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

2Free Trial: compliancehr.com/freetrial

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

Free Trial: compliancehr.com/freetrial 3

4

1. Full slide presentation (pdf format)

2. Link to recorded audio presentation

3. A free trial to Navigator OT

What You’ll Receive

Free Trial: compliancehr.com/freetrial


Accessing Your Free Trial is Easy


6

Agenda FLSA Exemption Basics Understanding the “White

Collar” Exemptions The Big Five Using Navigator OT to Power

Your Decision Making To Remediate or Reclassify

6


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


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


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.


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


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


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


Let’s Dig Into Duties!


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


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


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


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


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


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


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


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


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


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


26

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


27

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


The Big Five

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


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


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


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


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


Analyzing Overtime Exempt Classifications


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


Accessing Your Free Trial is Easy


37

Navigator OT – The Smart Solution

Questionniare


Risk Report


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


1. Compensation plan redesign2. Review benefit plans3. Review systems, policies and

practices4. Communicate the changes5. Provide training

Reclassify


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


Questions?

Thank you!

overtime violations lurking in your company · eligible for overtime pay, some employees are...

Documents