AN OVERVIEW OF MINIMUM WAGE AND OVERTIME REQUIREMENTS FOR STATE AGENCIES

1. AN OVERVIEW OF MINIMUM WAGE AND OVERTIME REQUIREMENTS FOR STATE AGENCIES for ADE/Child Nutrition Directors November 2, 2006 By: Daniel Knox Faulkner Arkansas Department of Labor 10421 West Markham Little Rock, AR 72205 (501) 682-4504 daniel.faulkner@arkansas.gov

2. Coverage • The federal Fair Labor Standards Act (FLSA) specifically covers public agencies. • Arkansas’ minimum wage and overtime law was amended effective October 1, 2006 to include the State and any political subdivision of the State.

3. Exclusions • Elected officials, personal staff members and advisors to such elected officials • Employees of the General Assembly are exempt from federal law, but not state law • Full-time students, student learners, apprentices or workers with disabilities who have special authorization to work at 85% of minimum wage

4. Minimum Wage • All non-exempt employees must be paid not less than the minimum wage for all hours worked • Federal $5.15/hr State $6.25/hr • School Districts MW tied to CPI Ark. Code Ann. § 6-17-2203 (See attached memos) • An employee may not waive his right to MW by agreement to work for less

5. School District Minimum Wage • Ark. Code Ann. § 6-17-2203. Minimum salary. (a) A full-time classified employee shall not receive an hourly rate of compensation less than six dollars twenty-five cents ($6.25) per hour. (b) No classified employee's hourly rate of compensation shall be reduced as a result of this subchapter. (c) Beginning July 1, 2003, and each year thereafter, the minimum hourly rate provided in this subchapter shall be increased by a percentage equal to the percentage increase of the consumer price index. History. Acts 2001, No. 1138, § 1; 2003, No. 1773, § 1. NOTE: The Arkansas Department of Labor does not have jurisdiction over this statute. It is an independent state law that covers public school districts. Please see the attached Arkansas Department of Education memo for more information.

6. Deductions • As a general rule, the basic MW rate is protected and an employer cannot make deductions that would result in payments of less than the required MW and OT • Permissible deductions: • Standard tax payments • Court-ordered withholdings • Cash advances • Payments to 3rd parties at employee’s request and authorization (e.g., insurance, savings bonds)

7. Prohibited Deductions-Examples • The following deductions are examples prohibited if the deduction brings the employee below MW: • Damages to employer’s property, even if caused by employee negligence • Cash or inventory shortages • Spoilage or breakage • Fines or penalties for misconduct or quitting without notice

8. Overtime Pay • Non-exempt employees must receive overtime pay at a rate of not less than 1 ½ times their regular rate of pay for hours worked in excess of 40 hours in any workweek • Overtime pay can not be waived by agreement

9. Overtime Pay • A policy that no OT will be authorized or must be authorized in advance will not shield an employer if OT is actually worked • Workweeks may not be averaged • Based on hours actually worked in a workweek

10. Example • Mary regularly works 8 hours per day Monday through Friday • Mary is absent on Monday due to a paid holiday • Mary works 8 hours per day Tuesday through Thursday and 10 hours on Friday • There is no overtime for the week

11. Compensatory Time • Public agencies may offer comp time if: • Provided at 1 ½ hours off with pay for each hour of OT worked • Done pursuant to a CBA or prior agreement • Accrued time does not exceed maximums

12. Accumulation of Comp Time • Police, firefighters, emergency response personnel, and employees engaged in seasonal activities may accrue a maximum of 480 hours of comp time • All other employees may accrue a maximum of 240 hours

13. Use of Comp Time • Employees are entitled to use comp time within a “reasonable period” after making a request, so long as it does not “unduly disrupt” the operation of the agency • Employees can not be penalized for requesting or using comp time

14. Use of Comp Time • An employee must be paid accrued comp time at termination at his current rate of pay or the average rate of pay over the past 3 years, whichever is higher • An employer may require the use of comp time by policy. Christensen v. Harris County, 529 U.S. 576 (2000)

15. Non-FLSA Overtime • A public agency may provide time-off to an employee who works on a holiday or in excess of his or her regular shift, even if it is not required by the FLSA. • An employer may establish its own policy with respect to accumulation and use of non-FLSA overtime

16. Non-FLSA Overtime • Records must be kept which reflect FLSA overtime hours separately from any non-FLSA overtime hours or other types of time-off allowed by the employer • IF separate records are maintained, the non-FLSA time-off will not count toward the 240 or 480 hour maximum

17. The Employment Relationship • State and federal law define “employ” to include “to suffer or permit to work” • The employment relationship for purposes of MW & OT is broader than a simple contractual relationship

18. Independent Contractor • There is no single rule or test. It requires a look at the totality of the circumstances, or the total activity • Factors considered • The extent to which the services rendered are an integral part of the principal’s business; • The permanency of the relationship • The amount of the alleged contractor’s investment in facilities and equipment;

19. Independent Contractor-Factors continued • The nature and degree of control by the principal; • The alleged contractor’s opportunity for profit or loss; • The amount of initiative, judgment or foresight in open market competition with others required for success; • The degree of independent business organization and operation

20. Volunteers • With Same Employer • May volunteer in any capacity other than to do their normal job • May not volunteer to perform the services they are employed to perform • With Different Employer • May volunteer to perform the same services they are employed to perform by another employer

21. Volunteers • Volunteers may be paid a nominal fee, reasonable benefits, or expenses and still be a volunteer • Individuals are volunteers only where their services are offered freely and without pressure or coercion, direct or implied, from an employer

22. Hours Worked • Generally, hours worked include the time an employee is: • Required to be on duty • Required to be on the employer’s premises or other prescribed place of work • Allowed, suffered or permitted to work

23. Hours worked • Work which is not requested or approved, but is permitted or allowed is work time and is compensable • For example: • An employee may voluntarily continue work at the end of the shift to finish a task or correct errors • An employee may eat lunch at his desk and answer the phone

24. Hours Worked 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

25. On-call time • An employee who is required to remain on call on the employer’s premises is working • An employee who is required to remain on call at home, carry a pager, or leave a number where he can be reached is not (in most cases) working • Exception: where the constraints on the employee’s freedom are such that he can not effectively use his time for his own purposes

26. Breaks • School Districts have a special state break statute • Ark. Code Ann. § 6-17-2205. Paid breaks for certain classified employees. For those classified employees working more than twenty (20) hours per week: (1)(A) Each school district in the state shall provide no fewer than two (2) paid fifteen-minute breaks during each regular workday for each classified school employee. (B) The contract day shall not be extended to provide for this section; and (2) Each school district shall file an affidavit for compliance with the Department of Education regarding the Fair Labor Standards Act for classified employees unless the school district policies or state laws impose higher standards. History. Acts 2003, No. 1752, § 1. NOTE: The Arkansas Department of Labor does not have jurisdiction over this statute. It is an independent state law that covers public school districts. Please see the attached Arkansas Department of Education memo for more information.

27. Breaks • Ark. Code Ann. § 6-17-2202. Definitions. As used in this subchapter, unless the context otherwise requires: (1) "Classified employee" means any employee of a public school district in Arkansas who performs work for the district and who is not required to hold a valid teaching license issued by the State Board of Education as a condition of employment; and (2) "Full-time classified employee" means any classified employee who works twenty (20) or more hours per week for the public school district. History. Acts 2001, No. 1138, § 1. NOTE: The Arkansas Department of Labor does not have jurisdiction over this statute. It is an independent state law that covers public school districts. Please see the attached Arkansas Department of Education memo for more information.

28. Breaks & Meal Periods • Breaks of 20 minutes or less are work time • Meal periods, typically 30 minutes or more, need not count as work time • Employee must be completely relieved of duty • If the employee is required to perform any duties, active or inactive, the time is compensable

29. Lectures, Meetings & Training Programs • Such activities need not be counted as work time if all four criteria are met: • It is outside normal work hours • It is voluntary • It is not job related • No productive work is performed

30. Travel Time • Home to Work Travel • An employee who travels from home before the regular workday and returns home at the end of the workday is engaged in ordinary home to work travel, which is not work time • It does not matter if the employee works at a fixed location or at different job sites • This does not include travel back to work after returning home at the end of the day due to an emergency outside regular work hours

31. Travel Time • Home to Work on a Special One Day Assignment in Another City • An employee who regularly works at a fixed location in one city and is given a special one day assignment in another city and returns home the same day • The travel time is work time, although the employer does not have to count the time that would have normally been spent commuting

32. Travel Time • Travel That is All in the Day’s Work • Time spent by an employee in travel as part of his principal activity, such as travel from job site to job site during the workday, is work time

33. Travel time • Travel Away from Home Community • This is travel that keeps an employee away from home overnight • If the travel cuts across the hours the employee regularly works, it is counted as hours worked. This is true even if the travel is on a nonwork day, such as Saturday or Sunday • Time spent as a passenger on an airplane, train, boat, bus or car outside regular working hours does not have to be counted as hours worked

34. Travel Time • Anytime an employee is working while traveling, it is counted as hours worked • Driving is working, except in normal home to work travel

35. White Collar Exemptions • Employees employed in a bona fide: • Administrative • Executive • Professional or • Outside sales capacity • Certain computer employees

36. Three Tests for Exemption • Salary Level Test • Salary Basis Test • Job Duties Test

37. Salary Level Test • For most employees, the minimum salary required for exemption: • Weekly $455 • Biweekly $910 • Semimonthly $985.83 • Monthly $1,971.66 • There are special rules for highly compensated employees who make at least $100,000 per year

38. Salary Basis Test • Regularly receives each pay period a predetermined amount of compensation • The compensation cannot be reduced because of variations in the quality or quantity of work • An employee does not have to be paid for any workweek in which no work is performed

39. Other Exceptions to “No Pay Docking” Rule • For penalties imposed in good faith for violation of safety rules of major significance • For unpaid disciplinary suspension of one or more full days pursuant to a written policy applicable to all employees • Pro-rating first and last week of employment • Unpaid leave under the FMLA

40. Effect of Improper Deductions • If employer has a pattern or practice of improper deductions, the exemption will be lost: • During the time period of improper deductions • For similarly classified employees • Working for the same manager(s) • Isolated or inadvertent improper deductions will not result in loss of the exemption if the employee is reimbursed

41. Safe Harbor • The exemption will not be lost if the employer: • Has a clearly communicated policy prohibiting improper deductions • Has a complaint mechanism • Reimburses employees • Makes a good faith commitment to future compliance • Unless the employer has a willful violation by continuing to make improper deductions after employee complaints

42. No Salary Requirements • The salary level and salary basis tests do not apply to • Outside sales employees • Doctors • Lawyers • Teachers • Certain computer-related occupations paid at least $27.63 per hour • 20% equity owners

43. Job Duties Test-Executives • Primary duty is management of the enterprise or a customarily recognized department or subdivision • Customarily and regularly directs the work of 2 or more other employees; • Authority to hire or fire or whose recommendations as to hiring, firing, promotion, or demotion are given particular weight

44. Management Duties • Interviewing, selecting and training • Setting and adjusting pay and hours worked • Directing the work of others • Maintaining production or sales records • Appraising employee productivity and efficiency

45. Management Duties • Disciplining employees • Planning work and work techniques • Apportioning work among employees • Determining the type of materials, supplies, machinery, equipment or tools to be used • Determining merchandise to be bought, stocked and sold

46. Management Duties • Providing for the safety and security of employees or property • Planning and controlling the budget • Monitoring or implementing legal compliance methods

47. Concurrent Duties • Concurrent performance of exempt and nonexempt work does not disqualify an employee from the executive exemption • Time spent performing exempt or nonexempt work is not a sole test

48. Concurrent Duties • Generally, exempt executives make the decision when to perform nonexempt work and remain responsible for the business operations under their management • Generally, nonexempt employees are directed to perform exempt work or to do so for a defined time

49. Job Duties Test-Administrators • 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 • Primary duty includes the exercise of discretion and independent judgment with respect to matters of significance

50. Tax Finance Accounting Budgeting Auditing Insurance Quality control Purchasing Legal Advertising Marketing Research Safety & health Human resources Public relations Government relations Labor relations Information technology Management or General Business Operations