102 - FAIR LABOR STANDARDS ACT

WHITE COLLAR EXEMPTION DUTIES (OUTSIDE SALES EMPLOYEES)

1. THE EMPLOYEE'S PRIMARY DUTY MUS BE: a. MAKING SALES OF TANGIBLE OR INTANGIBLE ITEMS SUCH AS GOODS, INSURANCE, STOCKS, BONDS, OR REAL ESTATE; OR b. OBTAINING ORDERS OR CONTRACTS FOR SERVICES OR TO USE OF FACILITIES. 2. THE EMPLOYEE MUST CUSTOMARILY AND REGULARLY WORK AWAY FROM THE EMPLOYER'S PLACE OR PLACES OF BUSINESS PERFORMING THE EMPLOYEE'S PRIMARY DUTY. THERE IS NO SALARY REQUIREMENT TO QUALIFY FOR THIS POSITION. PG 2-22

SICK LEAVE BUYBACK PAYMENTS

A FEDERAL APPEALS COURT RULED THAT A CITY'S PAYMENTS TO FIREFIGHTERS UNDER ITS SICK LEAVE BUY BACK PROGRAM SHOULD HAVE BEEN INCLUDED IN DETERMINING THE FIREFIGHTERS REGULAR RATE OF PAY FOR OVERTIME PURPOSES. THE COURT SAID THE PAYMENTS WERE SIMILAR TO A NON-DISCRETIONARY BONUS SINCE THEY WERE DETERMINED UNDER A FORMULA BASED ON HOW MUCH UNUSED SICK LEAVE A FIREFIGHTER HAD EARNED, AND WHERE CLEARLY PART OF THEIR COMPENSATION FOR EMPLOYMENT. PG 2-47

SUPPLEMENTAL DISABILITY PAYMENTS

A FEDERAL COURT OF APPEALS RULED THAT SUPPLEMENTAL PAYMENTS DESIGNED TO BRING THE WAGE OF A PARTIALLY DISABLED WORKER UP TO THE EMPLOYEE'S PRE-DISABILITY WAGE LEVEL MUST BE INCLUDED IN DETERMINING THE EMPLOYEE'S REGULAR RATE OF PAY. PG 2-47

SHIFT DIFFERENTIALS

AN AMOUNT ADDED TO AN HOURLY RATE TO COMPENSATE AN EMPLOYEE FOR WORKING AN EVENING, LATE NIGHT, OR OTHER UNDESIRABLE SHIFT. PG 2-45

New Hire Reporting

Employers are required to report information regarding newly hired and rehired employees to state agencies. This information may be used to facilitate the collection of child support and/or to uncover fraud and abuse in unemployment compensation, workers' compensation, and public assistance (welfare) benefit programs. Federal new hire reporting requirement Employers are required to comply with a federal new hire reporting requirement. The information required to be reported for new hires under federal law was expanded by the Claims Resolution Act of 2010, which requires the employer to report the date that each newly hired employee first performed services for pay.

IRS PENALTIES INTENTIONAL MISCLASSIFICATION

If an employer intentionally misclassifies the worker as an independent contractor after determining an employer-employee relationship exists, the assessments above do not apply and the employer is liable for The full amount of federal income tax that should have been withheld and 100% of the employee's and employer's share of social security and Medicare taxes

MINORS AGE 14 AND 15 (child labor restrictions)

MINORS AGE 14 AND 15 CAN WORK IN A LIMITED NUMBER OF NONHAZARDOUS JOBS IN RETAIL, FOOD SERVICE, AND GASOLINE SERVICE ESTABLISHMENTS. THEY CANNOT WORK DURING SCHOOL HOURS AND ARE LIMITED TO WORKING 3 HOURS A DAY AND 18 HOURS A WEEKW HEN SCHOOL IS IN SESSION (8 A DAY, 40 A WEEK WHEN NOT IN SESSION). CAN WORK BETWEEN 7 AM AND 7 PM PG 2-69

WAGE RATES FOR PUBLIC BUILDINGS AND WORK (DAVIS-BACON AND RELATED ACTS)

THE SECRETARY OF LABOR SETS PREVAILING MINIMUM WAGE STANDARDS FOR LABORERS AND MECHANICS WORKING ON FEDERALLY FINANCED CONSTRUCTION CONTRACTS OF $2,000 OR MORE. THE "RELATED ACTS" INCLUDE PROVISION THAT REQUIRE DAVIS-BACON LABOR STANDARDS BE APPLIED TO MOST FEDERALLY AIDED CONSTRUCTION. COVERED CONTRACTORS AND SUBCONTRACTORS ARE REQUIRED TO PAY COVERED WORKERS WEEKLY AND SUBMIT WEEKLY CERTIFIED PAYROLL RECORD TO THE CONTRACTING AGENCY. PG 2-73

ALLOWABLE TIP CREDIT

THIS MEANS THAT THE EMPLOYER CAN TAKE A "TIP CREDIT" OF UP TO $5.12 ($7.25 - $2.13) PG 2-39

IRS Enforcement Efforts MISCLASSIFICATION OF WORKERS

The IRS uses several different programs in trying to detect worker misclassifications. The 1099 Matching Program targets individuals who file only one 1099-MISC with their personal tax return The IRS also will try to spot employees who receive Forms W-2 and 1099-MISC from the same employer in one year.

IRS Penalties UNINTENTIONAL MISCLASSIFICATION OF WORKERS

The Internal Revenue Code provides special reduced tax assessments when an employer unintentionally misclassifies an employee as an independent contractor. They are: 1.5% of wages paid for not withholding federal income tax, doubled to 3.0% if the employer fails to file an information return 20% of the employee's share of social security and Medicare taxes for not withholding those taxes, doubled to 40% if the employer fails to file an information return

PER DIEM PAY

WHERE AN EMPLOYER PROVIDED EMPLOYEES AN EXTRA HOURLY PAYMENT THAT VARIED WITH THE NUMBER OF HOURS WORKED, THE PAYMENT MUST BE INCLUDED IN THE EMPLOYEES' REGULAR RATE OF PAY. THE COURT SAID THE REGULAR RATE MUST REFLECT ALL PAYMENTS THAT THE EMPLOYER AND EMPLOYEE AGREE WILL BE RECEIVED REGULARLY DURING THE WORKWEEK. PG 2-47

COMPENSATORY TIME OFF IN LIEU OF OVERTIME PAY

BECAUSE THE WORKWEEK IS THE FLSA'S BASICE UNIT OF TIME USED IN DETERMINING WHETHER OVERTIME PAY IS DUE TO AN EMPLOYEE, EMPLOYERS GENERALLY CANNOT "PAY" OVERTIME EARNED IN ONE WORKWEEK BY GIVING THE EMPLOYEE TIME OFF FROM WORK IN ANOTHER WEEK, EVEN IF 1.5 HOURS OFF ARE GIVEN FOR EACH OVERTIME HOUR WORKED. EMPLOYERS CANNOT "AVERAGE" THE HOURS WORKED IN CONSECUTIVE WORKWEEKS TO AVOID PAYING OVERTIME.

EXEMPT EMPLOYEE

EMPLOYEES WHO DO NOT HAVE TO BE PAID THE REQUIRED MINIMUM WAGE OR OVERTIME PAYMENTS, AND THE EMPLOYER DOES NOT HAVE TO KEEP CERTAIN RECORDS DETAILING THIER WORK. PG 2-5

NON EXEMPT EMPLOYEE

EMPLOYEES WHO MUST BE PAID AT LEAST THE MINIMUM WAGE FOR ALL HOURS WORKED, AND AN OVERTIME PREMIUM FOR HOURS WORKED OVER 40 IN A WORKWEEK. PG 2-5

FEDERAL MINIMUM WAGE RATE

$7.25 ALL COVERED EMPLOYEES WHO ARE NOT OTHERWISE EXEMPT MUST BE PAID AT LEAST MINIMUM WAGE FOR ALL HOURS WORKED. EMPLOYEES MAY BE PAID ON A PIECEWORK, SALARY, OR COMMISSION BASIS, SO LONG AS THE WAGES AT LEAST EQUAL THE MINIMUM HOURLY RATE PG 2-36

WHITE COLLAR EXEMPTION DUTIES (EXECUTIVE EMPLOYEES)

1. THE EMPLOYEE'S PRIMARY DUTY MUST BE MANAGEMENT OF THE ENTERPRISE IN WHICH THE EMPLOYEE IS EMPLOYED OR OF A CUSTOMARILY RECOGNIZED DEPARTMENT OR SUBDIVISION OF THE ENTERPRISE. 2. THE EMPLOYEE MUST CUSTOMARILY AND REGULARLY DIRECT THE WORK OF TWO OR MORE OTHER EMPLOYEES. 3. THE EMPLOYEE MUST HAVE THE AUTHORITY TO HIRE OR FIRE OTHER EMPLOYEES, OR PARTICULAR WEIGHT MUST BE GIVEN TO THE EMPLOYEE'S RECOMMENDATIONS AS TO THE HIRING, FIRING, ADVANCEMENT, PROMOTION, OR OTHER CHANGE OF EMPLOYMENT STATUS OF OTHER EMPLOYEES. 4. THE EMPLOYEE MUST BE PAID A SALARY OF AT LEAST $455 PER WEEK, NOT INCLUDING BOARD, LODGING, OR OTHER FACILITIES. PG 2-12

TIP PAY REQUIREMENTS

1. THE TIPPED EMPLOYEE MUST ACTUALLY RECEIVE AT LEAST AS MUCH IN TIPS AS THE CREDIT TAKEN BY THE EMPLOYER. 2. THE EMPLOYEE MUST BE INFORMED ABOUT THE TIP CREDIT PROVISIONS OF THE LAW BEFORE THE CREDIT IS TAKEN, INCLUDING a. THE DIRECT CASH WAGE THE EMPLOYER IS PAYING TIPPED EMPLOYEES b. THE ADDITIONAL AMOUNT THE EMPLOYER IS USING AS A TIP CREDIT, UP TO THE DIFFERENCE BETWEEN THE MINIMUM WAGE AND THE DIRECT CASH WAGE. c. THAT THE TIP CREDIT MAY NOT EXCEED THE ACTUAL AMOUNT OF TIPS RECEIVED BY THE EMPLOYEE d. THAT THE TIP CREDIT DOES NOT APPLY TO TIPPED EMPLOYEES UNLESS THE EMPLOYEE HAD BEEN INFORMED ABOUT THE FLSA'S TIP CREDIT PROVISIONS. e. THAT ALL TIPS RECEIVED BY TIPPED EMPLOYEES MUST BE RETAINED BY THE EMPLOYEES EXCEPT UNDER LEGITIMATE TIP POOLING ARRANGEMENTS. 3. ALLL TIPS RECEIVED BY THE EMPLOYEE MUST BE KEPT BY THE EMPLOYEE, ALTHOUGH "VALID" TIP POOLING MAY BE REQUIRED AMONG EMPLOYEES WHO ARE CUSTOMARILY AND REGULARLY TIPPED (NOT JANITORS, DISHWASHERS, SALAD MAKERS, MANAGERS, ETC). **ONE EXCEPTION IS WITH SECURITY GUARDS, WHO ARE ENTITLED TO TIP POOL SINCE THEY HAVE SUFFICIENT INTERACTION WITH CUSTOMERS AND PLAYED PROMINENT ROLE IN CUSTOMER EXPERIENCE. 4. CREDIT CARD TIPS MUST BE GIVEN TO THE EMPLOYEE BY THE NEXT PAYDAY, ALTHOUGH THE CREDIT CARD COMPANY'S PERCENTAGE CHARGE FOR THE USE OF THE CARD MAY BE DEDUCTED FROM THE TIP. PG 2-39

WHITE COLLAR EXEMPTION DUTIES (COMPUTER-RELATED PROFESSIONAL EMPLOYEES)

1.THE APPLICATION OF SYSTEMS ANALYSIS TECHNIQUES AND PROCEDURES, INCLUDING CONSULTING WITH USERS, TO DETERMINE HARDWARE, SOFTWARE, OR SYSTEM FUNCTIONAL SPECIFICATIONS. 2. THE DESIGN, DEVELOPMENT, DOCUMENTATION, ANALYSIS, CREATION, TESTING, OR MODIFICATION OF COMPUTER SYSTEMS OR PROGRAMS, INCLUDING PROTOTYPES, BASED ON AND RELATED TO USER OR SYSTEM DESIGN SPECIFICATIONS. 3. THE CREATION, DESIGN, DOCUMENTATION, TESTING, OR MODIFICATION OF COMPUTER PROGRAMS RELATED TO MACHINE OPERATING SYSTEMS. 4. A COMBINATION OF THESE DUTIES, THE PERFORMANCE OF WHICH REQUIRES THE SAME LEVEL OF SKILLS. **MUST BE PAID A SALARY OR FEE OF AT LEAST $455 PER WEEK. ALSO CAN BE IF THEY ARE PAID AT LEAST $27.63 PER HOUR. PG 2-21

WHITE COLLAR EXEMPTION DUTIES (PROFESSIONAL EMPLOYEES)

1.THE EMPLOYEES PRIMARY DUTY MUST BE THE PERFORMANCE OF WORK: a. REQUIRING ADVANCED KNOWLEDGE IN A FIELD OF SCIENCE OR LEARNING CUSTOMARILY ACQUIRED BY A PROLONGED COURSE OF SPECIALIZED INTELLECTUAL INSTRUCTION (LEARNED PROFESSIONAL EXEMPTION; NURSES, ACCOUNTANTS, ETC): OR b. REQUIRING INVENTION, IMAGINATION, ORIGINALITY, OR TALENT IN A RECOGNIZED FIELD OF ARTISTIC OR CREATIVE ENDEAVOR. 2. THE EMPLOYEE MUST BE PAID AT LEAST $455 A WEEK ON A SALARY OR FEE BASIS, NOT INCLUDING BOARD, LODGING, OR OTHER FACILITIES. PG 2-15

THE WORKWEEK

A REGULARLY RECURRING PERIOD OF 168 HOURS (7 CONSECUTIVE 24-HOUR PERIODS). THE WORK WEEK DOES NOT HAVE TO BE THE SAME AS A CALENDAR WEEK OR BEGIN AT THE START OF A DAY. AS LONG AS EACH WORKWEEK REMAINS FIXED ONCE IT IS ESTABLISHED. PG 2-43

FLUCTUATING WORKWEEK

AN AGREEMENT BETWEEN EMPLOYER AND EMPLOYEE WHERE EMPLOYEES ARE PAID A FIXED WEEKLY SALARY EVEN THOUGH THEIR HOURS MAY VARY FROM WEEK TO WEEK BECAUSE OF THE AVAILABILITY OF MATERIALS,PRODUCTION SCHEDULES, ETC. FLSA ALLOWS SUCH ARRANGEMENTS, SO LONG AS THE EMPLOYEE RECEIVE ONE-HALF OF THE REGULAR HOURLY RATE FOR THE WEEK FOR EACH HOUR OF OVERTIME WORKED DURING THAT WEEK AND THE FIXED WEEKLY SALARY IS HIGH ENOUGH TO ENSURE THAT EVEN WHEN THE EMPLOYEES WORK A GREAT NUMBER OF HOURS, THIER STRAIGHT TIME PAY (FIXED WEEKLY SALARY) WILL NOT FALL BELOW THE MINIMUM HOURLY WAGE. PG 2-53

NON-DISCRETIONARY BONUSES

ANY CONTRACTUAL OR AGREE-UPON BONUS OR INCENTIVE RELATED TO PRODUCTION, EFFICIENCY, ATTENDANCE, QUALITY, OR SOME OTHER MEASURE OF PERFORMANCE MUST BE INCLUDED IN THE CALCULATION OF THE REGULAR RATE OF PAY FOR THE WORKWEEK DURING WHICH IT WAS EARNED. THE CALCULATION IS MADE BY ADDING THE BONUS TO THE EMPLOYEE'S OTHER REGULAR EARNINGS FOR THE WORKWEEK AND DIVIDING THE TOTAL BY THE NUMBER OF HOURS WORKED DURING THE WORK WEEK. PG 2-45

MCNAMARA-O'HARA SERVICE CONTRACT ACT (SERVICE CONTRACT ACT)

APPLIES TO EMPLOYERS THAT CONTRACT WITH THE FEDERAL GOVERNMENT TO PROVIDE SERVICES TO A FEDERAL AGENCY. IT APPLIES TO CONTRACTS OVER $2,500 AND REQUIRES THAT EMPLOYEES BE PAID PREVAILING MINIMUM WAGES AND FRINGE BENEFITS BASED ON WAGES AND BENEFITS FOR SIMILAR EMPLOYMENT IN THE LOCALITY OR ON A COLLECTIVE BARGAINING AGREEMENT, BUT NO LESS THAN THE MINIMUM WAGE UNDER THE FLSA. FRINGE BENEFITS NOT INCLUDED IN THE REGULAR RATE UNDER THE FLSA ARE ALSO NOT INCLUDED IN THE BASIC RATE FOR OVERTIME PURPOSES UNDER THIS CONTRACT. PG 2-73

I-9

Documents prove identity and/or work authorization All newly hired employees must show evidence of their identity and right to work in the U.S. They can do this by presenting any of a number of unexpired documents listed on Form I-9 (one from List A, or one each from List B and List C). List A - Documents proving both identity and work authorization 1. U.S. Passport or U.S. Passport Card 2. Permanent Resident Card or Alien Registration Receipt Card (Form I-151) (green card) 3. Foreign passport with a temporary I-551 stamp or temporary I-551 printed notation on a machine-readable immigrant visa 4. Employment Authorization Document card that contains a photograph, USCIS Form I-766 5. Foreign passport with an Arrival-Departure Record (Form I-94 or I-94A) bearing the same name as the passport and containing an endorsement of the alien's nonimmigrant status. 6. Passport from the Federated States of Micronesia or the Republic of the Marshall Islands with Form I-94 or I-94A indicating nonimmigrant admission List B - Documents Proving Identity Only 1. Driver's license or ID card issued by a state or U.S. possession with a photograph or identifying information 2. ID card issued by a federal state, or local government agency or entity, with a photograph or identifying information 3. School ID card with a photograph 4. Voter's registration card 5. U.S. military card or draft record 6. Military dependent's ID card 7. U.S. Coast Guard Merchant Mariner Card 8. Native American tribal document 9. Canadian driver's license 10. For persons under age 18 who cannot present one of the above documents: a) School record or report card b) Clinic, doctor, or hospital record c) Day care or nursery school record Section 1 - The Employer-Employee Relationship List C - Documents Proving Work Authorization Only 1. U.S. social security account number card issued by SSA, other than one that says on its face that the card does not authorize employment in the U.S. 2. Certification of Birth issued by the U. S. Department of State (Form FS-545) 3. Certification of Report of Birth issued by the U.S. Department of State (Form DS-1350) 4. Original or certified copy of a birth certificate with an official seal issued by a state or local government agency or U.S. possession 5. Native American tribal document 6. U.S. Citizen ID Card (Form I-197) 7. ID Card for Use of Resident Citizen in the U.S. (Form I-179) 8. Employment authorization document issued by DHS Note: Specific documents cannot be demanded by the employer. An employee can provide any document(s) on the lists to prove identity and work authorization. 1-25

MINORS UNDER AGE 14 (child labor restrictions)

EMPLOYMENT IS GENERALLY PROHIBITED, UNLESS MINOR IS WORKING FOR A PARENT, AND EVEN THOSE JOBS CANNOT BE HAZARDOUS OR IN MINING OR MANUFACTURING. PG 2-69

WHITE COLLAR EXEMPTION

EXEMPT EMPLOYEES SALARY OR FEE: $455 A WEEK BONA FIED ADMINISTRATIVE, EXECUTIVE, PROFESSIONAL, AND COMPUTER-RELATED PROFESSIONAL EMPLOYEES, AS WELL AS OUTSIDE SALES EMPLOYEES, ARE EXEMPT "WHITE COLLAR" EMPLOYEES UNDER THE FLSA. EMPLOYEES UNDER THIS EXEMPTION ARE NOT COVERED BY THE MINIMUM WAGE, OVERTIME, AND CERTAIN RECORD KEEPING REQUIREMENTS BY LAW. THE TEST FOR DETERMINING EXEMPT STATUS MEASURE THE ACTUAL DUTIES AND RESPONSIBILITIES OF THE EMPLOYEE, NOT THE JOB TITLE. PG 2-5

8/80 RULE

EXEMPTION FOR HOSPITALS AND NURSING HOMES: THE LAW ALLOWS SUCH EMPLOYERS TO USE A 14-DAY PERIOD RATHER THAN THE WORKWEEK FOR DETERMINING OVERTIME COMPENSATION. THE EMPLOYER MUST PAY EMPLOYEES COVERED BY THE AGREEMENT OR UNDERSTANDING AT LEAST 1.5 TIMES THIER REGULAR RATE OF PAY FOR ALL HOURS WORKED OVER 8 IN A DAY OR 80 IN THE 14-DAY PERIOD, WHICHEVER WOULD RESULT IN HIGHER PAY FOR THE EMPLOYEE.

Voluntary Worker Classification Settlement Program MISCLASSIFICATION OF WORKERS

Employers can voluntarily reclassify workers as employees for federal employment tax purposes and obtain relief similar to that obtained in the Classification Settlement Program. Some other noteworthy items related to the IRS enforcement efforts are: The IRS conducts 6,000 random employment tax audits over three years The IRS shares information with state agencies to increase employer compliance Reclassification can mean retroactive benefits as well Employers can't enforce proper classification by competitors on their own

CHILD LABOR RESTRICTIONS

FLSA PROHIBITS THE EMPLOYMENT OF ANY "OPPRESSIVE CHILD LABOR" IN CONNECTION WITH INTERSTATE COMMERCE. PROHIBITS THE DELIVERY OR SHIPPING OF ANY GOODS PRODUCED BY AN ESTABLISHMENT THAT USED OPPRESSIVE CHILD LABOR WITH IN 30 DAYS OF THIER INITIAL SHIPMENT. "OPPRESSIVE CHILD LABOR": THE EMPLOYMENT OF ANY CHILD UNDER AGE OF 18 IN VIOLATION OF THE CHILD LABOR RESTRICTIONS OF THE FLSA AND REGULATIONS ISSUED UNDER IT. GREATLY RELAXED FOR AGRICULTURAL OCCUPATIONS, ACTORS, MOVIES, AND TELEVISION. PG 2-69

OVERTIME REQUIREMENTS

GENERAL RULE UNDER THE FLSA IS THAT ALL COVERED EMPLOYEES MUST BE PAID AT LEAST 1.5 TIMES THEIR "REGULAR RATE OF PAY" FOR ALL HOURS PHYSICALLY WORKED OVER 40 HOURS IN A WORKWEEK. FOR TIPPED EMPLOYEES, THE EMPLOYER CANNOT TAKE AN INCREASED TIP CREDIT FOR OVERTIME HOURS WORKED. -- FOR EXAMPLE, IF THE EMPLOYER IS TAKING THE FULL TIP CREDIT OF $5.12 PER HOUR AND PAYING THE EMPLOYEE A CASH WAGE OF 2.13 PER HOUR, THE CASH WAGE FOR OVER TIME HOURS IS $5.76 [($7.25 X 1.5) - $5.12 = $5.76] WHEN A STATE OR LOCALITY HAS A HIGHER MINIMUM WAGE THAN THE FLSA, THE HIGHER WAGE MUST BE USED IN DETERMINING THE EMPLOYEE'S OVERTIME RATE, BUT THE FLSA TIP CREDIT MAXIMUM IS STILL APPLIED IF THE STATE TIP CREDIT IS GREATER. PG 2-42

MEAL AND REST PERIODS (compensable time)

GENERALLY, THE MEAL PERIOD MUST BE AT LEAST 30 MINUTES LONG TO BE CONSIDERED NONWORK TIME, ALTHOUGH THE WAGE AND HOUR DIVISION AND THE COURTS HAVE ALLOWED SHORTER TIME PERIODS WHERE THE EMPLOYEES ARE RELIEVED OF ALL DUTIES OR SPECIAL CONDITIONS HAVE PREVAILED. EMPLOYER DOES NOT HAVE TO ALLOW THE EMPLOYEE TO LEAVE THE EMPLOYER'S PREMISES, SO LONG AS THE EMPLOYEE IS FREE TO PURSUE PERSONAL INTEREST RATHER THAN WORK DURING THE MEAL PERIOD. PG 2-60

WALSH-HEALEY PUBLIC CONTRACTS ACT

GOVERNS THE WAGES AND HOURS OF EMPLOYEES OF MANUFACTURERS AND DEALERS FURNISHING THE FEDERAL GOVERNMENT WITH MATERIALS, SUPPLIES, AND EQUIPMENT UNDER CONTRACTS EXCEEDING $10,000. THE ACT REQUIRES COVERED EMPLOYEES TO BE PAID 1.5 TIMES THIER BASIC (REGULAR) RATE OF PAY FOR ALL HOURS PHYSICALLY WORKED OVER 40 IN A WORKWEEK. THEY ALSO MUST BE PAID THE PREVAILING MINIMUM WAGE FOR WORK IN THE SAME OR SIMILAR INDUSTRIES IN THE LOCALITY WHERE THE GOODS ARE MANUFACTURED OR FURNISHED. **EMPLOYERS MAY HAVE TO PAY DAMAGES FOR BREACH OF CONTRACT AND CAN BE BARRED FROM RECEIVING A GOVERNMENT CONTRACT FOR UP TO THREE YEARS PG 2-72

MEAL AND REST PERIOD FACTORS (compensable time)

HOW TO DETERMINE WHETHER THE MEAL PERIOD IS SPENT FOR TH EMPLOYER'S BENEFIT OR THE EMPLOYEES BENEFIT FACTORS: *LIMITATIONS AND RESTRICTIONS PLACED ON THE EMPLOYEE *EXTENT TO WHICH THE RESTRICTIONS BENEFIT THE EMPLOYER *DUTIES FOR WHICH THE EMPLOYEE IS HELD RESPONSIBLE DURING THE MEAL PERIOD *HOW OFTEN MEAL PERIODS ARE INTERRUPTED *WHETHER THE EMPLOYEE IS ALLOWED TO RESUME AN INTERRUPTED MEAL BREAK. PG 2-60

PUBLIC SECTOR COMPENSATORY TIME OFF INSTEAD OF CASH

IF CERTAIN CONDITIONS ARE MET, STATE AND LOCAL GOVERNMENT EMPLOYERS CAN GIVE THIER NONEXEMPT EMPLOYEES AT LEAST 1.5 HOURS OF PAID COMPENSATORY TIME OFF FOR EACH HOUR OF OVERTIME WORKED RATHER THAN PAYING A PREMIUM RATE FOR THE OVERTIME. *AGREEMENT BEFOER WORK: THERE MUST BE AN AGREEMENT BETWEEN THE EMPLOYER AND THE EMPLOYEES OF THIER COLLECTIVE BARGAINING REPRESENTATIVE BEFORE ANY WORK IS DONE. *REASONABLE PERIOD OF TIME TO TAKE TIME OFF *CAN BE REQUIRED TO USE COMP TIME

PAYMENTS IN A FORM OTHER THAN CASH

IF PAYMENTS TO AN EMPLOYEE ARE MADE IN THE FORM OF GOODS OR SERVICES RATHER THAN CASH, THE REASONABLE COST TO THE EMPLOYER OR THE FAIR MARKET VALUE OF THE GOODS OR SERVICES MUST BE INCLUDED WHEN DETERMINING THE REGULAR RATE OF PAY PG 2-47

UNAUTHORIZED OVERTIME (compensable time)

IF THE EMPLOYER ALLOWS AN EMPLOYEE TO DO WORK, THE TIME SPENT WORKING IS COMPENSABLE TIME AND MUST BE CONSIDERED WHEN CALCULATING OVERTIME DUE. THIS IS TRUE EVEN WHEN THE EMPLOYER DOES NOT ASK THE EMPLOYEE TO DO WORK OR IN GENERAL FORBIDS SUCH WORK THAT RESULTS IN OVERTIME. MERELY HAVING A RULE AGAINST UNAUTHORIZED WORK IS NOT ENOUGH. THE RULE MUST BE CONSISTENTLY ENFORCED (E.G., THROUGH DISCIPLINARY ACTION) WHENEVER POSSIBLE. PG 2-59

MINIMUM WAGE REQUIREMENTS

IN ANY WORKWEEK IN WHICH EMPLOYEES DO SOME WORK THAT IS COVERED BY THE FLSA AND SOME THAT IS NOT COVERED, THEY MUST BE PAID AT LEAST THE MINIMUM WAGE FOR ALL WORK DONE DURING THAT WORK WEEK. THE TWO TYPES OF WORK CANNOT BE SEGREGATED DURING TH WORK WEEK. EMPLOYEES MAY BE PAID ON A PIECEWORK, SALARY, OR COMMISSION BASIS, SO LONG AS THE WAGES AT LEAST EQUAL THE MINIMUM HOURLY RATE *DETERMINATIONS BASED ON WORKWEEK: IN DETERMINATION WHETHER AN EMPLOYEE HAS BEEN PAID MINIMUM WAGE, THE WAGE AND HOUR DIVISION USES THE WORKWEEK AS A BASIC UNIT OF TIME. (SOME CASES THE PAY PERIOD IS OK PER THE DOL). PG 2-36

WHITE COLLAR EXEMPTION DUTIES (ADMINISTRATIVE EMPLOYEES)

JOB TITLES DO NOT DETERMINE EXEMPTION STATUS 1. THE EMPLOYEE'S PRIMARY DUTY MUST BE THE PERFORMANCE OF OFFICE OR NON- MANUAL WORK DIRECTLY RELATED TO THE MANAGEMENT OR GENERAL BUSINESS OPERATIONS OF THE EMPLOYER OR THE EMPLOYERS CUSTOMERS. 2. THE EMPLOYEE MUST BE PAID AT LEAST $455 A WEEK ON A SALARY OR FEE BASIS, NOT INCLUDING BOARD, LODGING, OR OTHER FACILITIES. 3. THE EMPLOYEE'S PRIMARY DUTY MUST INCLUDE THE EXERCISE OF DISCRETION AND INDEPENDENT JUDGMENT REGARDING MATTERS OF SIGNIFICANCE. PG 2-9

MINORS UNDER AGE 18 (child labor restrictions)

NO MINOR UNDER AGE 18 CAN WORK IN A JOB THAT HAS BEEN DECLARED HAZARDOUS BY THE WAGE AND HOUR DIVISION. SOME MINORS AGE 16 AND 17 ARE EXEMPT FROM THESE RESTRICTIONS UNDER CERTAIN STUDENT LEARNER OR APPRENTICE PROGRAMS. PG 2-69

COPELAND 'ANTI-KICKBACK' ACT

ONE PORTION OF THIS ACT IMPOSES FINES AND JAIL TIME ON ANYONE WHO INDUCES ANY EMPLOYEE WORKING ON A FEDERALLY FINANCED CONSTRUCTION, BUILDING, OR PUBLIC WORKS PROJECT TO GIVE UP OR "KICK BACK" ANY PART OF THE EMPLOYEE'S COMPENSATION TO WICH THE EMPLOYEE IS ENTITLED UNDER A FEDERAL CONTRACT. ANOTHER PORTION REQUIRES THE SECRETARY OF LABOR TO ISSUE REGULATIONS FOR FEDERAL CONSTRUCTION AND PUBLIC WORKS CONTRACTORS AND SUBCONTRACTORS THAT REQUIRE THEM TO FURNISH A PAY STATEMENT TO THIER EMPLOYEES EACH WEEK. PG 2-73

Proof of the Right to Work in the U.S. *The Immigration Reform and Control Act of 1986 (IRCA)

Once an employer hires a worker as an employee, the employee must prove his or her identity and right to work in the United States. The Immigration Reform and Control Act of 1986 (IRCA) makes it illegal for an employer to knowingly hire or continue to employ an unauthorized worker. Employers can protect themselves by: Having employees fill out Section 1 of Form I-9 on their first day of employment. Making sure employees provide original documentary evidence of their identify and eligibility to work within 3 business days of the date employment begin Physically examine the documents to determine if they appear genuine within 3 business days of the date employment begins. Properly completing the employer's portion of Form I-9 within 3 business days of the date of hire. Person who examines documents must be the same person who signs the employer's portion of Form I-9 Keeping completed I-9 forms for at least 3 years from the date of hire or 1 year from the date of termination, whichever is longer Presenting Form I-9 on request within 3 business days PG 1-28

ON-CALL PAY

PAY RECEIVED FOR COMPENSABLE ON-CALL TIME MUST BE INCLUDED IN THE EMPLOYEE'S TOTAL EARNINGS WHEN COMPUTING THE REGULAR RATE OF PAY. PG 2-47

CONTRACT WORK HOURS AND SAFETY STANDARDS ACT

REQUIRES CONTRACTORS WITH THE FEDERAL GOVERNMENT (NOT ALREADY COVERED BY WALSH-HEALEY) TO PAY EMPLOYEES OVERTIME OF AT LEAST 1.5 TIMES THIER "BASIC RATE" FOR HOURS WORKED OVER 40 IN A WORKWEEK. (OVERTIME MUST BE PAID ONLY FOR WORK COVERED BY THE CONTRACT (WALSH-HEALEY APPLIES TO BOTH COVERED AND UNCOVERED WORK). THE LAW APPLIES TO CONTRACTS OVER $100,000. THE BASIC RATE IS THE SAME AS THE EMPLOYEE'S REGULAR RATE UNDER THE FLSA. VIOLATORS ARE SUBJECT TO LIQUIDATED DAMAGES OF $10 PER DAY FOR EACH EMPLOYEE WORKING IN VIOLATION OF THE ACT. SUCH AMOUNTS CAN BE WITHHELD FROM AMOUNTS OWED THE CONTRACTOR UNDER ITS CONTRACT WITH THE FEDERAL GOVERNMENT. PG 2-73

WHITE COLLAR EXEMPTION CLASSIFICATIONS

THE EXEMPT/NONEXEMPT STATUS OF AN EMPLOYEE IS DETERMINED BY THE EMPLOYER ONLY ON THE BASIS OF WHETHER THE EMPLOYEE'S STATUS AND DUTIES MEET THE REQUIREMENTS ESTABLISHED BY THE DOL'S REGULATIONS DETERMINATION OF DUTIES DEPENDS ON: -- THE EMPLOYEE'S PRIMARY DUTY -- WHETHER A MINIMUM SALARY REQUIREMENT IS MET -- THE EMPLOYEE'S LEVEL OF DISCRETIONARY AUTHORITY. PG 2-5

REGULAR RATE OF PAY COMPONENTS

THE REGULAR RATE OF PAY IS AN HOURLY PAY RATE DETERMINED BY DIVIDING THE TOTAL REGULAR PAY ACTUALLY EARNED FOR THE WORKWEEK BY THE TOTAL NUMBER OF HOURS WORKED. THE FOLLOWING PAYMENTS, IN ADDITION TO HOURLY OR CONTRACT WAGES, MUST BE CONSIDERED WHEN CALCULATING AN EMPLOYEE'S REGULAR RATE OF PAY: 1. SHIFT DIFFERENTIAL 2. NON-DISCRETIONARY BONUSES 3. PAYMENTS IN A FORM OTHER THAN CASH 4. RETROACTIVE PAY 5. ON-CALL PAY 6. SUPPLEMENTAL DISABILITY PAYMENTS. 7. SICK LEAVE BUYBACK PAYMENTS. 8. PER DIEM PAY. PG 2-45 - 2-47

RETROACTIVE PAY

THIS IS AWARDED FOR A PERIOD DURING WHICH OVERTIME HOURS WERE WORKED, THE REGULAR RATE OF PAY IS ALSO INCREASED FOR THAT PERIOD. THIS IS TRUE WHETHER THE RETROACTIVE PAY IS IN THE FORM OF AN HOURLY INCREASE OR A LUMP-SUM PAYMENT THAT MUST BE ALLOCATED TO THE WEEKS AND HOURS WORKED IN THE SAME MANNER AS A NON-DISCRETIONARY BONUS. PG 2-47

WAITING TIME/PERIODS (compensable time)

TIME SPENT "ENGAGED TO BE WAITING" IS COMPENSABLE WORKTIME BECAUSE IT IS USUALLY SHORT, SPENT ON THE EMPLOYERS PREMISES, AND INSUFFICIENT FOR THE EMPLOYEE TO USE FOR HIS OR HER OWN PURPOSES. SUCH TIME INCLUDES: *WAITING FOR MINOR REPAIRS SO A MACHINE WILL BE OPERABLE *WAITING ON ASSIGNMENTS *WAITING FORA CUSTOMER TO ARRIVE. CONVERSELY "WAITING TO BE ENGAGED" IS NOT WORKTIME BECAUSE THE EMPLOYEE IS FREED FROM ALL DUTIES AND RESPONSIBILITIES FOR A DEFINITE PERIOD OF TIME AND HAS ENOUGH TIME TO PURSUE PERSONAL BUSINESS BEFORE RETURNING TO WORK. PG 2-64

Classification Settlement Program for employers under examination MISCLASSIFICATION OF WORKERS

This IRS program, called the Worker Classification Settlement Program (CSP), allows examiners and businesses to resolve worker classification cases as early in the enforcement process as possible. If the examiner finds that the business is wrongfully treating employees as independent contractors, one of two CSP settlement offers can be made. If the business has met the reporting consistency requirement, but has no reasonable basis for treating its workers as independent contractors, or has been inconsistent, the offer will be a full employment tax assessment If the business has met the reporting consistency requirement, and can reasonably argue that it met the reasonable basis and consistency of treatment tests, the offer will be an assessment of 25% of the employment tax liability for the audit year.

EFFECT OF TIP CREDIT ON MINIMUM WAGE

UNDER THE FLSA, EMPLOYERS ARE REQUIRED TO PAY "TIPPED EMPLOYEES" ONLY $2.13 PER HOURS IN WAGES, SO LONG AS THE EMPLOYEE'S TIPS ARE ENOUGH TO MAKE UP THE REMAINDER OF THE MINIMUM HOURLY WAGE THEN IN EFFECT ($7.25 PER HOUR). THIS MEANS THAT THE EMPLOYER CAN TAKE A "TIP CREDIT" OF UP TO $5.12 ($7.25 - $2.13) PG 2-39

WORK TIME ROUNDING PRACTICES

WAGE AND HOUR DIVISION HAS ACCEPTED THE PRACTICE OF ROUNDING OFF AN EMPLOYEE'S WORK TIME, ESPECIALLY WHERE TIME CARDS ARE USED, TO THE NEAREST TENTH (6 MINUTES) OR QUARTER (15 MINUTES) OF AN HOUR. THE PRACTICE MUST BE USED CONSISTENTLY, HOWEVER, SO THAT EMPLOYEES ARE COMPENSATED, OVER A PERIOD OF TIME, FOR ALL TIME ACTUALLY WORKED.

CHANGING WORK WEEK

WHILE FLSA ENCOURAGES EMPLOYERS TO ESTABLISH PERMANENT WORKWEEKS, A CHANGE MAY BE NECESSARY TO MEET CHANGING BUSINESS NEEDS. BUT IF A CHANGE IS MADE, THE EMPLOYER MUST BE CAREFUL WHEN DETERMINING HOURS WORKED WHERE THE NEW AND OLD WORKWEEKS OVERLAP. STEPS: 1.ADD THE OVERLAPPING DAYS TO THE OLD WORKWEEK 2. CALCULATE THE OVERTIME HOURS AND PAY DUE FOR THE OLD AND NEW WORKWEEKS ON THIS BASIS. 3. ADD THE OVERLAPPING DAYS TO THE NEW WORK WEEK. 4. CALCULATE THE OVERTIME HOURS AND PAY DUE FOR THE OLD AND NEW WORKWEEKS ON THIS BASIS. 5. PAY THE EMPLOYEE THE GREATER AMOUNT FROM STEP 2 OR STEP 4.