Presented by Christine S. Goldberg Baton Rouge, Louisiana Legal Pitfalls Under the Fair Labor...

Presented by Christine S. GoldbergBaton Rouge, Louisiana

Legal Pitfalls Under the Fair Labor Standards Act

Louisiana GFOA Fall ConferenceOctober 7, 2011

http://www.kullmanlaw.com/index.asp

The FLSA establishes minimum wage, overtime pay, record-keeping and child labor standards for full-time and part-time workers in the private and public sectors.

Fair Labor Standards ActFair Labor Standards Act


• The minimum wage is currently $7.25 per hour.

• There are no state minimum wage laws.

• Government contracts may require the prevailing wage rate as determined by the DOL.

Minimum WageMinimum Wage


PUBLIC ENTITIESAND THE FLSA


• The following are excluded from coverage under the FLSA:

• Elected public officials• Certain individuals appointed by elected

public officials• Employees of legislative branches of

State and local governments (if they are not subject to the civil service laws of the employing State or local agency).


Compensable TimeCompensable Time

All time spent in physical or mental exertion, regardless of the level of difficulty, where the work is controlled by or required by the employer and is primarily for the employer’s benefit.


Compensable TimeCompensable Time

• Watch out for “Off-the-Clock” work

• Watch out for Lunch Breaks


Overtime BasicsOvertime Basics

• Payable for all hours over 40 worked per work week.

• Overtime pay is one and one-half times the employee’s regular rate.

• Overtime must be computed each week and cannot be averaged over two weeks.



• Overtime is 1.5 times the Regular Rate.

• The Regular Rate is all remuneration paid to an employee

• It can include:– Salary– Commission– Piece Rate– Bonuses (All non-discretionary)

• It should not include gifts so long as they are not tied to production, hours worked or efficiency



• Hours that are paid but not worked (holidays, vacation, sick days, etc.) do not count as “hours worked” under the FLSA.

• If an employee works 40 hours Monday through Thursday, the employer may relieve the employee from work on Friday to avoid overtime.


Two Different Job FunctionsTwo Different Job Functions

• State and local government employees may, solely at their option, work on a part-time basis for the same public agency in a different capacity and the hours worked need not be combined.

• BUT ONLY IF:– The work is occasional or sporadic– The work is different from the employee’s

regular duties– It is truly voluntary

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Two Different Job Functions – How do you Count the Hours?


• Example: School Board employee works 40 hours a week as a non-exempt office secretary.

• For 1 hour each day, Monday-Friday, she also works as the Assistant Athletic Director where she performs secretarial/administrative duties such as mailings, phone calls, administering building permits for athletic events. Total work does not exceed 10 hours/week. She is paid a flat fee per school year.

• For 2-4 hours per day and 2-4 days per week, she is also the Site Manager for volleyball and basketball games. She is paid a flat fee per game.

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• Hours spent working as a secretary and Assistant Athletic Director must be combined because the work as the Athletic Director is not any different than her work as a secretary. Also, the work is not occasional or sporadic.

• Time spent working as a Site Manager must be included because it is not occasional or sporadic. If she only volunteered to act as a Site Manager once a month or so, it would be excluded.

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How Do You Calculate Overtime When There Are Dual Rates of PayHow Do You Calculate Overtime

When There Are Dual Rates of Pay

• Nothing prohibits an employer from paying an employee at two different rates for work at different times or of different types

• Generally, the overtime rate is determined by taking a weighted average of the two rates

• You can agree to pay an overtime rate equivalent to 1.5 times the regular rate applicable to the work that is performed during overtime hours

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Must overtime compensation be paid for unauthorized work?

Must overtime compensation be paid for unauthorized work?

YES.• Overtime pay must be paid for “hours

worked” over 40, even if the additional work is unauthorized.

• If an employee is working unauthorized overtime, he or she should be disciplined and told to discontinue the additional work.

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Who is Exempt from Overtime Requirements of the FLSA?


A. Professional Exemption

B. Executive Exemption

C. Administrative Exemption

D. Computer Exemption

E. Highly Compensated Employees

F. Outside Sales Exemption




• To be exempt, an employee must fit within an exemption

AND

• Must be paid a SALARY!! ($455 per week or $23,660 per year)


Professional ExemptionProfessional Exemption

1. Primary duty is intellectual in nature and requires prolonged course of specialized intellectual instruction

2. Professional exemption examples:

a. Doctors b. Lawyers c. Engineersd. Teachers – No salary requirement e. Registered Nurses (RNs)

3. This exemption does not include:

a. Licensed Practical Nurses (LPNs)b. Beauticiansc. Tradespersonsd. Technician


Executive ExemptionExecutive Exemption

1. Manages an enterprise, department or subdivision of the enterprise, i.e. – The Top Dog

2. Must Supervise 2 or more full-time employees

3. Must have the authority to hire and fire

4. Executive exemption examples:

a. Business owner b. Manager in sole charge of independent or branch

establishment


Administrative ExemptionAdministrative Exemption

1. Performs office or non-manual work directly related to the management or general business operation of the employer

2. Must exercise discretion and independent judgment

3. Don’t confuse production employees and administrative employees


Administrative ExemptionAdministrative Exemption

a. Project leaders or managers;b. Executive assistants to high-level

executives;c. Human resource managers;d. Purchasing agents;e. Tax experts;f. Credit managers; g. Account executives;h. Sales research experts.


Computer Exemption Computer Exemption

1. Must be paid $455 per week or not less than $27.63 per hour.

2. Computer employees may be exempt under the professional exemption, or under the computer employee exemption

3. Computer systems analyst, computer programmer, software engineer

4. Don’t confuse an IT Specialist for a computer professional


Highly Compensated Employees

Highly Compensated Employees

Employees performing office or non-manual work and paid a total annual compensation of $100,000 or more are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee.


Outside Sales ExemptionOutside Sales Exemption

1. Qualifying for the outside sales exemption:

a. The employee’s primary duty must be making sales or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

b. Who is customarily and regularly engaged away from the employer’s place or place of business in performing such primary duty.

2. Outside sales exemption in the real estate and mortgage industry




• Overtime v. Compensatory Time Off– Non-exempt employees must receive not

less than 1.5 times their regular rates of pay for hours worked in excess of the applicable maximum hours standard.

– FLSA provides an exemption that authorizes a public agency to provide compensatory time off in lieu of monetary overtime compensation.

– Comp Time must be earned at a rate of 1.5 hours for each hour worked


COMPENSATORY TIME COMPENSATORY TIME

– A public agency may provide compensatory time only pursuant to:• applicable provisions of a collective

bargaining agreement, memorandum of understanding or any other agreement between the public agency and the representatives of such employees; or

• an agreement or understanding arrived at between the employer and employee before the performance of the work.


• Agreements or understandings may provide for any combination of compensatory time off and overtime payment in cash so long as the premium pay principle of at least “time and one-half” is maintained.

COMPENSATORY TIMECOMPENSATORY TIME



• Compensatory time is limited to 480 hours for employees whose work included a public safety activity, an emergency response activity, or a seasonal activity.

• Compensatory time is limited to 240 hours for any other work.



• Upon termination of employment, unused compensatory time must be paid at a rate of compensation not less than (1) the average regular rate received by the employee during the last 3 years; or (2) the final regular rate -- whichever is higher.



• An employee of a public agency shall be permitted to use compensatory time off within a reasonable period after making the request if the use does not unduly disrupt the operations of the public agency.


OTHER EXEMPTIONSOTHER EXEMPTIONS• Section 7(k) -- partial overtime

pay exemption for public agency employees employed in fire protection or law enforcement.

• Section 13(b)(20) -- exemption for both the minimum wage and overtime requirements for any employee of a public agency engaged in fire protection or law enforcement activities, if the public agency employs less than 5 employees in such activities.


VOLUNTEERS AND PUBLIC AGENCIES

VOLUNTEERS AND PUBLIC AGENCIES

• FLSA does not permit a person to perform hours of volunteer service for a public agency when they involve the same type of services the individual is employed to perform for the same public agency.


Managers and Individual Liability

Managers and Individual Liability

Under the FLSA, individuals who exercise “control over the nature and structure of the employment relationship” or “economic control” over the relationship are “employers” and thus subject to personal liability.


TIME KEEPING TRAPS FOR THE UNWARY

TIME KEEPING TRAPS FOR THE UNWARY

A. “Off the Clock” WorkB. Meal and Rest PeriodsC. “On-Call" TimeD. Deductions from SalaryE. Effect of Improper DeductionsF. TrainingG. Time Spent Using an iPhone,

BlackBerry or Other Remote Communication Devices


“Off the Clock” Work“Off the Clock” Work

1. “Off-the-clock” work

2. There is an increase in cases seeking to hold employers liable for “off-the-clock” work performed by employees.

3. Employers don’t necessarily need to know about the work


Meal and Rest PeriodsMeal and Rest Periods

1. Are they compensable

2. Courts are increasingly finding meal periods compensable where work is being performed

3. New federal law requires break for breastfeeding but the employer need not compensate the employee for each break. (Up to 1 year after birth of child)


“On-Call" Time“On-Call" Time

1. Whether on-call time is compensable depends on whether the wait predominantly benefits the employer and whether employees are able to use the time for their own purposes.

2. Ask what the employees can do during on-call periods:

3. Factors used to determine whether on-call time is compensable:


Permissible Deductions from Salary


a. Deductions of a full day or more for personal reasons;

b. Deductions of a full day or more for sickness or disability if in accordance with a bona fide plan, policy, practice that covers sickness or disability pay;

c. Deductions can also be made for any time taken off as unpaid leave, including a partial day, under the Family Medical Leave Act;




a. An employer can offset any amounts received by an employee as jury fees, witness fees or military pay for a particular week against the salary due for that particular week;

b. An employee’s salary may be deducted for violating a safety rule of major significance;

c. An employee may also receive an unpaid disciplinary suspension, this disciplinary suspension may last one full day or more but it must fall under an established conduct policy; and

d. Employers may pay an employee only a proportionate amount of salary for the initial and terminal week of employment if the employee worked less than a full week.


Effect of Improper Deductions

Effect of Improper Deductions

1. Isolated or inadvertent improper deductions

2. Failure to reimburse employees for improper deductions


TrainingTraining

1. Payment for time spent attending training programs, seminars, and lectures

2. What is voluntary

3. Is the training for the enhancement of an employee’s skills or qualifications for promotion or advancement

4. Remember the rules concerning training for current employees are different than the rules concerning individuals who are in training to become employees


Time Spent Using an iPhone, BlackBerry or Other Remote

Communication Devices

Time Spent Using an iPhone, BlackBerry or Other Remote

Communication Devices

1. iPhone, BlackBerry or other remote communication device use by nonexempt employees can cause problems for employers:

a. Using electronic devices to send and receive work-related e-mail, during nonworking hours

b. Policies against use of PDAs or BlackBerry devices outside of working hours or during unpaid meal periods

c. Don’t encourage or require nonexempt employees to be available via email during nonworking hours

d. Time keeping requirements


Negative Leave BalancesNegative Leave Balances

• An employer can allow an employee to borrow against future leave.

• If the employee ends his or her employment before the leave is re-paid, an employer can deduct the unearned leave ONLY if the set off will not result in a reduction in wages below the minimum wage.


Louisiana Wage Payment Statutes

Louisiana Wage Payment Statutes

• La. R.S. 23:631 requires employers to pay all wages due and owing at the time of termination

• Within 15 days or next regular pay date, whichever first occurs

• Accrued and unused vacation is a wage!!

• Penalties are provided for failure to comply.


QUESTIONSQUESTIONS


Presented by Christine S. Goldberg Baton Rouge, Louisiana Legal Pitfalls Under the Fair Labor...

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