The Impact of the New DOL OT Rules96bda424cfcc34d9dd1a-0a7f10f87519dba22d2dbc6233a731e5.r41.… ·...

The Impact of the New DOL OT Rules

Presented by:

Sharon L. Sellers, SHRM-SPC

SLS Consulting, LLC

843.819.5129

[email protected]

Agenda

• Fair Labor Standards Act

• Who is Covered

• The Rules – Including the New

Revisions

• Effective Dates

• What to Do Now

• Getting Your House In Order

Copyright 2016 SLS Consulting, LLC

Fair Labor Standards Act


History…• At the time – Depression Era, mid-1930’s

– High Adult Male Unemployment – over 20%

– Women and Children were Exploited (paid very low wages; ¼ of U.S. Children worked)

– Many factories worked employees 60+hrs/wk

– Wages had been cut from $11/wk to $4/wk


http://images.google.com/imgres?imgurl=http://images.businessweek.com/ss/07/04/0426_dow/image/2_great_depression.jpg&imgrefurl=http://images.businessweek.com/ss/07/04/0426_dow/source/3.htm&usg=__G489bspsWWClqZshaFW0-UvlVUM=&h=323&w=432&sz=55&hl=en&start=3&sig2=9ncaj6pviams2uekAsjnPQ&tbnid=Cnh9b7Kg_UU58M:&tbnh=94&tbnw=126&prev=/images%3Fq%3Dgreat%2Bdepression%26gbv%3D2%26ndsp%3D18%26hl%3Den&ei=YUDSSaCJI5WNtgfqnKz0Bg

http://images.google.com/imgres?imgurl=http://images.businessweek.com/ss/07/04/0426_dow/image/2_great_depression.jpg&imgrefurl=http://images.businessweek.com/ss/07/04/0426_dow/source/3.htm&usg=__G489bspsWWClqZshaFW0-UvlVUM=&h=323&w=432&sz=55&hl=en&start=3&sig2=9ncaj6pviams2uekAsjnPQ&tbnid=Cnh9b7Kg_UU58M:&tbnh=94&tbnw=126&prev=/images%3Fq%3Dgreat%2Bdepression%26gbv%3D2%26ndsp%3D18%26hl%3Den&ei=YUDSSaCJI5WNtgfqnKz0Bg

Employment Laws –Wage & Hour - FLSA



Ceiling – After 40 hours,

Overtime



Floor – Minimum Wage


Overtime





Overtime

Children playing –

Child Labor Laws





Overtime

Children playing –

Child Labor Laws

Also includes who’s NOT in the house – Independent Contractors


Who is Covered?


Who is Covered?


• Enterprise –• Revenue of $500,000 or more in ordinary commercial

activities

• Does NOT include contributions, membership fees or

dues

• MUST include revenue generated by sales through

selling of goods and services, thrift stores, etc. (fair

competition with a “for profit”)

• ALWAYS applies to hospitals; institutions primarily engaged

in the care of older adults and people with disabilities who

reside on the premises; schools for children who are mentally

or physically disabled or gifted; federal, state, and local

governments; and preschools, elementary and secondary

schools, and institutions of higher education

Who is Covered?


• Individuals

• An employee:

• Who engages in interstate commerce

• Who engages in the production of

goods for interstate commerce

• Whose work involves or relates to the

movement of persons or things

across state lines

Who is Covered?


Does your employee

• Routinely make telephone calls out of

state?

• Send emails to people or organizations

out of state?

• Order supplies from out of state?

• Receive goods, services, or

contributions from people out of state

(marketing, clerical, accounting)?

Then this person is Covered under

FLSA

Who is Covered?


How would someone NOT be covered?

If you had an employee who was an

intake counselor who only worked with

clients from within the state and who did

not make phone calls/emails outside of

the state or order or receive goods, then

the employee MAY not be covered by

FLSA on an individual basis

The Rules – Including the New Revisions


FLSA –2016

• For purposes of this presentation, we will review the FLSA rules regarding:

– Overtime Pay

– Employee Classifications of

Exempt and Non-Exempt


Overtime Rules

• Technically, all employees are considered not exempt from overtime (“non-exempt”) UNLESS their job duties fall into one or more exemptions

• Federal law states that non-exempt employees must be paid at 1 ½ times their hourly wage for all hours worked over 40 hours per week (some state exceptions, for example, California requires overtime for any hours worked over 8 hours/day)

• State-Differs Rule – If the State law and the Federal law differs, go with the one that most “protects” (benefits) the employee


Overtime Rules under FLSA

• Exempt – Exempt from overtime For most positions –

– Employee paid on a Salary Basis*

– At a Certain Salary Level amount changed with new rule

– Performs Certain Job Duties (TITLE does not matter)

*Salary Basis does not apply to Outside Sales Persons, Doctors, Lawyers, Teachers. It does not apply to certain Computer Employees (software) as long as they make $27.63 per hour.



Salary Basis

Must pay the person the same base amount each week if they work any part of the week. You cannot “dock” an employee if they leave early, come in late.

You CAN have a non-exempt salaried employee. You continue to pay their base pay, monitor their hours worked, and pay them overtime for any hours worked over 40 per week.



• Non-Exempt – “not exempt” from overtime– Are paid on an hourly basis or a salary basis

– Are paid overtime of a rate of at least one-and-one-half times the regular hourly rate for any hours WORKED over 40 per week

Overtime is based on hours WORKED, not hours paid, so paid leave hours are not included

Some additional issues with paying employees will be discussed at the conclusion of today’s presentation.


Overtime Rules – the ExemptsExecutive Exemption:

• Be compensated at least

$455/wk or $23,660/yr –

• Manages the enterprise or a department

• Directs the work of 2 or more employees

• Can or recommends hiring and firing

• Or owns 20% equity interest in enterprise


Overtime Rules – the Exempts

Executive Exemption:

• Be compensated at least $455/wk or $23,660/yr –

$913/wk or $47,476/yr• Manages the enterprise or a

department

• Directs the work of 2 or more employees

• Can or recommends hiring and firing

• Or owns 20% equity interest in enterprise


XXXXXXX


Administrative Exemption:


• Performs administrative (office) work

• Be required to exercise discretion and independent judgment with respect to “matters of significance”



Administrative Exemption:


$913/wk or $47,476/yr

• Performs administrative (office) work

• Be required to exercise discretion and independent judgment with respect to “matters of significance”



Professional Employee Exemption:

• Be compensated at least $455/wk or 23,660/yr

• Intellectual, consistent exercise of discretion and judgment

• Advanced knowledge in science or learning

• Usually a prolonged course of specialized instruction



Professional Employee Exemption:


• Be compensated at least $913/wk or $47,476/yr

• Intellectual, consistent exercise of discretion and judgment

• Advanced knowledge in science or learning

• Usually a prolonged course of specialized instruction



Creative Employee Exemption:

• Be compensated at least $455/wk of $23,660/yr

• Performs work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor



Creative Employee Exemption:



• Performs work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor



Computer Professional Exemption:


OR paid at least $27.63 per hour

• Primarily engaged in one or more of several computer-related functions specified in the regulations such as software engineers (NOT manufacture of computers)



Computer Professional Exemption:



OR paid at least $27.63 per hour

• Primarily engaged in one or more of several computer-related functions specified in the regulations such as software engineers (NOT manufacture of computers)



Outside Sales Exemption:

• Minimum salary requirement does NOT apply

• Have the primary duty of making sales or obtaining orders or contracts for services or for the use of facilities

• Customarily and regularly be engaged away from employer’s business.



The JOB TITLE really means little.

The Salary and the Duties are the primary elements



Highly Compensated Employee –

Performs at least one duty of executive, administrative, etc.

Earns at least $100,000 – NOW $134,004

This is based on the top 10% of those salaries paid across the country


Bonuses


Discretionary Bonuses cannot

be counted toward Salary

determination

Bonuses


Nondiscretionary Bonuses NOW

can be counted –

• Limited to 10% of salary

• Must be paid at least quarterly

• “Catch-up” is allowed per quarter

– no later than the pay period

immediately after quarter

Effective Dates


December 1, 2016 – Effective Date of the New Rule except

The Department of Labor is, however, implementing a

limited non-enforcement policy for providers of

Medicaid-funded services for individuals with intellectual

or developmental disabilities in residential homes and

facilities with 15 or fewer beds. This non-enforcement

period will last from December 1, 2016, to March 17,

2019.

January 1, 2020 – Automatic update to new Salary Level

based on the bottom 40th percentile of the salaries in the

lowest geographic area (currently the South). Update will

continue every 3 years. Highly Compensated Employee

level will also be updated every 3 years.

Protecting Workplace Advancement and Opportunity Act (S.

2707 and H.R. 4773) are bills currently in Congress

What to Do Now


How to Comply:

If an exempt is no longer eligible due to the Salary Level:

1. Make former exempts non-exempt and pay them overtime –figure new pay

– Current salary divided by 2080 (40 hours/week times 52 weeks)= hourly rate [$45,000 = $21.63 per hour]

– Figure in the overtime when computing the new hourly rate (for 50 hour/wk manager making $45,000, 2080 hr/year plus 10 OT hours times 1.5 times 52 = 2080 + 780 =2860. Divide $45,000 by 2860 =$15.73 per hour)


How to Comply:

If an exempt is no longer eligible due to the Salary Level:

2. Increase pay to the minimum required amount to keep them exempt– example, $47,476

3. Make them non-exempt, but tell them not to work overtime

– That includes no phone calls, texts, emails, etc.

Reminder = you CAN continue to pay the employee on a salary basis, but you will need to monitor time and pay them additional compensation for hours worked over 40 per week


How to Comply:

• Start NOW coming up with a way for your former exempts to record time (this is good practice for many reasons). The DOL states that it is not a requirement to have a Time Clock, but you should somehow record the hours worked (both you and the employee need to agree that the method is an accurate recording of hours worked)

• Look at your policies – Do you have an Electronic “down time” policy? Are there rules regarding when to call in someone? (probably should be anyway)

• Apps to restrict access to servers during off hours? To create but not send emails to non-exempt employees except during working hours?


Getting Your House In Order


Were They Classified Correctly?

• Some organizations have misclassified their employees in the past. Now is your chance to double check to make sure your employees are correctly classified.

– If change is due to the NEW rule – explain to the employees that the rules have recently changed

– If change is because you have been misclassifying them all along – recommend you discuss with an attorney and pay them owed backpay


What is “Comp Time”?

• Comp Time is a term generally used to refer to the practice of allowing an employee to take extra time off in exchange for previously working extra hours.

• There are no laws requiring employers to provide comp time to exempt employees

• It is not lawful to provide a comp time arrangement to non-exempts in exchange for not paying the employees overtime pay in the private sector (allowable in government)


What Else Should I Watch For?

• Working “off the clock” – is not legal for employees if they are performing their same duties (or other compensable duties) as they would if they were “on the clock”

• Coming in early, working during lunch, staying late – all compensable even if not approved by management. You must pay them (if non-exempt), but you can discipline them if they aren’t going by the policy



• Volunteering – You should not accept volunteers for performing duties that would be in competition with a for-profit.

– Eg. A Thrift Store that receives revenue for selling goods should not allow people to volunteer to work in the store. The store competes with for-profit entities and, therefore, must pay its employees just as a for-profit store would.

– A charity who gives away food or clothing to those in need may have volunteers.

• Employees CAN volunteer (for non-profits)for the same organization but it must be a volunteer position and not an extension of the paid job Copyright 2016 SLS Consulting, LLC


• Interns – Interns should be paid, so don’t think you can replace an employee with an unpaid intern (there are some exceptions, exclusively in the academic arena)


“Hours Worked” for Overtime

• Includes ANY time working for your organization –whether approved or not:– Answering business telephone

– Checking business emails

– Sending or receiving a business phone call on cell

– Sending or receiving a business related text message


Common Questions

• Can I still pay my non-exempt on a salary basis?

• Doesn’t education count toward determination?

• In order to avoid paying overtime, can I just keep my paid employees to 40 hours and “back fill” the time to volunteers?


Common Questions

• What if my employee to whom I was going to paid commission for the other 10%, leaves mid-quarter?

• Where can I get more information?

Go to the DOL website:

https://www.dol.gov/whd/overtime/final2016/


Thank You!

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