Chapter 2

repeated violation

established when employer has a prior finding against it by labor dept, court or another tribunal w/ authority to make such a finding. Prior finding could be est. if an employer has failed to file an appeal or if an appeal is concluded. -multi-establishment employer can be fine for violations at different establishments.

shift premium

extra pay allowanced made to employee who work on a shift other than a regular day shift

base rate

hourly amount paid for a job performed

outside sales exemption test

primary duty: person is employed for the purpose of customarily and regluary working away from the employer's place of business in one of the following capacities:making sales, obtaining orders or contracts -there is no salary test for outside salespeople

c. Exceptions-For exempt employees

several exceptions i. Computer professionals earning more than $27.63/hr can be classified as exempt under salary basis tests. ii. The following have been exempted from salary basis tests: 1. Outside sales 2. Licensed or certified doctors 3. Lawyers 4. Teachers iii. Exception to the full weekly salary requirement occurs when an employee must miss part of a day for medical reasons covered by the family and medical leave act. Employer can dock the exempt employee for this partial absence without jeopardizing the employee's salary basis.

Salary level test: c. Exceptions

several professions do not have a salary level test requirement i. Outside sales ii. Licensed/certified doctors iii. Lawyers iv. Teachers

(Common flsa violations) training time

time spent in training during the regular hours of work. if any job connected work is produced during training, or training is considered a requirement for the ongoing employment relationship the hours in training and some amount of study time must be considered hours worked.

(Common flsa violations) on-call time

when employer requires an employee to be on call and the employee is not free to pursue the majority of his/her normal non work activities. on call time is considered hours worked.

record keeping requirement

-employers must keep records on wage, hours and other terms of info for all their employees -no particular form required with regard to exempt employees but the following records must be maintain for non exempt employee: -name, address, dob if under 19 -sex and occupation -hour and day when workweek begins -regular hourly pay rate for any week when overtime is worked -hours worked each workday adn total hours worked each week -total daily/weekly straigh time earning -total ot pay for workweek -deductions or addition to wages total wages paid each pay period -date of payment and pay period covered -Must be kept 3 years

What prompts an audit

1. employee personal complaints-most common 2. random audit 3. DOL targets certain geographic regions of the country

Child labor rules

1. objective-protect education, health, well-being -adult worker priority

Highly compensated employee qualifying

If a person qualifies for the exemption and at year end will not meet the 100k requirement, the employer can either 1. pay employee the overtime worked during the year 2. allocate a bonus in the amount that will raise the employee to 100k. -100k may be prorated if employee does not work the full year -employer may choose any 52-week period to test total omp.

piece rate

direct performance payment based on production by an individual worker

Salary Basis Test**Know improper deductions from salary. a. Proper deductions from salary

i. Absence from work for one or more full days for personal reasons other than sickness and disability ii. Absence from work for one or more full days due to sickness or disability if the deductions are made under a bona fide plan, policy or practice. iii. To offset any amounts received as payment for jury fees, witness feees or military pay iv. Penalties imposed in good faith for violating safety rules of "major significance" v. Unpaid disciplinary suspension of one or more full days imposed in good faith for violations of workplace conduct rules vi. Proportionate part of an employee's full salary may be paid for time actually worked in the first and last weeks of employment

FLSA-Purpose

i. Est. minimum wage rate ii. Eliminate detrimental working conditions iii. Protect the educational opportunities of youth

(Common flsa violations) travel time

nonexempt employee on company business must be paid w/in the framework of the FLSA provisions.

Discretionary bonus

paid to employee w/o any prior communication or agreements. they do not need to be included when calculating OT

FLSA-Fair labor standards act

- primary objective in 1938 was worker's rights. --the principal federal statute that influences the design of direct compensation programs. e. Enforcing agency-US DOL, administered by wage and hour division

Child labor rules restrictions

-Age -14 to 15- certain nonhazardous jobs in certain places -16 to 17-may perform nonhazardous jobs -18 and up-hazard ban lifted -hours of work -14 and 15 yo are limited to working 3 hours on a school day. 18 hours a school week. 8 hours on non school day. 40 hours non school week -16 and 17-no hour limit -type of employer -14 and 15-may work in the retail and service industries but no hazardous work. may not work in manufacturing, mining -type of job-youth under age of 18 may not perform any non farm work identified as hazardous(driving motor vehicle, machine, roofing) by sec. of labor

(Common flsa violations)

-Comp time off -failure to pay unathorized hours worked -bonus pay exclusion from reg hourly rate -failure to pay recorded hours - innaccurate records

Bonus exclusion-payments not included in regular rates of pay for OT calc

-Discretionary bonus -vacation, holiday, sick -expense reimbursement -contribution to bona-fied profit sharing plan/trust or thrift/saving plan

Computer employees

-Effective march 29, 1991 congress amended their exemption. -special exemption was previously incorporated in the profession exemption test -titles noted in the language of the ammendment include: Computer system analyst, computer programmer, software engineers or similar -qualifying wage: hourly-regular rate of payment must exceed 6.5 time federal min wage at time amendment was enacted=27.625/hr salaried employee=23,660/yr

Rest and meal period

-None required under flsa -rest periods of 5-20 minutes can count as hours worked -bona fide meal periods of 30 min or more are not hours of work.

"On call" time-Engaged to wait

-all hours the employee is "engaged to wait" are considered hours worked -employee required to stay on company premises or close and not free to pursue own interests -person hired to do nothing, or wait for something is still working

"On call" time-waiting to be engaged

-employee is on call must be able to use time for own interests -can require employee to be accessible by phone -anytime spent responding to calls is hours worked.

travel time example

-employee regular time is 8-5 m-f -same-day travel to another city that starts before or after the employee reglular work hour or ends after is generally compensable -travel on a day not normally work but during normal working hours is generally compensable

Rate of pay-regular

-employees average hourly earnings for the workweek. Including comp in the form of commissions, shift premiums and nondiscretionary bonuses.

nonexempt employee

-employees not meeting criteria for exemption. all of the following apply: Hours of work: -rest and meal periods -training time -on call time -travel time -remedial education rate of pay: -regular -Overtime -banked hour (comp time) worker economic opportunity act child labor rules record keeping requirements

Violation and penalties continued

-employers are also subject to criminal prosecution by the justice dept for wilful violation for the flsa -good faith defense-an employer may escape back pay or liquidated damages liability by showing that it has good faith basis bases on other sources for its belief that it was not violating the flsa -statute of limitations-actions to enforce non willful violations must be commenced w/in 2 years of the cause of the actions. Actions to enforce willful violations must be w/in 3 years.

remedial education exemption

-in 89 congress passed an amendment to increase min. wage --this also included a special provision to remedial education --under the amendment an employer can enroll an employee in remedial education of up to 10 hours per week w/o OT pay ::limited to employees lacking high school diploma or employees whose reading or basic skills are at or below 8th grade level.

Lectures, meeting and training programs

-most misunderstood -Attendance is work time if: -it is required by employer. -employee is given to understand that present working conditions or the continuance of employment would be adversley affected by nonattendance. -attendance is not work time if all of the following are met: -attendance is outside working hours -voluntary -not related to job directly -no productive work done

remedial education exemption-following must be met to qualify for OT pay exemption

-must be designed to give employee basic skills at 8th grade level or to fulfill requirement for a HS diploma or GED -instruction must be conducted during set time periods away from employee's regular work station, but must not include job specific training -employee must be paid up to 10 hours at straight time for the training time for each workweek

Executive standard test

-must meet the test primary duty: management of the enterprisr or a recognized department or subdivision other duties: -direct work of at least 2 or more FTEmployees -have authority to hire/fire or recommend hiring/firing or have recommendation on these and other actions affeting employees given particular weight

worker economic opportunity act provisions

-terms of the plan must be communicated to employees -employees given option not to participate -stock option and SARs cannon be granted at more than 15% discount -Employees must hold option or right for at least six months -stock purchsase plans only qulaify if they are tax qulaifed or substantially similar to tax-qualified plan

Travel time

-time spent by nonexempt employees in travel from domicile to workplace is generally not hours worked -if employee makes a trip by operating a vehicle on employers behalf is hours worked -any other travel required by employer during normal working hours is usually considered hours worked. even if it occurs on the employee's normal day off. ex. flight on sunday durning normal 8-5 hours would be time worked. after 5 would not be time worked.

FLSA does not require

1. pay for time not worked-vacation, holiday, severance, sick, meal period, rest period greater than 20 min. 2. time clocks to record hours 3. premium pay for sat, sun, holiday, or 6th or 7th day work. or hours worked in excess of 8 per day unless employer chooses 8/80 option 4. differentiation between exempt and non exempt employees in any other way than min way payments, overtime premiums, and records 5. pay raises or fringe benefits 6. pay stubs or w-2 7. limit on number of hours in a day or days in a week an employee may be required to scheduled to work is at least 16 yo.

Public sector employees and banked hours

1985-amendement was passed by congress in response to san antonio to ease the burden of FLSA compliance to state and local gov. -state and local gov can sub comp time rather than pay for the time in the week worked -banked time is 1.5x -max hours allowed for banked time-480 hours for public safetly, seasonal and emergency workers. 240 hours for all other -paying banked time is an obligation. no use it or lose it -paid out at employee current rate, not rate paid at time ot was worked.

worker economic opportunity act

Amendment signed into law may 18, 2000. -allows employers to exclude from OT calc the profits or income earned from stock plans, stock appreciation rights (SAR) and employee stock purchase plans -Coverage:same as flsa -enfored by US DOL(wage and Hour division)

(Common flsa violations) improper payment of break time

Any break 5-20 min must be considered hours worked. greater than 20 are not worked. bona fide meal periods of 30+ min are not hours worked

Employee Categories

FLSA divides all employees into the two major categories of exempt and nonexempt. DOL position is all jobs are non-exempt until proven otherwise.

Overtime

FLSA requires employers pay nonexempt employees 1.5x rate of reg pay for all hours over 40 each workweek-168 hours over 7-24 hour periods -special cases, such as hospital or nursing home, you can use over 80 hours in 2 weeks. "8 in 80" allows more flexible scheduling -workweek can being on any day of the week and any hour -workweek-168 hours over 7-24 hour periods -state law could require daily OT -regular rate includes supplementary earning such as commissions bonus or shift premium

Salary level test: Bright-light exemption/highly compensated employees

If an employee earns at least $100,000 per year and performs nonmanual work, the employee is a "highly-compensated employee" and can be categorized as exempt, provided he or she performs at least one exempt duty as defined by the primary duty test.

(Common flsa violations) missclassification of employees as exmept

Labor dept. will confirm what criteria the employer used to est. exemption. Looking for attempts by employers to avoid OT penalty

Learned Professional exemption standard test

Min Salary: 455/week exclusive of board, lodging or other facilities. Primary duty: performing work requiring advanced knowledge, defined as work that is predominantly intellectual in character and which includes work requiring the consistent excercise of discretion and independent judgement. Advanced knowledge of an advanced type must be in a field of science or learning customarily acquired by a prolonged course of specialized individual instruction Programmer and systems analysts do not qualify under this test but may under another.

creative professional exemption test

Primary duty: performing work requiring invention, imagination, originality or talent in a recognized field or artistic endeavor. Min salary: 455/week

Exemption categories

Tests for: 1. executive 2. administrative 3. professional 3.a learned/creative 4. computer 5. outside sales Criteria: 1. primary duties 2. salary requirement except outside sales

violation and penalties

The wage and hour division of the DOL is responsible for enforcing the FLSA. the law provided teh authorized rep. of the wage and hour division may investigate and gather data regarding the wages, hours and other conditions of employment. -employers may not retaliate against employees if they exercise their flsa rights -employers who violate the min wage and OT provisions of the FLSA are subject to:-civil suit by DOL to collect unpaid wages and OT due employees plus and equal amount in liquidated damages. -Civil suit by dol to enjoin further violations. -extreme cases the dol may go to court to issue an injunctino against employer and temporarily close down its operation

Highly Compensated employee salary

This $100,000 per year salary must include at least $455 per week in base salary, however the remaining amount would be considered "total annual compensation." Total annual compensation can include commissions, nondiscretionary bonus and other nondiscretionary compensation. Total annual compensation does not include benefits [e.g., 401(k) contributions, payment for medical insurance].

Salary level test:

a. DOL has est. a salary level of $455/week (23,660/yr). Any employee earning less than $455/week will not pass the salary level test, therefore nonexempt. b. For EE in Puerto Rico and Virgin Islands the salary levels match the US. For American Somoa, the lower level is $380/week (19,760/yr)

Minimum wages

a. Several points in time for minimum wages are given to show progression i. From 1938 .25/hr to 2009 7.25/hr b. Basis for pay does not affect the minimum wage law (hour, piecework or salary). Employees must earn at least minimum wage regardless of method of pay. c. State or local law may be higher.

Exemption test-salary basis test

a. To be considered exempt, an employee must be paid on a salary basis, as distinguished from an hourly basis. b. Under FLSA, and employee is paid on a salary basis if "the employee regularly receives each pay period. (predetermined amount constituting all or part of the variations in the quality or quantity of work performed. Employee must receive the full salary for any week in which he or she performs any work without regard to number of days/hours worked.

Hours of work

all time which the employer requires, suffers or permits the employee to be on duty at a prescribed workplace or an employer's premises. all hours worked must be paid to nonexempt employees.

special consideration for computer employee

hourly paid employee making less than qualifying wage(27.625/hr) are automatically nonexempt. salaried employees paid at salary requirement (455/wk) may still qualify for an exemption under the exec. or admin test.

FLSA-coverage

i. Employers who are involved in interstate of foreign commerce are covered by the FLSA. FLSA coverage is broadly interpreted and includes nearly all employers of all sizes ii. 2 amendments (1966 and 1974) expanded coverage to include 90% of the American labor force.

Exempt employees a.(Exempt from OT, minimum wage, certain record keeping requirements)

i. Executives (Officer, manager, supervisor) ii. Administrative iii. Professional (Learned, creative) iv. Computer v. Outside Sales

Exemption Test: Safe Harbor

i. Exemptions will not be lost if: 1. Employer has a clearly communicated policy prohibiting improper deductions including a complaint mechanism 2. Reimbursement is made to the employee for any improper deduction. 3. Employer makes a good faith commitment to comply with the regulations in the future. ii. If the employer engages in willful violation of the policy by continuing to make improper deductions after receiving complaints, the safe harbor option will not be available. iii. Clearly communicated policy must be included in the employee handbook, and/or posted on the intranet, and/or distributed as a handout during an orientation meeting.

Salary Basis Test**Know improper deductions from salary. b. Improper deductions from salary

i. Isolated or inadvertent improper deductions will not result in the loss of exempt status if the employer reimburses the employee ii. An actual practice or making improper deductions from salary will result in the loss of the exemption: 1. During the time period in which improper deductions were made 2. For employees in the same job classification 3. For employees working for the same manager responsible for the actual improper deductions: possibly working in same geographic region. iii. Facotrs that could suggest an actual practice are: 1. # of improper deductions compared to the number of employee infractions warranting discipline. 2. Time period of the improper deductions 3. Number and geographic location 4. Clearly communicated policy permitting or prohibiting improper deductions

FLSA-provisions

i. Minimum wage ii. Employment categories (exempt/nonexempt) iii. Hours of work iv. Rate of pay (overtime, banked hours) v. Worker economic opportunity act vi. Child labor restrictions vii. Record-keeping requirements viii. Violations and penalties

Nonexempt employees

i.Paraprofessionals ii. Technicians iii. Office clerical iv. Skilled trade v.Semiskilled/ Unskilled

willful violation

intended to apply to situation where employer should have known or clearly should have sought out advice from labor dept. before implementing the plan/program not in compliance. -occurs when employer knows its conduct is prohibited under the act or shows reckless disregard -considered "knowing" if the labor dept. earlier had advised of unlawful actions.

Executive standard minimum salary

must be paid on a salary basis and at the rate of at least $455 a week exclusive of board, lodging, or other facilities (23,660/yr.) -To be salaried under flsa exemption means to be paid the full salary for the work week regardless of hours works that workweek.

Administrative standard test for exemption

must meet: Minimum salary: 455/week Primary duty: performing office or nonmanual work direction related to the management of general business operations of the employer or the employer's customers other duties: -exercises discretion and independent judgment with respect to matters significance --discretion and independent judgement involved the comparison and evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered

Computer employee additional requirment

primary duties must include one or more of the following: -applying system analysis techniques and procedures, including consulting with users -design, develop, document, analyze, create, test or modify computer systems or programs based on and related to user or system design specs. -design develop, document, analyze, create or modify computer programs related to machine operating systems

non discretionary-bonus

typically defined as driven by formula, communicated to employees in advance and employees have a right to receive if conditions are met. ex: lump sum in lieu of a merit would be non discretionary. They must be included in average hourly earning when calculating OT