The Wage & Hour TrifectaDOL Proposals on Overtime Exemptions, the Overtime Calculations and Joint EmploymentMay 1, 2019
Lori BrownCEO, ComplianceHR
[email protected] @labrown1419
• Former Littler Shareholder• Former General Counsel / HR
Chief of Global Security Organization
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Answering Your Questions
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OBJECTIVES FOR TODAY’S SESSION:
1. Joint Employment2. Exemptions from Overtime3. Calculating Overtime – the Regular Rate 4. Technology Can Help!5. ComplianceHR Free Trial Code
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Tammy McCutchenVP Strategy, ComplianceHR
[email protected] @tdmccutchen
• Littler Principal• Former Administrator, US-DOL
Wage & Hour Division and author of 2004 revisions to the overtime regulations
• Leading authority on federal and state wage and hour laws
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Under the FLSA, an employee may have one or more joint employers
29 C.F.R. Part 791, which defines when two companies are considered joint employers, was last revised in 1961, 58 years ago
A joint employer is jointly and severally liable for any FLSA violations
Joint Employment Basics
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Published in Federal Register on April 9
60-day public comment period Comments due on June 10
www.regulations.gov
Search for RIN # 1235-AA24
The Notice of Proposed Rulemaking
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Does the potential joint employer actually exercise the power to:
1. Hire or fire the employee
2. Supervise and control the employee’s work schedules or conditions of employment
3. Determine the employee’s rate and method of payment
4. Maintain the employee’s employment records
New Four-Part Balancing Test
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The FLSA definition of “employ” as “to suffer or permit work”
“Economic dependence” on the potential joint employer
Whether the employee: Is in a specialty job or a job otherwise requiring special
skill, initiative, judgment, or foresight Has the opportunity for profit or loss based on managerial
skill Invests in equipment or materials required for work Employs helpers or assistants
Not Relevant to the JE Analysis
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Operating as a franchisor Requiring a business partner to institute workplace
safety measures, wage floors, or sexual harassment policies
Providing a sample employee handbook Allowing a business partner to operate on your
premises Jointly participating in an apprenticeship program,
association health plan, or retirement plan
Business Practices that Do Not Impact JE Status
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Review your contracts with business partners in light of the DOL’s proposed four-part balancing test
Preparing for Change –Joint Employment
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Minimum salary of $455 per week ($23,660 annual)
Salary must be guaranteed and paid in full for each week the employee performs any work No salary required for lawyers, doctors,
teachers and outside sales
Computer employees also may be paid $27.63 per hour
Meet the duties tests for exemption:
Executive
Administrative
Professional
Computer
Outside sales
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“White Collar” Exemption Basics
Published in Federal Register on March 22
60-day public comment period Comments due on May 21 www.regulations.gov Search for RIN # 1235-AA20
The Notice of Proposed Rulemaking
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POLL: Is the Minimum Salary Level:
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Too highToo lowJust right
Up to 10% of the minimum salary level may be satisfied with non-discretionary bonuses, commissions and other incentive pay that are paid annually or more frequently
Let’s do the math:$679 – 10% = $611.10 weekly salary
plus
$35,308 x 10% = $3,530.90 bonuses/commission paid during the year
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Bonuses, Incentive Payments, Commissions
POLL: How Likely Is Your Company To Use The 10% Rule?
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Unlikely Likely Very likely
DOL will review every four years 20th percentile of salaries in
South/Retail for minimum salary
Through notice-and-comment rulemaking
No automatic increases
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Future Increases
Review salary levels Review job duties
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Preparing for Change –Overtime Exemptions
Increase Salary or Reclassify? Pull salary and incentive pay data
for all employees earning below $35,309
Calculate the cost of increasing salary to the minimum $35,309
Compare with the cost of paying overtime: (weekly salary / 40) * 1.5 * expected OT hours
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Review Salary Levels
• Review HRIS data• Review documents• Conduct interviews• Research and apply the law
Review Job Duties:The Manual Process
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• Complete a questionnaire
• Get an answer
Review Job Duties: An Easier Way
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Traditional OT Audit690 Minutes
Navigator OT20 Minutes
97% Less Time Per Evaluation
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Under the FLSA, non-exempt employees must be paid after 40 hours worked in a week overtime at 1.5 times an employees “regular rate” of pay
The “regular rate” of pay includes “all remuneration for employment” earned in a work week divided by all hours worked in a work week
Some types of compensation are excluded from the regular rate by statute
All Remuneration ÷
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Regular Rate Basics
INCLUDED
Hourly wages or salary Commissions Non-discretionary bonuses Prizes and awards related to work Shift or job differentials On-call pay
EXCLUDED
Employee benefits Payments for time not worked Business expense
reimbursements Certain premium pay Gifts for Christmas or special
occasions Discretionary bonuses
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Compensation Included and Excluded
Published in Federal Register on March 29
60-day public comment period
Comments due on May 28 www.regulations.gov Search for RIN # 1235-AA24
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The Notice of Proposed Rulemaking
Tuition reimbursement and repayment of student loans
Payments for bona fide meal periods and certain types of “call-back” pay
Business expense reimbursements, even if not “solely” for the benefit of the employer
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Proposed Exclusions from the Regular Rate
Wellness benefits, including gym memberships, fitness classes and on-site specialist treatment
Discounts on retail goods and services
Payouts to employees of unused vacation and sick leave
Accident, unemployment and legal services benefits
No proposed changes to the definition New examples of excludable
discretionary bonuses Bonuses paid to employees who
make unique or extraordinary efforts that are not awarded according to pre-established criteria
Bonuses for overcoming challenging or stressful situations
Employee-of-the-month bonuses Severance bonuses
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Discretionary Bonuses
Conduct an audit of your pay codes Identify codes used for non-exempt
employees that are not being included in the regular rate
For each code, identify specific exclusion from the regular rate, if any 29 USC 207(e) 29 CFR Part 778 (current and
proposed)
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Preparing for Change –Regular Rate
EarningsCode Description
1 REG HRLY2 OT HRLY6 SAFETY7 INCENTIVE10 VACATION11 SICK PAY12 HOLIDAY20 BONUS25 SHIFT PREMIUM30 S/T DISABILITY40 HEALTH INS PRE TAX50 401(k)61 AUTO ALLOW63 OPERATOR INCENTIVE68 PER DIEM
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