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January 12, 2015

The New FLSA Rule is Coming. Are you Ready?

Filed under: FLSA,General HR Buzz,Salaries & Pay3:22 am


By Joyce Marsh, SPHR, Senior HR Consultant

According to the U.S. Department of Labor’s (DOL) Wage and Hour Division, the Fair Labor Standards Act (FLSA) proposed rule should hit somewhere in the first quarter of 2015. This release is somewhat later than the original forecast of November 2014 for the final rule.

The final rule shouldn’t differ too much from the proposed one, so now is the time to start looking at classifications. While no one knows for sure what the changes will be to the white-collar exemptions, here are some educated guesses from some employment law experts:

  • An increase in the minimum salary threshold
    There’s speculation that the current threshold of $455 per week/$23,660 per year could more than double to $970 per week/$50,440 per year.
  • Exempt duty standards will change
    Following California’s current requirements, standards could change to employees needing to engage in exempt duties at least 50 percent of the time.
  • Executive exemption standards will change
    In an effort by the DOL to change or eliminate the primary duty standard, executive exemption could be lessened.

As we said, these are just highly educated guesses. So whatever happens with the FLSA proposed rule, the main lesson here is to be prepared.




October 31, 2014

6 Easy Ways to Violate the FLSA – Mistakes 4-6

Filed under: Compease,Compensation,FLSA9:44 am

In yesterday’s blog, we discussed the first three mistakes that lead to Fair Labor Standards Act (FLSA) violations.  Today, we will take a look at the last three, featured that is; there are many more!

Mistake #4:  Asking Nonexempt Employees to “Work Off the Clock”

More recently, asking an hourly employee to “work off the clock” is considered wage theft.  The FLSA requires employers to keep accurate time records.  Tight budgets often prompt managers to request that employees “work off the clock” by asking them to come in early or stay late and not compensating them.  Such a practice can create huge liabilities for an organization.

Mistake #5:  Prohibiting Employees from Discussing Compensation Issues

Although many employers prefer that compensation rates and other pay issues remain private and even write policies to that effect, forbidding such discussion by employees may be in violation of the law.  The National Labor Relations Act (NLRA) prohibits employers from banning wage discussions as it is interpreted as interfering with employees’ right to engage in protected concerted activity.  The National Labor Relations Board, the government agency that enforces the NLRA, has been watching these actions closely, especially with the more prevalent use of social media.

Mistake #6:  Failing to Properly Pay Nonexempt Employees for Meetings and Training

This is a puzzling one for many employers – knowing whether or not they are required to pay for meetings and training sessions.  Attendance at meetings and training is not counted as “hours worked” if all four of the following criteria are true:

  • Attendance is outside of the employee’s regular work hours;
  • Attendance is truly voluntary;
  • The course, lecture, or meeting is not directly related to the employee’s job; and
  • The employee does not perform any productive work while attending. 

Attendance is not considered voluntary, however, if the employee believes that his working conditions or employment opportunities would be adversely affected if he did not attend.

Even the most experienced HR professionals have difficulty navigating the FLSA.  However, failure to do so can be costly in terms of dollars, time spent fixing problems, bad publicity, and lower employee morale.  Focusing on a few of the most common FLSA mistakes and steering your organization away from them is definitely time well spent.


October 30, 2014

6 Easy Ways to Violate the FLSA – Mistakes 1-3

Filed under: Compease,Compensation,FLSA4:32 pm

No doubt, most employers have a battle with the Fair Labor Standards Act (FLSA), which establishes the standards for how to pay their employees.  The FLSA governs overtime pay, the minimum wage, and child labor.  Many are simply unaware of the maze of requirements, some try in good faith to act in accordance with the law but fall short, and a few simply ignore the Act, hoping that nothing comes back to bite them.  But ignorance of the law is not bliss…or an excuse.

FLSA enforcement by the Department of Labor’s Wage and Hour Division recovered just shy of $250 million in back wages for 2013, with 269,250 employees receiving back wages. Another interesting fact is that the average days to resolve a complaint is 110.  This means the Wage and Hour people are very interested in the way you pay your employees and even enjoy perusing your records.

Here are six ways (and believe me, there are many more) in which you could find the DOL knocking on your door:

Mistake #1:  Misclassifying Employees

Nearly every employer must decide which positions are considered nonexempt under the law and must be paid overtime (for hours worked beyond 40 in a workweek), and which positions are exempt from overtime. The FLSA establishes overtime pay requirements by outlining a series of tests that qualify employees as exempt from overtime and minimum wage requirements in these categories:  executive, administrative, professional, outside sales, and certain high-level computer positions.

Mistake #2:  Thinking, “If I make everyone ‘Salaried,’ I won’t have to pay overtime!”

Genius, not.  Be careful.  “Salaried” is not equivalent to “exempt.”  An employer must satisfy an FLSA job duties test mentioned in number 1.  Remember too, that job positions should be reviewed regularly to ensure they still meet the requirements of nonexempt or exempt as the position requirements may change.

Mistake #3:  Failing to Pay Nonexempt Employees for Unauthorized Work

If a company “allows” employees to work, they must pay for this time and include it as “hours worked” for overtime purposes. When an employee who begins work early, stays late, takes work home, or works through the lunch break without authorization to do so, must be paid for unauthorized work (even if the company has a policy prohibiting it).  The employee, though, may be subjected to disciplinary action for violating the policy.

Watch for Mistakes 4-6 in tomorrow’s blog!



September 4, 2014

Interesting News Briefs from the World of HR Law

Filed under: FLSA,Hiring & Jobs,Legal Issues4:36 pm

In an interesting test of the Fair Labor Standards Act (FLSA) exemption regulations, a well-known national retailer has been sued in California by employees alleging that the company improperly classified its store assistant managers as exempt employees.  This lawsuit is a good reminder of how important it is to have updated job descriptions to determine the exempt or nonexempt status of all positions within an organization.  The Department of Labor website provides general information to determine exempt status.  Click here.

A national retail provider of rent-to-own merchandise (appliances, furniture, etc.) has been sued under the federal Fair Credit Reporting Act with the plaintiffs in the case alleging that the company used a third party to run background checks but did not provide copies of the same before taking adverse action against applicants and employees (e.g. denying or terminating employment) based on the background check results. The lawsuit is pending in Georgia.  This is a great example of the importance of knowing the law!  The Equal Employment Opportunity Commission provides excellent guidance to employers and employees on background checks from each perspective.  You can check those out for employers here, and for employees here.


April 1, 2014

New Overtime Regulations on the Horizon!

Filed under: Compensation,FLSA9:11 am

Nearly all businesses are required to comply with the regulations under the Fair Labor Standards Act (FLSA).  On March 13, President Obama directed the Secretary of Labor to update the FLSA to meet several criteria:

  1. Update existing protections in keeping with the intent of the FLSA;
  2. Address the changing nature of the American workplace; and
  3. Simplify the overtime rules to make them easier for both workers and businesses to understand.

What does this mean for American businesses?   In a nutshell, it means that thousands of employees who are currently considered exempt under the FLSA may become eligible to receive overtime compensation for hours worked over 40 in a week.   According to Alfred B. Robinson Jr., former acting administrator of the Wage and Hour division of the US Department of Labor (DOL), the administration is focusing heavily on the salary basis test of the regulation which currently states that an employee must earn at least $455 per week to be considered exempt.  The administration has said that “If the 1974 salary basis test had been indexed, then they would approach approximately $1000 per week in today’s dollar.”

In addition to the salary basis of the exemption, the DOL will also closely examine the primary duties test to ensure that jobs fit into the defined executive, administrative, and professional employee white collar exemptions.  HR professionals should continue to carefully evaluate new positions to determine if they do qualify for a white collar exemption based on the types and frequency of duties being performed.   Once these new regulations are implemented, there will be far reaching implications for HR staff, including new job evaluations, salary structures, and training to managers overseeing newly non-exempt staff.


March 3, 2014

Court Finds Mortgage Loan Officers to Be Exempt

Filed under: Compensation,FLSA,Legal Issues12:07 pm

A federal trial court in Virginia has ruled that the mortgage loan officers employed by the financial institution involved in that case were exempt from the overtime pay and related requirements of the Fair Labor Standards Act (FLSA). The court based its ruling on the outside sales employee exemption from FLSA. According to the United States Department of Labor (DOL), to be an exempt outside salesperson, the employee’s primary duty must be “making sales (as defined in the FLSA), 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 the employee must be customarily and regularly engaged away from the employer’s place or places of business.” The Virginia court found that the mortgage loan officers involved in that case met these requirements, even though they spent most of their time in the office, by regularly attending outside events, such as open houses, weekly networking events, weekly one-on-one meetings with realtors and monthly home-buying seminars.

Before switching these types of employees back to nonexempt status, employers might want to wait and see how the appeals court deals with this case, as well as how the DOL deals with another recent decision that said it did not enact its “loan-officers-are-nonexempt” letter in the right way. Employers who make the switch now, before the law develops a bit further, might be taking on a large litigation risk. There are still plaintiff-side employment lawyers out there looking to sue financial institutions who classify loan officers as exempt. If, on the other hand, an employer decides to make the change now (or in the near future), it would be wise to carefully study the facts in the recent case and model classifications on the approach that particular employer used. The Virginia case name/citation is Cougill v. Prospect Mortgage, LLC, No. 13-1433 (E.D.Va. Feb. 5, 2014).



October 25, 2013

HR Fact Friday: New DOL Rule Gives FLSA Protections to Home Care Workers

Filed under: FLSA — Tags: , , , 6:00 am

DOL has published a new rule that provides the protections (e.g. minimum wage and overtime pay) of the FLSA to home care workers such as home health aides, certified nursing assistants, and personal care aides. DOL accomplished this by redefining and narrowing the “companionship” FLSA exemption to largely exclude these types of employees and by only allowing the “live-in” exemption to be claimed by the individual or household and not by third party employer, such as home care agencies.


May 3, 2013

HR Fact Friday: What FLSA Is Not About

Filed under: FLSA6:00 am

This is a reminder of what the Fair Labor Standards Act (FLSA) is not about. Of course, FLSA does require payment of a minimum wage and overtime pay to nonexempt employees and it regulates the use of child labor. However, it does not define when someone is full or part time or regulate (or require) use of vacation, holiday, severance or sick pay. It does not dictate breaks or meal periods (but it does require that employees be paid for short breaks if provided and that meal times must be paid for unless the employee is relieved of work duties). Other than pay for over 40 hours, FLSA does not regulate or require premium pay for work on weekends or unusual hours and it does not deal with pay raises or fringe benefits. Finally, FLSA does not regulate number of hours worked for employees over age 16 or deal with or consider discharge notices. Of course, other state or federal laws may cover some of these issues, but it is not FLSA.


October 31, 2012

Daylight Saving Time Ends November 4

Filed under: FLSA,Salaries & Pay6:00 am

Time to set your clocks back one hour Sunday, November 4, 2012!  But, how do you pay employees that are working that night/morning?

Most states participate in daylight saving time. Those employees working the graveyard shift when Daylight Saving Time begins work one hour less because the clocks are set ahead one hour. Those employees working the graveyard shift when Daylight Saving Time ends work an extra hour because the clocks are set back one hour at 2:00 a.m.

For example:

The scheduled shift starts at 11:00 p.m. and ends at 7:30 a.m. the next day, your employee works an eight- hour shift and receives a 30-minute lunch break.

  • On the Sunday that Daylight Saving Time starts at 2:00 a.m., the employee does not work the hour from 2:00 a.m. to 3:00 a.m. because at 2:00 a.m. all of the clocks are turned forward to 3:00 a.m. Thus, on this day the employee only worked 7 hours, even though the schedule was for 8 hours.
  • On the Sunday that Daylight Saving Time ends at 2:00 a.m., the employee works the hour from 1:00 a.m. to 2:00 a.m. twice because at 2:00 a.m. all of the clocks are turned back to 1:00 a.m. Thus, on this day the employee worked 9 hours, even though the schedule only reflected 8 hours.

The FLSA requires that employees must be credited with all of the hours actually worked. Therefore, if the employee is in a work situation similar to that described in the above example, he or she worked 7 hours on the day that Daylight Saving Time begins and 9 hours on the day that Daylight Saving Time ends. This assumes, of course, that the employee actually worked the scheduled shift as in our example.

For more information, please contact your local Wage and Hour District Office.


June 25, 2012

Exemption Decision on Pharmaceutical Reps Could Affect Your Sales Force

Filed under: Compensation,Employment Law,FLSA — Tags: 9:22 pm

This week the Supreme Court ruled 5-4 on the Christopher v. SmithKline Beecham Corp which held that pharmaceutical reps are subject to the “outside sales” exemption to the overtime requirements of the Fair Labor Standards Act.  You may dismiss this as something not pertaining to you if your organization doesn’t have pharmaceutical sales reps.  But actually there are some important decisions made as part of this ruling which could apply to your sales force.

The issue for the Supreme Court was that pharmaceutical reps do not really “sell” drugs to doctors.  Based on the heavy regulation within the pharmaceutical industry, reps are not allowed to sell directly to the public or even to doctors.  Instead, they call on doctors and persuade them to make a non-binding commitment to promote their products in appropriate cases.  Thus, the plaintiff’s argument – the rep makes no “sale” but instead is a nonexempt “promoter”.

The Department of Labor took the position that drug reps were nonexempt beginning in 2009.  Their argument was that “(a)n employee does not make a ‘sale’ for purposes of the ‘outside salesman’ exemption unless he actually transfers title to the property at issue.”  The DOL’s reasoning would seem to remove a whole lot of sales persons who previously were exempt, much more narrowly defining the regulations and prior case law.

The Supreme Court’s decision reinforces the practices of the past 70 years defining “sales” is expansive and functional.   Below are some of the issues cited to support this decision:

*that the language of the FLSA included not only “direct sales” but also “consignments to sale” and exchanges;

*that, in giving examples of what might be “sales” for purposes of the exemption, Congress had used the word “includes” rather than “means,” indicating that the examples were not intended to be unduly limiting;

*that Congress had included “or other disposition” as a catch-all, which should reasonably be interpreted as accommodating industry-by-industry variations in methods of selling commodities.

For the complete opinion of the case, you may click here.

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