Wage & Hour Refresher

Wage & Hour Refresher Presented by: Assistant Attorney General Daniel Knox Faulkner June 5, 2018

General Rule/Minimum Wage • Employees must receive minimum wage for all hours worked • Federal: $7.25/hour • $500K annually • Named entities (state agencies) • Individual coverage • State: $8.50/hour (4 or more employees)

General Rule/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 • Overtime pay cannot be waived by agreement • 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 and each workweek stands by itself • Based on hours actually worked in a workweek

Exclusions and Exemptions Generally • Federal and State Exemptions • Minimum Wage and Overtime Exemptions • White Collar/541 Exemptions • Overtime Only Exemptions • Partial Overtime Exemptions

Three Tests for White Collar/541 Exemptions • Salary Level Test • Salary Basis Test • Job Duties Test

Salary Level Test • For most employees, the minimum salary required for exemption: • Weekly $455 • Annually $23,660 • There are special rules for highly compensated employees who make at least $100,000 per year

Proposed Overtime Changes 2016 • Proposed USDL reg changes would have: • raised salary level (Weekly $913/Annually $47,476) • provided for automatic increases to salary level every three years • These rules were enjoined in November 2016 • Summary judgment against USDL August 2017 • Appeal being held in abeyance for USDL rule-making

USDL Overtime Regs Currently • The Department of Labor is undertaking rulemaking to revise the regulations located at 29 C.F.R. part 541, which govern the exemption of executive, administrative, and professional employees from the Fair Labor Standards Act's minimum wage and overtime pay requirements. • Until the Department issues its final rule, it will enforce the part 541 regulations in effect on November 30, 2016, including the $455 per week standard salary level.

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 • No pay docking

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

White Collar/541 Exemptions • Employees employed in a bona fide: • Administrative • Executive • Professional or • Outside sales capacity • Certain computer employees

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

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

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

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

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

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

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

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

Discretion and Independent Judgment • Involves the comparison and evaluation of possible courses of conduct and acting or making a decision • Implies that the employee has the authority to make an independent choice, free from immediate supervision • Decisions or recommendations may be reviewed at a higher level and upon occasion revised or reversed

Administrative Exemption Examples • Human resources • HR manager who formulates, interprets or implements employment policies generally meets the administrative duties test • Personnel clerks who screen applicants to obtain data regarding minimum qualifications and fitness for employment generally are not exempt • State inspectors or investigators are nonexempt

Job Duties Test - Professionals • Learned Professions • Creative Professions

Learned Professional Duties • The employee’s primary duty is the performance of work requiring • Advanced knowledge • In a field of science or learning • Customarily acquired by a prolonged course of specialized intellectual instruction

Advanced Knowledge • Work is predominantly intellectual in character • Work requiring the consistent exercise of discretion and judgment • The advanced knowledge is generally used to analyze, interpret, and make deductions

Examples of Learned Professionals • Engineers • Teachers • Lawyers • Accountants • Chefs • Actuaries • Athletic trainers • Licensed funeral directors or embalmers • Doctors • Registered nurses • If paid by the hour, will not meet salary basis test • Dental hygienists • Pharmacists • Certified physician assistants

Nonexempt Professions • Licensed practical nurses • Accounting clerks and bookkeepers • Cooks • Paralegals and legal assistants • Engineering technicians

Creative Professional Duties • The employee’s primary duty is the performance of work requiring • Invention, imagination, originality or talent • In a recognized field of artistic or creative endeavor

Invention, Imagination, Originality or Talent Exempt status is determined on a case-by-case basis, depending on the extent of the invention, imagination, originality or talent exercised

Recognized Field of Artistic or Creative Endeavor • Includes • Music • Musicians, composers, conductors & soloists • Writing • Essayists, novelists, short story writers • Screen play writers who choose subject • Responsible writing positions in ad agencies • Acting • Graphic arts • Painting, cartoonists, photographers

Computer Employees • Meets salary level and salary basis test or is paid not less than $27.63 per hour • Primary duty must consist of: • Application of systems analysis techniques and procedures, including consulting with users to determine hardware, software or system function specifications or

Computer Employees • Design, documentation, testing, creation or modification of computer programs related to machine operating systems or • Design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications or • A combination of the above duties, requiring the same level of skills

REMEMBER • It is not the job title or job description that is important. • Actual job duties performed must be examined to determine if an employee is exempt.

Law Enforcement & Firefighters • Exempt from OT under federal law if the public agency has fewer than 5 employees engaged in fire protection or law enforcement activities • Partial OT exemption for law enforcement & firefightersknown as the 7(k) exemption under State and federal law

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 collective bargaining agreement or other prior agreement • Accrued time does not exceed maximums

Comp Time Maximums • 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

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 • An employer may require the use of comp time by policy. Christensen v. Harris County, 529 U.S. 576 (2000)

Payment 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.

Hours Worked • Generally, hours worked is 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

Hours Worked • Work that 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 • E-mail/texts outside normal work hours

Hours Worked • Management MUST exercise its control and see that work is not performed if it does not want it to be performed. • Management cannot sit back and accept the benefits of work without compensating for it. • The mere promulgation of a rule against such work is not enough.

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 phone, 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

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.

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

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

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

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

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

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

Recordkeeping • Good records are essential for proper compliance • Payroll records and time cards and wage computation records must be kept for 3 years • No particular form is required • A poster is required to be posted by employer

Wage & Hour Refresher