Overtime Violations Lurking in Your Company · eligible for overtime pay, some employees are...
Transcript of Overtime Violations Lurking in Your Company · eligible for overtime pay, some employees are...
Overtime Violations Lurking in Your Company:The Five Most Misclassified Jobs Under the FLSAFebruary 11, 2020
© 2020 ComplianceHR
Lori BrownCEO, ComplianceHR
[email protected] @labrown1419
• Former Littler Shareholder
• Former General Counsel / HR Chief of Global Security Organization
• Career Compliance Geek
• Need more? https://compliancehr.com/resources/
Follow Us on Twitter: @Compliance_HR
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1. Q & A Box on your screen (questions are confidential – visible to presenters only)
2. E-mail me at [email protected] –monitored throughout today’s presentation (attendees will not be mentioned by name or company)
Answering Your Questions
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1. Full slide presentation (pdf format)
2. Link to recorded audio presentation
3. A free trial to Navigator OT
What You’ll Receive
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Accessing Your Free Trial is Easy
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Agenda FLSA Exemption Basics Understanding the “White
Collar” Exemptions The Big Five Using Navigator OT to Power
Your Decision Making To Remediate or Reclassify
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Increased the minimum salary required for exemption to $684 each week, effective January 1 Did you make it? Did you have time to make sure the
job duties qualified for one of the exemptions?
Are you confident in your exempt classifications?
ComplianceHR.com/resources
The New Rule
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FLSA Exemption Basics
The FLSA requires employers to pay non-exempt employees: At least the minimum wage for all
hours worked Overtime for all hours worked
over 40 in a week at 1.5 times the employee’s regular rate of pay
Employers also must maintain accurate and complete time and payroll records
FLSA Basics
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While most employees are eligible for overtime pay, some employees are “exempt” from the FLSA overtime requirements
The most common exemptions are for “white collar” workers – executive, administrative, professional, outside sales, and computer employees
FLSA: Exempt v. Non-Exempt –THAT is the Question.
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Currently, employers must pay employees at least $684 per week to qualify for the executive, administrative, and professional employee exemptions.
Salary-level test
With very limited exceptions, the employer must pay employees their full salary in any week they perform work, regardless of the quality or quantity of the work.
Salary-basis Test
To qualify for an executive, administrative or professional exemption an employee must meet specific duties tests.
Duties Test
Tammy McCutchenVP Strategy, ComplianceHR
[email protected] @tdmccutchen
• Littler Principal
• Former Administrator, US-DOL Wage & Hour Division and author of 2004 revisions to the overtime regulations
• Leading authority on federal and state wage and hour laws
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Understanding the “White Collar” ExemptionsExecutive, Administrative, Professional, Computer, Outside Sales
Exempt employees must be paid their full salary in any week during which they perform any work Predetermined amount of compensation each pay
period The compensation cannot be reduced because of
variations in the quality or quantity of the work performed
An employee is not paid on a salary basis if deductions from salary are made for absences occasioned by the employer or by the operating requirements of the businesses
Need not be paid for any workweek when no work is performed
Salary Basis Test
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Penalties for violating safety rules of “major significance”
Unpaid disciplinary suspension of one or more full days for violations of workplace conduct rules
Proportionate part of an employee’s full salary may be paid in first and last weeks of employment
Unpaid leave taken pursuant to the Family and Medical Leave Act
Absence from work for one or more full days for personal reasons, other than sickness or disability
Absence from work for one or more full days due to sickness or disability under a bona fide plan, policy or practice of providing wage replacement benefits
To offset any amounts received as payment for jury fees, witness fees, or military pay
Permitted Salary Deductions
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Let’s Dig Into Duties!
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1. Primary duty is management of the enterprise or of a customarily recognized department or subdivision of the employer or the employer’s customers
2. Customarily and regularly directs the work of two or more other employees, and
3. Authority to hire or fire other employees or whose suggestions and recommendations as to hiring, firing, advancement, promotion or other change of status of other employees are given particular weight
Executive Duties
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Two or More Employees Does the employee supervise 80
compensable work hours of other employees each week?
Have there been time periods when the 80-hour standard was not been met?
Best Practice: Apply the exemption only to employees who supervise at least 3 full-time employees
Supervisory Authority Is the employee the final decision-maker
on hiring and firing?
If not, explore the employee’s involvement in hiring, firing, promotion, discipline, performance reviews, compensation, etc.
Best Practice: Apply the exemption only to employees who regularly play a significant role in key employment decisions
Executive Analysis
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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 Primary duty includes the exercise of
discretion and independent judgment with respect to matters of significance.
Administrative Duties
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What goods or services does the company sell?
Is the employee involved with producing or selling?
Does the work performed directly increase company revenues?
Does the employee work in a business unit normally viewed as a “support” or “administrative” function?
Administrative Analysis –Primary Duty
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Includes Formulating, waiving or deviating from
management policies Work that substantially impacts business
operations or finances Authority to negotiate and bind the
company Providing expert advice to the company Planning long- or short-term business
objectives Resolving disputes
Does Not Include Applying well-established
techniques, procedures or specific standards described in manuals or other sources
Clerical or secretarial work
Recording or tabulating data
Performing mechanical, repetitive, recurrent or routine work
Administrative Analysis –Discretion & Independent Judgment
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What decisions can the employee make without further review?
How often are the employee’s recommendations followed?
Is the employee free to choose among a number of possible solutions?
If two employees are presented with the same facts, would they be expected to reach the same decision?
If an employee makes a mistake, how does that affect company operations or finances?
What percent of the employee’s time each week is spent performing mechanical, repetitive, recurrent or routine work?
Administrative Analysis – Discretion & Independent Judgement
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DutiesPrimary duty must be the performance of work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction
Analysis Does the employee work in a recognized
profession? Is a specialized advanced degree
required? Does the employee use his advanced,
specialized knowledge in the job? Is the employee required to follow
established procedures? How much time does the employee
spend performing routine or repetitive work?
Professional Exemptions – Learned
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DutiesThe 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.
Analysis Does the employee work in a recognized
artistic field? Does the employee create original content? Or
is the content provided by others? Is the employee required to follow established
specifications? Does the employee use computer assisted
design? How often is the employee’s work modified or
rejected?
Professional Exemptions – Creative
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Primary Duty 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 programs based on and related to user or system design specifications
The design, documentation, testing, creation or modification of computer programs related to machine operating systems
A combination of such duties, the performance of which requires the same level of skills
Computer Duties
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Does the employee: Consult with users to determine software/hardware needs?
Develop, modify, document, analyze or test systems or programs?
Write computer code?
Answer “help desk” calls?
Assist end users to troubleshoot standard computer software?
How much time does the employee spend on routine data entry? How much time does the employees spend repairing or
troubleshooting hardware?
Computer Analysis
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Primary duty of making sales or obtaining orders/contracts
Customarily and regularly engaged away from the employer's place of business
Employer’s “place of business” includes any fixed site used as a headquarters, including a home office
The employee must leave the headquarters to make sales at least “one or two hours a day, one or two times a week” WHD Opinion Letter FLSA2007-2
Exempt outside sales work includes work incidental to, in conjunction with or furthering the employee’s own sales
Outside Sales
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What is the sales process as trained by the company?
How often does the employee work away from a company location or a home office?
Is the employee compensated based on level of sales?
How much time does the employee spend performing work related to his/her own sales such as developing prospects, creating marketing materials, preparing sales reports and negotiating contracts?
How much time does the employee spend performing work which is not related to sales (e.g., training, attending meetings)?
Outside Sales Analysis
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The Big Five
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Job title is over-used Used for employees
performing different job duties – even within the same company
Many “project managers” do not actually manage anything
Only Exempt If: Directing the work of other
employees
Responsible for project planning – setting goals, processes, deadlines
Held accountable for the success or failure of the project
Provides the employer and/or the client with expert consulting
The bigger the projects managed, the lower the risk
5. Project Managers
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Technicians may be highly skilled or work on complex machinery – but that does not support exemption.
Not Exempt If: Do not have a 4-year professional degree Primary duty is to assist a degreed
professional (e.g., engineering technician)
Spend time using tools and performing other manual work
4. Technicians
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Exempt CFOs, comptrollers, auditors, and
other certified public accountants generally are exempt
Primary duty include:
Providing expert advice to the company on compliance with tax and SEC laws
Business planning
Preparing the company budget
Conducting financial and legal audits
3. Entry-Level Accounting Employees
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Non-Exempt Payroll, AR and other accounting
clerks generally are not exempt
Primary duty include:
Filing tax returns
Ledger entries and reconciliations
Running standard reports
Collections
Other repetitive bookkeeping tasks
Only Available Exemption
29 U.S.C. § 207(i) Retail or service
establishment More than 50% of
earnings are commissions Regular rate (earnings
divided by hours) each week must be at least 1.5 times minimum wage
Non-Exempt Sell over the phone or a computer
Spend most of the time in the employer’s office or a home office
The company is not retail
134 types of businesses listed in the FLSA regulations as “lacking the retail concept”
2. Inside Sales
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Exemption not as broad as you think
An IT worker who does not write code or perform systems analysis, most likely is not exempt
Nine states do not have a separate computer exemption
Non-Exempt: Help desk employees and other
“troubleshooters”
“Database” administrators and others who manage data in a database (or who run SQL inquiries)
Employees who set up computer equipment, authorize access or manage passwords
Employees who run reports or monitor performance
Computer repair employees
1. Entry-Level IT Employees
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Analyzing Overtime Exempt Classifications
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The OLD Way1. Interview SME managers about job
duties of the incumbent employees2. Prepare a memo summarizing those
duties and obtain consensus that the facts are accurate
3. Research federal and state laws, looking for cases on similar jobs
4. Apply legal standards to those facts5. Communicate results to the business6. Implement change
The NEW Way 1. Use ComplianceHR’s
Navigator OT application2. Implement change
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Accessing Your Free Trial is Easy
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Navigator OT – The Smart Solution
Questionniare
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Risk Report
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Remediate or Reclassify?
Can This Job be Restructured? Can they be given another employee to
supervise? Can non-exempt duties be delegated? Can more or final authority be given?
Remediate
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1. Compensation plan redesign2. Review benefit plans3. Review systems, policies and
practices4. Communicate the changes5. Provide training
Reclassify
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California Assembly Bill 5 (AB 5) Paid Sick Leave Handling DOL Investigations Creating and Maintaining Compliant Employee
Handbooks More FLSA: Understanding Exempt/Non Exempt
Future Webinar Topics
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Questions?
Thank you!