February 18, 2016

New Overtime Rules Could Result in Loss of Exempt Status for Salaried Employees

Posted in Administrative Exemption, Executive Exemption, Exempt/Non-Exempt Employees, Fair Labor Standards Act, Hours Worked, Professional Exemption tagged , , , , , , , , , at 4:58 pm by Tom Jacobson

new flsa overtime rules

Many salaried employees would lose their exempt status under the DOL’s new overtime rules.

The U.S. Department of Labor’s proposed changes to the nation’s overtime pay rules would have a profound impact on workplaces throughout the country. The impact would be the potential loss of exempt status for many salaried employees. To prepare, employers should familiarize themselves with the proposed new rule and review their pay practices to ensure compliance in case the new overtime rules take effect.

The new rules would increase the minimum salary an employee must be paid before s/he may be classified as exempt from overtime pay under the Fair Labor Standards Act. This means many employees who are now properly classified as exempt will no longer be exempt. Consequently, they would then be eligible for overtime pay if they work more than forty hours in a workweek.

The change would come about because the FLSA generally requires most U.S. employers to pay overtime (that is, one and one-half times the employee’s regular rate of pay) when employees work more than forty hours in a work week. However, certain categories of employees are exempt from that requirement. To qualify for some exemptions, those employees must not only perform certain duties as specified in the FLSA, but they must also be paid a minimum salary.

Currently, that minimum salary is $455 per week ($23,660 per year). Under the new rule, that threshold would more than double to $970 per week ($50,440 per year).

The impact can be illustrated with a hypothetical workplace where an employee is currently paid a salary somewhere between $24,000 and $50,000 per year and works an average of 45 to 50 hours per week. Assuming that employee meets one of the FLSA’s “duties” tests, the employee would likely be considered exempt and not entitled to overtime pay. Therefore, the employee would be paid the same regardless of how many hours s/he works in a week.

If the new rules take effect, the same employee would no longer be exempt, and s/he would be entitled to overtime pay for the extra five to ten hours of work each week. Therefore, the employer would need to increase the employee’s salary to meet the new threshold and maintain the exemption, or the employer would need to convert the employee to an hourly-rate employee and pay time and a half for any overtime.

The new rules have not yet gone into effect, and it is not entirely clear if and when they will. They were initially slated to take effect this spring. However, the Society for Human Resource Management reports that this may not happen until later this year. SHRM also reports there is a remote chance that Congress could overturn the rules using the Congressional Review Act and/or that the rules will be challenged in court.

In the meantime, employers should pay attention to the potential rule change and be prepared to change their pay practices to remain in compliance. Suggestions include:

  • Determine which currently exempt employees would no longer be exempt if the salary threshold increases;
  • Assuming an employee’s exemption would be lost under the new rules, decide whether to increase the employee’s salary to meet the new threshold or convert the employee’s salary to an hourly rate basis;
  • Budget for any increased overtime costs resulting from employees who would become eligible for it under the new rules;
  • Review scheduling issues to determine whether hours can be reduced to limit the overtime liability for an employee who must be treated as non-exempt;
  • Address morale issues that could result from any perceived “demotion” of employees from exempt/salaried to non-exempt/hourly status.

In addition, although the proposed new rules do not alter the “duties” test for FLSA exemptions, employers would be wise to take this opportunity to review their exempt employees’ duties to determine whether they actually meet those duties tests. This is because even if an employee meets the salary test (whether under the current or proposed new standards), that does not automatically mean the employee is exempt from the law’s overtime pay requirements.

For more information about FLSA exemption issues, please contact me at taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2016 Swenson Lervick Syverson Trosvig Jacobson Schultz Cass, PA
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December 9, 2014

Supreme Court sides with employers in security screenings pay case

Posted in Fair Labor Standards Act, Hours Worked, Principal activities, Security screenings tagged , , , , , , at 3:02 pm by Tom Jacobson

time clockThe United States Supreme Court today ruled unanimously in favor of employers in a case relating to whether or not employees must be paid for time spent in security screenings. The case is Integrity Staffing Solutions, Inc. v. Busk.

Integrity Staffing Solutions required its hourly workers to undergo security screenings before leaving the warehouse each day. The workers were not paid for this time, which took about 25 minutes per day. A group of former employees sued, claiming the practice violated the Fair Labor Standards Act (as amended by the Portal to Portal Act). This law generally requires employers to pay employees for all hours worked.

The high court rejected the employees’ claims. Specifically, the court noted that under the FLSA, employers do not have to pay for activities that occur before or after “the performance of the principal activities that an employee is employed to perform.” Under the court’s precedents, compensable “principal activities” include tasks that are “integral and indispensable” parts of the principal activity.

Thus, the legal question was whether or not the screenings were part of the employees’ principal work activities (which would be compensable) or mere pre- or postliminary activities (which would not be compensable).

In siding with the employer, the court ruled that the screenings were not the principal activities the employees were hired to do. Rather, the court said, the employees were hired “to retrieve products from warehouse shelves and package them for shipment,” not to undergo security screenings. The court also ruled that the screenings were not “integral and indispensable” to their retrieving and packaging responsibilities.

The court expressly rejected the employees’ argument that the focus should be on whether the particular activity was required by the employer. Rather, the court said, the focus must be on whether the task was tied to the productive work that the employee was employed to perform.

The decision is a victory for employers in that it re-affirms decades of precedent that hourly employees do not have to be paid for mandatory pre- and postliminary activities that are not the employees’ “principal activities” and are not “integral and indispensable” to those activities. Employers should, however, use caution when applying this standard and should carefully analyze any pre- and post work tasks to determine whether they are or are not compensable.

For more information about this article, please contact me at alexandriamnlaw.com or  taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2014 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA

June 30, 2011

Parades, puppies and the “Fargo” woodchipper

Posted in Attendance, Breaks, Computer Use, Confidential Information, Contracts, Employee Privacy, Fair Labor Standards Act, Hours Worked, Leaves of Absence, Leaves of Absence, Overtime, Record Keeping, Social Media in the Workplace, Telework / Telecommuting, Vacation Policies tagged , , at 8:51 am by Tom Jacobson

Last week I took a staycation.  Despite the fact that it was one of the rainiest June weeks on record for our neck of the woods, we had a great time. We watched two parades and a swim meet, spent time with our son who is home on leave from the Air Force Academy, and we played with our litter of Labrador pups .  We even took a side-trip to Fargo to see the wood chipper from the movie, Fargo.  And, except for my first day off when I needed to put out a fire that started the day before, I managed to not check my work e-mail or voice mail for a week.

But what if I had checked my e-mail or voice mail?  What if I had texted my secretary or my clients?  What if I had decided to post this commentary from home during one of those downpours?  Telecommuting, or “telework,” would have allowed me to turn my staycation into a working vacation.

Telecommuting offers tremendous benefits.  It allows for flexible work arrangements.  It can save on fuel and other transportation costs.  It can keep employees productive when circumstances would otherwise prevent them from working.

But telecommuting can also be a trap for the unwary.  Aside from the fact that it can distract us from our R&R, working remotely raises a number of employer-employee issues, such as:

* How are working hours tracked for an employee who works remotely?

* Is the telecommuting employee getting the break time to which s/he may be legally entitled?

* Is the employee entitled to overtime when the hours worked remotely are added to his/her workweek?

* Is an employee really on “leave” if s/he is working remotely while supposedly taking time off?

* Is the employee entitled to any tax deductions for a “home office”?

* To what extent is an employee entitled to worker’s compensation benefits if s/he is injured while working from home, and does this give the employer the right to inspect the employee’s home for safety concerns?

* How secure is the employer’s data if an employee is accessing it from or storing it on his/her home computer?

* What privacy rights, if any, does an employee have with respect to his/her cell phone, computer, etc. that is used to work remotely?

* Which jobs work best for telecommuting arrangements?

* What is lost (or in come cases, gained) when telecommuting co-workers do not have face-to-face contact?

* How can the employer be assured that the teleworking employee is actually working?

To avoid falling into a telecommuting trap, employers need to understand the risks, as well as the rewards, of remote working arrangements.  Then, by developing telecommuting agreements and policies,  employers can take full advantage of the benefits that telecommuting can offer.  For more information about the development and use of such policies and agreements, please contact me at taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2011 Swenson Lervick Syverson Trosvig Jacobson, PA

May 27, 2011

Employees without time records? The DOL now has an app for that.

Posted in Fair Labor Standards Act, Hours Worked, Meal Periods, Overtime, Record Keeping tagged , , , at 10:31 pm by Tom Jacobson

In its ongoing effort to more aggressively enforce the Fair Labor Standards Act, the U.S. Department of Labor has introduced its first app.  It’s the DOL Timesheet app  which enables employees to use their smart phones to track their hours worked and wages owed.

In some respects, this is nothing new.  Employees have always had the right to keep track of their work hours, and the DOL  also provides printable calendars for tracking time and wages.  The DOL’s app simply provides a new tool that will make it even easier for an employee to do so.

It is an employer’s responsibility to keep records of the hours worked by its employees.  If those records are not kept, then in the event of a dispute over wages owed, overtime or any other time-keeping issue, the DOL’s new app may provide just the evidence the employee or the DOL needs to prove their case.

For more information about this article, please contact me at taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2011 Swenson Lervick Syverson Trosvig Jacobson, PA

September 15, 2010

DOL to Disney: Failing to pay for hours worked ain’t no Mickey Mouse

Posted in Exempt/Non-Exempt Employees, Fair Labor Standards Act, Hours Worked, Record Keeping tagged , , , , at 5:00 pm by Tom Jacobson

Sixty-nine employees of Disney World in Orlando, FL will be receiving $433,819.00 in back wages after a U.S. Department of Labor investigation uncovered violations of the Fair Labor Standards Act.

The workers were a group of non-exempt inventory control clerks in the park’s food and beverage department who were not paid for work done before and after their normal shift, during meal times, and when working from home.

The FLSA requires that non-exempt workers be paid for “hours worked.”  Generally speaking, “hours worked” include all time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work, from the beginning of the first principal activity of the workday to the end of the last principal work activity of the workday.  This includes time spent working when employees are supposed to be on their breaks.

“While Walt Disney has specific rules regarding off-clock work, an investigation conducted by the Department of Labor’s Wage and Hour Division found that managers within the company were not adhering to those important policies,” said Wage and Hour Deputy Administrator Nancy Leppink. “It is not enough to have policies. Management must also ensure that all supervisors are implementing them.”

The DOL’s investigative findings stress how important it is for employers to have and enforce policies for tracking and paying for the  “hours worked” by their non-exempt employees, even the time spent working from home and on breaks.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

September 7, 2010

DOL targets health care & other industries in FLSA enforcement campaign

Posted in Aggregating Work Hours, Enforcement, Exempt/Non-Exempt Employees, Fair Labor Standards Act, Hours Worked, Independent Contractors, Independent Contractors, Meal Periods, Overtime, Rounding, Travel Time tagged , , , , , , , at 3:35 pm by Tom Jacobson

As a part of its stepped up efforts to enforce the Fair Labor Standards Act, the Department of Labor has taken aim at certain industries.  The health care industry now appears to be one of the DOL’s targets.

In a recent article published in the Workplace Law Bulletin, the Society for Human Resource Management noted that when common FLSA issues permeate an industry, the DOL will target that industry with its enforcement efforts.  In the health care industry, for example, SHRM listed the following common violations:

  • Meal period violations;
  • Rounding time in the employer’s favor;
  • Failing to pay for pre-shift/post-shift time;
  • Mistakes about what is “off the clock” time;
  • Travel time errors;
  • Failure to aggregate work hours;
  • Employee/independent contractor misclassifications;
  • Exempt/non-exempt employee misclassifications.

As a result, some DOL Wage and Hour Division district offices have started local initiatives targeting health care employers.  These initiatives have been costly for non-compliant employers.  For example, the DOL  reported earlier this year that $2.2 million in back wages was awarded to health care workers in New York, while over $2 million was awarded late last year to their colleagues in Connecticut and Rhode Island.

The health care industry is not alone.  SHRM reports that other low-wage industries, such as agriculture, day care, restaurants, garment manufacturing, hotels and motels, janitorial, and temporary help have also been targeted.    Given the DOL’s March, 2010 administrative interpretation that most mortgage loan officers are not exempt from the FLSA’s overtime standards, it appears that the financial services industry is also in the department’s sights.

Although certain industries may be DOL targets, all employers must be aware of what the FLSA requires, for violations can lead to not only DOL enforcement, but also private lawsuits brought by employees or classes of employees.  For these reasons, employment policy development and review, education, training,  and proper record keeping are musts for all employers.

The SHRM article, “Health Care Industry Targeted in FLSA Enforcement,” can be found at http://www.shrm.org/LegalIssues/FederalResources/Pages/HealthCareIndustry.aspx.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

August 20, 2010

Tick tock, we’re on the clock; Qwest employees’ FLSA claims allowed to proceed

Posted in Fair Labor Standards Act, Hours Worked, Hours Worked, Overtime, Personnel Records, Record Keeping tagged , , , , , at 9:29 am by Tom Jacobson

A July 20, 2010 decision by the United States District Court for the District of Minnesota stresses how important it is for employers to understand when their employees are “on the clock” and are, therefore, entitled to be paid.  The case also stresses every employer’s responsibility to maintain accurate records of their employees’ work time.

At issue in the case were two Qwest policies designed to gauge its technicians’ performance.  According to the technicians, in order for them to succeed under the policies, they had to work outside their regularly scheduled work day (for example, by coming in early in order to do the things required by the policies).   Therefore, they argued that under the Fair Labor Standards Act (FLSA), they should have been paid for that time, including any  overtime.

Qwest argued that because the technicians chose to work the extra hours in order to meet the company’s performance standards, the company did not have to pay them for that extra time.  The Court disagreed, saying “[t]he reason an employee continues to work beyond his shift is immaterial; if the employer knows or has reason to believe that the employee continues to work, the additional hours must be counted.'”

Qwest also argued that it should not be liable for the extra time worked because the employees failed to report it on their time sheets.  The Court rejected this argument as well, noting that it is the employer’s burden to maintain accurate time records even when employees are responsible for recording their own hours on a time sheet.

A few extra minutes of  unpaid work time may not seem like a big deal.  However, when those few minutes are added to the work-days of multiple employees over time, the consequences of the resulting FLSA violations are enormous.  Therefore, employers must understand when their employees are “on the clock,” and they must maintain accurate records of that work time.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

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