lerch early flsa avoiding compensation claims under the fair labor standards act 2014 06-30
DESCRIPTION
How to avoid compensation claims under the Fair Labor Standards Act, including who must be paid overtime and when and how to pay overtime.TRANSCRIPT
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FLSA: Fearing Law Suits Always
or Fair Labor Standards Act ?
Avoiding Compensation Claims Under the FLSA
June 13, 2014
Presented by Lerch, Early & Brewer’s
Employment & Labor Attorneys
www.lerchearly.com
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June 13, 2014
Employment & Labor Lerch, Early & Brewer,
Chtd.
www.lerchearly.com
A Seminar for Business Owners, C Level Officers, HR Managers, Directors, and
Vice Presidents
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Overview
3
Introduction Who to Pay How & What to Pay Takeaways Q&A
Rick Vernon
Michael Neary
Julie Reddig
Marc Engel
Lauri Cleary
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June 13, 2014
Michael J. NearyLerch, Early & Brewer,
Chtd.
www.lerchearly.com
WHO IS SUBJECT TO THE FLSA?
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FLSA Traps for the Unwary
5
Employee vs. non-employee
Exempt vs. non-exempt
Deductions
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FLSA Requirements
6
Minimum
wage
Overtime
above 40
hours
Record-keepingobligatio
ns
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What’s so hard about that?
7
Unhappy current and former employees
Government enforcement
Plaintiffs’ attorneys
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Trap 1: Incorrectly Identifying Employees as Not Subject to FLSA
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Workers Not Subject to FLSA
9
Independent Contractors
Volunteers
Interns
Trainees
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Independent Contractors
10
Common mistake… Confusing casual or irregular workers with ICs
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Independent Contractors
11
The Tests:
IRS
Common law
Economic realities
Hybrid
State
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More control and oversight Less likely
worker is an IC
Independent Contractors
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13
Independent Contractors
1
Mis-classifi
ed worker
Fender
bender
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14
Independent Contractors
Many
Mis-classifie
d workers
Train derailm
ent
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Exposure
Back wages Unpaid employment
taxes Unpaid
unemployment and workers’ comp insurance premiums
Participation rights in employee benefits plans
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Best Practices for Avoiding IC Problems
16
If concerned, engage counsel or conduct internal audit
Train managersAlways use IC contracts and tailor to mirror IC tests
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Are They Volunteers?
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Interns
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in·ternnounA student or recent graduate seeking practical hands-on experience; improved resume and job prospects; networking with a particular employer or in a particular field
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Do You Have to Pay Them?
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Six Factors for Paying Interns
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Environment allows for observation or school credit
Benefit for intern: skills are transferrable
Interns don’t replace employees
No immediate advantages for employer
No job entitlement
No compensation: all parties understand this
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What Is a Trainee?
21
Pre-employment vs. after-employment
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Best Practice: Avoid Volunteer/Intern/Trainee Problems
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Create a plan for these programsPut plan into writingMonitor the program
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Trap 2: Incorrectly Identifying Exempt vs. Non- Exempt Employees
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The Exemptions
24
THE DEFAULT RULEEmployees are entitled overtime
> 40 hours
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Six Main Exemptions
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Administrative
Executive
Professional
Computer professional
Outside sales
Highly compensated
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Administrative Exemption
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Office/non-manual work directly related to management/general business operations
Exercises discretion and independent judgment
Has decision-making responsibilities
Duties
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Administrative Exemption
When in doubt, classify as non-exempt
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Watch Out For!
Production workers outside scope of exemption
Routine/structured tasks outside scope
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Executive Exemption
Primary duty is management of enterprise or dept./subdivision
Directs 2+ employees (not ICs)
Hiring/firing authority 29
Duties
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Watch Out For: Rules Re Supervising
DOL takes the position that supervising independent contracts or other employer’s workers doesn’t satisfy the requirement of directing the work of two or more other employees.
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Professional Exemption
Advanced knowledge in a field of science or learning
Invention, imagination, originality, talent31
Work requires
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Computer Professional Exemption
Systems analysis
Design, development, documentation, testing, creation, modification of:
Computer systems or programs
Operating systems
Combo of above32
Duties
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Watch Out For!
Help desk or tech workers likely not
exempt
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Outside Sales Exemption
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Duties Makes sales
and is regularly away from employer’s place(s) of business to perform this duty
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Watch Out For!
They are called outside sales men or women because they sell outside the office, but they spend a lot of time in the office and have duties other than just selling. Be careful to focus on responsibilities, not labels.
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Highly Compensated Exemption
Performs office or non-manual work as an executive, administrative, or professional employee with at least $100,000+ salary
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Duties
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Best Practice: Job Descriptions
Review and revise to track exemption Clarify and list actual duties Emphasize exempt duties Describe discretion and
independent judgment Give authority to hire and fire or
state recommendation 37
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Best Practice: Job Descriptions con’t
Use responsibilities, not labels Monitor tasks
Document why exemptConsult counsel
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Trap 3: Taking Improper Deductions
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Salary Basis
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Ordinarily, exempt workers paid on a salary basis must receive
the full amount of the guaranteed salary in any work
week in which they perform any work, without deduction based on the quality or quantity of the
employee's work. FLSA only specifies certain situations where pay deductions are
allowed.
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Improper Deductions
41
Can destroy the exemption if the facts demonstrate that the
employer didn’t intend to pay employees on a
salary basis.
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Improper Deductions:Important Factors
Number
Time periodNumber and geographic location of
employeesNumber and geographic locations of
managersWhether the employer has a clearly communicated policy permitting or
prohibiting improper deductions
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Proper Deductions
43
Full-day absences for personal reasons (not sickness/disability)Full-day absences in accordance with an employer’s bona fide plan, policy or practice providing compensation for absences (for sickness/disability)
Offset jury duty leave, witness leave, or military leave pay
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Proper Deductions Continued
Penalties imposed in good faith for infractions of safety rulesUnpaid disciplinary suspensions of one or more full daysPro rata payment of salary in the 1st and last week of employment Full-day or partial-day absence covered by FMLA
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Safe Harbor
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Allows employers to keep the exemption if improper deductions were made.
Employers must have: 1. Communicated policy prohibiting
improper salary deductions 2. Provided complaint mechanism3. Reimbursed employees4. Made good faith commitment
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Best Practices for Avoiding Improper DeductionsTrain managers Create a clear policy Include policy in
handbookIf someone complains
about improper deduction, take it seriously and fix it promptly
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HOW AND WHAT TO PAY UNDER THE FLSA
June 13, 2014
Julie A. ReddigLerch, Early & Brewer,
Chtd.
www.lerchearly.com
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What is compensable time?
How to calculate overtime?
Overview
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What is Work?
Time in which an employee either “suffers or is permitted” to work
Key element = control49
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What is Work? Working “Off the Clock”
Working longer than scheduled shift
Working unauthorized overtime
Working from home/mobile device
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Best Practice: Prevent Working “Off the Clock”
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Timesheet disclaimer
Update policy
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What is Work? Travel Time?
Ride programs Different
worksites Overnight travel Travel for call back
time
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What is Work? Donning and
Doffing Protective Equipment?
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One of the most
litigated issues under the FLSA in
the last decade.
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What is Work? Walking Time?
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What is Work? Meals & Rest Breaks?
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What is Work? On Call Time?
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Is the employee engaged to wait or waiting to be engaged?
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What is Work? Training Time
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What is Work? Comp Time
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Essentially does not
exist in private sector.
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What is Work? Comp Time
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1 • Same work week
2
• Same payroll period: 2nd week provide time off at time and ½ for each hour >40 in 1st work week
Only two ways to allow comp time under FLSA:
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Pitfalls in Calculating Overtime
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OT: Based on the Regular Rate
Overtime is time and ½ the employee’s Regular Rate of Pay
Regular Rate is an hourly rate
Regular Rate can be DIFFERENT from the employee’s regular hourly rate
Regular Rate must be calculated weekly
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OT: The Regular Rate Calculation
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Divide ALL payments made by the employer to or on behalf of the employee in the work week by the number of hours the employee worked in the work week.
$ paid _______# of
hours worked
Regular
Rate
=
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OT: The Regular Rate Includes
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OT: Regular Rate Excludes
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HOLIDAY
Premiums
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Speakers
Michael Neary is an employment and litigation attorney at Lerch, Early & Brewer who represents management in employment and labor matters. He advises clients on how to save money, time and energy by avoiding litigation and also counsels employers on compliance with federal, state and local employment statutes and regulations.
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(301) [email protected]
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Speakers
Julie Reddig is an employment attorney at Lerch, Early & Brewer who counsels and defends management in a broad range of matters and disputes involving employment and the workplace, including wage and hour investigations by state and federal officials, discrimination, harassment, and overtime claims made by current and former employees.
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(301) [email protected]
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For more information
Lerch, Early & Brewer, Chtd.3 Bethesda Metro Center, Suite 460
Bethesda, MD 20814(301) 986-1300
Thank you for your participation
This content is for your information only and is not intended to
constitute legal advice. Please consult your attorney before acting
on any information contained here.
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