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U.S. Dept. of Labor vs. CT Dept. of Labor Which Law Prevails? September 27, 2017
Transcript of U.S. Dept. of Labor vs. CT Dept. of Labor Which Law ...
U.S. Dept. of Labor vs. CT Dept. of LaborWhich Law Prevails?
September 27, 2017
Agenda
• Where Are We Now?
• “White Collar” Exemptions
• Cost of Non-Compliance
• Review Classifications,
Policies and Procedures
The Fair Labor Standards Act
Under the FLSA, non-exempt employees must be paid at least the minimum wage (currently, $7.25) for all hours worked and 1 ½ times the regular rate of pay for all hours worked over 40 in a “workweek”
Connecticut
• Minimum wage is currently $10.10
• Overtime after 40 hours in a workweek
“WHITE COLLAR” EXEMPTIONS
Do you need to pay overtime?
Exempt/Nonexempt?
The Fair Labor Standards Act
• Since enacted in 1938, the FLSA has included exemptions from the minimum wage and overtime requirements for executive, administrative, professional and outside sales employees
• “as such terms are defined and delimited from time to time by regulations of the Secretary subject to the provisions of [the Administrative Procedure Act]”
29 C.F.R. Part 541
• DOL has defined the “white collar” (or “EAP”) exemptions in regulations at 29 C.F.R. Part 541
• Executive• Administrative• Learned Professional• Creative Professional• Computer (CT does not have
the computer exemption)• Outside Sales
Three Tests for Exemption
• Salary Level
• Salary Basis
• Duties
Salary LevelFederal FLSA
• Minimum salary level for exemption is currently $455 per week
Connecticut
• Minimum salary level for exemption is currently $475 per week
Salary Basis Test• Predetermined weekly amount (although may be paid on a less
frequent basis)• Not subject to reduction because of variations in the quality or
quantity of the work performed• Must be paid the full salary for any week in which the employee
performs any work• Need not be paid for any workweek when no work is performed• Not applicable to teachers, doctors, lawyers or outside sales
employees
Deductions From Salary• An employee is not paid on a salary basis if
deductions from the predetermined salary are made for absences occasioned by the employer or by the operating requirements of the businesses
• If the employee is ready, willing and able to work, deductions may not be made for time when work is not available
Seven Permitted Salary Deductions
1. First and last weeks of employment2. Full day absences taken for personal reasons, other than sickness
or disability3. Full day absences for sickness or disability before paid leave begins
and after paid leave is exhausted under a bona fide plan4. FMLA Leave – full or partial day absences5. Offsets for payment of jury fees, witness fees, or military pay6. Penalties imposed in good faith for violating safety rules of “major
significance”7. Unpaid disciplinary suspension of one or more full days imposed in
good faith for violations of workplace conduct rules
Executive Duties
• Primary duty of management
• Customarily and regularly direct the work of two or more FTEs
• Authority to hire/fire or change of status recommendations given particular weight
Administrative Duties
• Primary duty of office/non-manual work directly related to the management or general business operations of the employer or its customers
• The primary duty includes the exercise of discretion and independent judgment on matters of significance
• Risks because this is often used as a “catch-all” category
Learned Professional Duties
Primary duty is work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction
Creative Professional Duties
Primary duty of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor
• Musicians• Composers• Conductors• Singers• Essayists• Novelists• Short-story writers• Some journalists• Acting• Painters• Photographers• Cartoonists• Graphic design• Web design
Computer Duties
• Computer systems analysts, programmers, software engineers
• Paid either the minimum salary level or $27.63 per hour
• Not available in Connecticut
Sales ExemptionsOutside Sales
• Primary duty of making sales or obtaining orders/contracts
• Customarily and regularly engaged away from the employer's place of business in making sales or obtaining contracts
Commissioned Sales• Employee of a retail or service
establishment• More than 50% of the
employee’s wages over a representative period are commissions
• The employee’s total compensation is at least one and one-half times the minimum wage
COST OF NON-COMPLIANCE
Exempt/Nonexempt?
Cost of Non-Compliance
• $3.6 billion– Total that companies have paid to settle
wage and hour lawsuits since 2007
• $400 million– Total settlement dollars in 2014, latest full-
year of data
• $5.3 million– Average settlement dollars in 2014, latest
full-year of data
Misclassification Settlements
• $210 million to insurance claims adjusters
• $99 million to sales representatives
• $65 million to IT specialists
• $44 million to financial advisors
• $42 million to assistant store managers
• $35 million to engineers and project managers
• $27 million to misclassified field managers
• $24 million to technical support workers
• $18 million to oil field workers
FLSA Lawsuits Still on the Rise
4,0553,426 3,464
4,398
6,786
5,3025,644
6,081
7,008 7,064
7,7648,126
8,781
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Federal FLSA Lawsuits(FY Ends Sept. 30)
Record Enforcement by DOL
$131.9
$175.6
$212.5$196.6
$166.0 $171.9
$220.6
$185.2
$137.6
$130.0
$224.0
$280.0
$250.0$240.00
$247.8
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Back Wages (millions)
Review Policies and Processes
• Policies– Off-the-clock work– Meal and rest break– Travel time– Mobile device
• Processes– Timekeeping – Payroll changes– Controlling overtime hours
Communicate the Changes
• Need to communicate with senior management, managers of reclassified employees and the employees themselves
• Key decisions– Who will communicate the changes?– What will be communicated?– How will changes be communicated?– When will the changes be communicated
• Prepare talking points and FAQs
Training
Train the reclassified employees and their managers• Wage & hour policies
• Timekeeping procedures
• Activities that are compensable work
Tammy McCutchenWashington, DC
(202) 414-6857
Patricia ReillyNew Haven, CT
(203) 772-7733
