee  Paid more than $100,000 per year HR Office– FSU/ Pierpont C&TC

Executive Test Criteria  Must be compensated on a salary basis of a minimum of $455 per week  Primarily manages a department or subdivision (non-manual work); and  Directs the work of two or more full-time employees ; and  Is given the authority to hire, fire and discipline, or to recommend changes in employment or work HR Office– FSU/ Pierpont C&TC

Examples of Executive Exempt Jobs (Can be classified or non-classified)  Payroll Manager  HR Director  Accounting Manager  Director of Physical Plant  Manager of Business Operations HR Office– FSU/ Pierpont C&TC

Administrative Test Criteria  Compensated at a minimum of $455 per week paid as salary  Primary duty must be office or non-manual work; and  Work must be directly related to management policies or general business operations; and  Customarily and regularly requires the exercise of discretion and independent judgment HR Office– FSU/ Pierpont C&TC

Examples ofAdministrative Exempt Jobs(Can be classified or non-classified) Accountant • Budget Analyst • Business Research Analyst • Food Service Manager • HR Representative • Office Administrator  Operations Manager HR Office– FSU/ Pierpont C&TC

Professional Test Criteria • Two types: • Creative Professional • Learned Professional HR Office– FSU/ Pierpont C&TC

Professional Test Criteria Creative Professional: 2 Tests (both must be met): • The employee must be compensated on a salary or fee basis (as defined in the regulations) 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 or creative endeavor. HR Office– FSU/ Pierpont C&TC

Professional Test Criteria Learned Professional • 4 Tests (all 4 must be met): • Paid on a salary basis a minimum of $455 per week • Primary duty must be the performance of work requiring advanced knowledge, i.e., work which is predominantly intellectual in character and which includes the consistent exercise of discretion and judgment • The advanced knowledge must be in a field of science or learning • The advanced knowledge must customarily be acquired by a prolonged course of specialized intellectual instruction HR Office– FSU/ Pierpont C&TC

Examples of Professional Exempt Jobs Creative Exemptions: • Writers • Composers and Musicians • Actors • Painters • Writers • Graphic Designers/Multimedia Specialists Learned Exemptions: • Physicians (MD, DDS) • Pharmacists (RPH)  Certified Nurse Practitioners/Physician’s Assistants  Architects  Attorneys  Teachers/Professors  Psychologists/Clinical Social Workers HR Office– FSU/ Pierpont C&TC

Computer Professional Test Criteria • Paid a minimum of $455 per week on a salary basis, or an hourly basis of at least $27.63 • Employed as a computer systems analyst, programmer or software engineer or similar skilled worker in the computer field  Primary duties must consist of:  Application of systems analysis techniques, including consultation with users to determine needed specs; or  Design, development, documentation, analysis, creation, testing, or modification of computer systems or programs; or  Design, documentation, testing, creation, or modification of computer programs related to machine operating systems; or  A combination of the duties noted above HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Non-Exempt Employees Must compensate employees for all hours worked! (De minimis exclusions) HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Non-Exempt Employees De minimis: Of minimum importance; so small or brief as to not have weight HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Non-Exempt Employees Compensable Time: • Travel Time – from job site to job site • Breaks – less than 20 minutes • Waiting Time – “engaged to wait” • Training Programs – outside work hours, required, and job related HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Non-Exempt Employees “Suffering or permitting to work” means that, if you know or have reason to know a N-E employee is working, then even if you have not “officially” required or approved the hours/schedule, you are liable for any incurred OT compensation. How to handle with employee–disciplinary action possible HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Non-Exempt Employees Penalties and Back Pay • Non-willful: 2 years of back pay • Liquidated damages – “double back pay” (if not) • Willful : 3 years of back pay, liquidated damages, fines and up to six months imprisonment for repeated willful violations • Plus costs and attorneys’ fees for successful plaintiff HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act Personal Liability Under the FLSA, employers must follow the act's requirements or be liable for damages and possible criminal penalties for violating its mandates. The FLSA defines "employer" to include "any person acting directly or indirectly in the interest of an employer in relation to an employee" (29 U.S.C. §203[d]). Federal courts almost universally state that this definition is to be interpreted "broadly" to achieve Congress's intent to provide a remedy to employees for their employers' wage and hour violations. Taken in the broadest literal sense, the FLSA's definition of employer could extend liability to virtually any person who has supervisory power over employees (see Donovan v. Agnew, 712 F.2d 1509 [1st Cir. 1983]). HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Non-Exempt Employees Compensatory Time Off (CTO) • Permitted by DoL for PUBLIC employees only, as budget/financial consideration • Cannot force employee to take STO/CTO, but administration can offer it; employees may not demand HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Non-Exempt Employees Compensatory Time Off (CTO) --Only for non-exempt employees --Accrues like OT at time-and-one-half --Calculated at straight rate for hours in workweek between 37.5 and 40 --Use within 12 months or pay out at 12 months --Maximum balance of 240 hrs. (480 for Public Safety) HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Non-Exempt Employees Compensatory Time Off (CTO) Consider budget implications and staffing needs before offering CTO HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act Breaks and Meal Periods FLSA does not mandate breaks of any kind West Virginia employment law requires offering a break of at least 20 minutes after 6 hours of work—what this means for supervisors HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act Breaks and Meal Periods • If breaks are offered (they are not required by the DoL), the typical duration and number is two (2) paid breaks of no more than 10 minutes per 7.5-hour workday • Breaks not to be stacked, accumulated or added to the end of the work day so that the employee can leave early • Breaks not taken in the workday are forfeit and not compensable HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act Breaks and Meal Periods • The supervisor establishes the time of the meal break, not the employee • Should be based on operational needs and efficiencies • Supervisors should ensure that employees do not work while eating, or the time could be compensable HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Exempt and Non-Exempt employee travel considerations • Hours to pay, E and N-E employees • Required duties vs. free time when traveling HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Volunteering • For non-exempt employees, work done volunteering may not be the same or similar to regular duties, or the employee must be paid. HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act • Time Keeping Methods and Systems • Beware “repeating 7.5’s” on paper timesheets HR Office– FSU/ Pierpont C&TC

Fair Labor Standards Act Questions & Comments? HR Office– FSU/ Pierpont C&TC

The Fair Labor Standards Act (FLSA)