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Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock...

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www.laborlawyers.com Phone (858) 597-9600 Overtime Exemptions and Misclassification Issues: Brewing Wage and Hour Violations Could Seriously Interrupt Your Craft Presented by: Megan Winter [email protected] 858-597-9622
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Page 1: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Overtime Exemptions and

Misclassification Issues:

Brewing Wage and Hour Violations

Could Seriously Interrupt Your Craft

Presented by:Megan Winter

[email protected]

Page 2: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Number One Mistake Related to

Employee Classification

• Not just anyone can be paid a

salary, come and go without keeping

track of their time, and not receive

overtime.

Page 3: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Exemptions: Exempt from

What?

–One or more of the following:

• Minimum wage requirements

• Overtime premium

Page 4: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Overtime Pay

How to Calculate?

• Count hours worked over 40 in a workweek.*

– Exceptions: Alaska, California, Colorado, Nevada

• Pay 1.5 times the "regular rate" of pay (all pay ÷

all hours the pay covers)

• Include in the regular rate things like bonuses,

commissions, incentive pay and other kinds of

extra pay

Page 5: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Overtime Pay

• Some payments can be

excluded from the “regular

rate.” For example:

– Pay for un-worked holidays

– Pay for un-worked vacation

time

– “Discretionary” bonuses (be

careful with this!)

Page 6: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Exemptions

• The default is non-exempt – Employees must

receive overtime unless an exemption applies

• Exemptions are defined by law, not by

agreement, job descriptions, or either party’s

intention.

• Employer bears the burden to show that the

employee meets the exemption requirements

Page 7: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

• Employee compensation and related costs are

often one of the largest cash outlays that

business owners face.

• This is compounded by the risk of making a

mistake on how individuals are compensated.

• Wage and hour lawsuits and administrative

charges against employers rise every year.

Why Does It Matter?

Page 8: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

• Back Wages

• Liquidated Damages

• Civil Money Penalties

• "Reasonable"

Attorney's Fees

Why Does It Matter?

• Possible Individual Liability

• Probably Not Insurable

• Injunctions

• Criminal Penalties

Page 9: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Atlanta · Baltimore · Boston · Charlotte · Chicago · Cleveland · Columbia · Columbus · Dallas · Denver · Fort Lauderdale · Gulfport ·

Houston · Irvine

Kansas City · Las Vegas · Los Angeles · Louisville · Memphis · New England · New Jersey · New Orleans · Orlando · Philadelphia

Phoenix · Portland · San Antonio · San Diego · San Francisco · Tampa · Washington, DC

www.laborlawyers.com

White Collar

Exemptions

Page 10: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions

• Executive

• Administrative

• Professional

– Each have a salary basis test

– Duties test

– Must meet both to qualify for

exemption

Page 11: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions

Requirement One: Salary

Basis Test

Page 12: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions

• Salary Basis Test: Must be paid on “salary basis” of at least:

$455 per week

$1971.67 per month

$23,660 per year

*state law may have different salary requirements

Page 13: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions

Salary Basis Test:

• Salary is a fixed, predetermined amount of compensation

• Weekly salary must be paid without reduction for quantity or quality of work for any week in which any time was worked.

• No de minimus rule on “work performed” test

Page 14: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions

May dock in full-day increments for one or more days of absence caused by:• First and last week of employment

• Full-day absences for personal leave, vacation, and religious observances

• Full-day absences for illness or accidents if employer has bona fide paid leave program for sickness or accident and employee has no accrued benefits under that program

• Qualifying FMLA/CFRA leave can dock in smaller increments

Page 15: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions

Requirement Two: Duties

Test

Page 16: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Duties Test

• Exemptions Relate To Individuals – Not To Job

Descriptions, Pay Classifications, Positions, Job

Groups, Conventional Wisdom, Etc.

• Detailed, Accurate, Current Job Information Is Essential.

• Must Be Based Upon Actual Work, Real Facts.

• Job Descriptions Do Not "Make Employees Exempt".

Page 17: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Job Descriptions

• Current, Accurate, Well-Written Ones Can Play A Role In

Defending Exempt Status.

• Unrealistic, Inaccurate, Puffed-up, Out-Of-Date, Or Poorly-

Written Job Descriptions Can:

• Cause Management To Make An Incorrect Decision

Regarding Exempt Status,

• Hurt Defense Efforts.

Page 18: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions

• Customarily and Regularly Exercises Discretion and Independent Judgment as to Matters of Significance:

– Authority to make independent choices without immediate supervision about matters of significance.

– Contrast with the mere application of procedures and policies.

Page 19: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions

• “Primarily” engaged in duties which meet the test of the exemption

• Actual duties must meet test, although employee cannot underperform out of an exemption.

Page 20: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Primary Duty

• Relative importance of exempt

duties.

• Percentage of time spent performing

exempt duties.

• Relative freedom from supervision.

• Comparison of salary vs. hourly pay

for non-exempt work.

Page 21: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions:

Executive

• Four-part duties test:

• Management of enterprise or subdivision;

• Supervises 2 or more full-time employees;

• Authority to hire and fire; and

• Customarily and regularly exercise discretion and independent judgment

Page 22: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Staffing meets the “Two or More”

Requirement”

General Manager

Assistant

Manager

Assistant

Manager

Assistant

Manager

Full-time

Employee

Full-time

Employee

Full-time

Employee

Half-time

Employee

Half-time

Employee

Half-time

Employee

Half-time

Employee

Half-time

Employee

Half-time

Employee

Page 23: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions:

Executive

Who meets this duties test?

• General Manager?

• Tasting Room manager?

• Assistant Manager?

Page 24: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions:

Administrative

• Three-part duties test:

• Office or non-manual work related to general business operations of employer or customer

• Customarily and regularly exercise discretion and independent judgment

• Regularly assists a proprietor or bona fide executive or administrative employee; OR performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge; OR executes under only general supervision special assignments and tasks.

Page 25: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions:

Administrative

Who meets these duties?

– Controller

– Human Resources professional

– Marketing manager

– Event coordinator?

Page 26: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

White Collar Exemptions:

Professional & Creative

• Employee’s primary duty is the performance of work requiring advanced knowledge, predominantly intellectual in character

• Work that requires advanced knowledge in a field of science or learning and is customarily acquired by a prolonged course of specialized intellectual instruction.

• Examples: law, medicine, theology, accounting, engineering, architecture, teaching, pharmacy

OR• Primary duty is performance of work requiring

invention, imagination, originality or talent in a recognized field of artistic or creative endeavor

Page 27: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Highly Compensated Employee

• Earns annual compensation of at least

$100,000 or more, which includes at least

$455 per week on salary basis

• Primary duty includes performing office or

non-manual work

• Customarily and regularly performs at

least one of the exempt duties of an

exempt executive, administrative or

professional employee

Page 28: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

What About Brewmaster/Head

Brewer?

• Level of importance to the business is not

a factor

• Usually engaging in manual work

• If large enough, and he or she is

managing at least two employees, then

can fit in executive exemption

– Management must be “primary duty”

Page 29: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Atlanta · Baltimore · Boston · Charlotte · Chicago · Cleveland · Columbia · Columbus · Dallas · Denver · Fort Lauderdale · Gulfport ·

Houston · Irvine

Kansas City · Las Vegas · Los Angeles · Louisville · Memphis · New England · New Jersey · New Orleans · Orlando · Philadelphia

Phoenix · Portland · San Antonio · San Diego · San Francisco · Tampa · Washington, DC

www.laborlawyers.com

OTHER

EXEMPTIONS

Page 30: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Outside-Sales Exemption

• Primary duty: making sales, or obtaining orders for

contracts for services, products, or use of facilities for

which the customer or client will pay.

• The employee is customarily and regularly engaged in

this activity away from the employer’s place of business.

• More than occasional but less than constant,

normally done every work week

• No minimum pay requirement

Page 31: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Family Members & Business

Owners

• Business that has as its only regular employees the owner, parent, spouse, child or other immediate family member, may not be an enterprise engaged in commerce pursuant to the FLSA.

• Business owners who own a bona fide 20% equity interest and who are actively engaged in management, are bona fide exempt employees.

Page 32: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

The Big Picture

Regularly Reconsider Exemption Status:

• Work Evolves Over Time – Sometimes Away From Exempt

Status, Sometimes Towards It.

• New Positions Continually Introduced – No Assumptions About

Exemption Status!

Don't Fall For "Conventional Wisdom":

• "Everybody Treats These Jobs As Exempt."

• "The Employees Want To Be Exempt."

• "The Employee Agreed To Be Exempt.“

Quickly Consider What To Do To Correct Any Problems

Be Careful About How You Implement The Changes

Compliance Does Not Necessarily Mean Higher Wage Costs

Page 33: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

The Big Picture

Whether A Particular Job Will Be Ruled Exempt Is Often

Uncertain.

To Some Extent, A Question Of Risk And Risk-Tolerance.

The "Scale" Approach: Ranking From 1 To 5.

• (1) : Successful Defense Prospects Are Low

• (5) : Successful Defense Prospects Are High

• (2), (3), (4) : Shades of Gray

Resist Any Urge To Rationalize Exempt Status – The Risk Of

Claims And The Risk Of Loss Are Real.

Page 34: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Presented by:

Megan Winter

Phone: (858) 597-9622

[email protected]

Fisher & Phillips LLP

ATTORNEYS AT LAW

Solutions at Work®

Atlanta · Boston · Charlotte · Chicago · Cleveland · Columbia · Dallas · Denver · Fort Lauderdale · Houston

Irvine · Kansas City · Las Vegas · Los Angeles · Louisville · Memphis · New England · New Jersey · New Orleans

Orlando · Philadelphia · Phoenix · Portland · San Diego · San Francisco · Tampa · Washington, DC

www.laborlawyers.com

Final

Questions?

Page 35: Overtime Exemptions and Misclassification Issues: Brewing ... · White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: •First and last

www.laborlawyers.com ● Phone (858) 597-9600

Presented by:

Megan Winter

Phone: (858) 597-9622

[email protected]

Fisher & Phillips LLP

ATTORNEYS AT LAW

Solutions at Work®

Atlanta · Boston · Charlotte · Chicago · Cleveland · Columbia · Dallas · Denver · Fort Lauderdale · Houston

Irvine · Kansas City · Las Vegas · Los Angeles · Louisville · Memphis · New England · New Jersey · New Orleans

Orlando · Philadelphia · Phoenix · Portland · San Diego · San Francisco · Tampa · Washington, DC

www.laborlawyers.com

Thank You


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