Timekeeping and the Law - final · 2013-02-20 · Motor Carrier Exemption Employee is not entitled...

2/20/2013

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www.khlaw.comWashington, DC ● Brussels ● San Francisco ● Shanghai

Crystal N. SkeltonMichael F. Morrone

Manesh K. RathKeller and Heckman LLP

1001 G Street NWSuite 500 West

Washington, DC 20001(202) 434-4254

[email protected]

Timekeeping and the LawFebruary 7, 2013

│ www.khlaw.com │ KELLER AND HECKMAN LLP Copyright © 20122

A Preliminary Word…

This presentation provides information about the law. Legal information is not the same as legal advice, which involves the application of law to an individual's specific circumstances. The interpretation and application of the law to an individual’s specific circumstance depend on many factors. This presentation is not intended to provide legal advice.

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Timekeeping and the Law – Overview:

� FLSA Coverage• Workweek• Minimum wage• Overtime• Records and Recordkeeping

� Recent Enforcement


What is the Fair Labor Standards Act?

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Fair Labor Standards Act of 1938

� FLSA administered by Wage and Hour Division of Department of Labor

� Establishes standards for:• Minimum Wage• Overtime Pay• Recordkeeping• Youth Employment• Equal Pay


Who is Covered?

� More than 130 million workers, both full-time and part-time, are “covered” by the FLSA

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Coverage

� Two types of coverage

1. Enterprise coverage:

– If enterprise covered, all of its employees entitled to FLSA protections

2. Individual coverage :

– Even if enterprise is not covered, individual employees may be covered & entitled to FLSA protections


FLSA Enterprise Coverage

� Enterprise with:• At least 2 employees; and • Either

– Engages in interstate commerce; or

– Gross >$500,000/yr in business

� If enterprise coverage exists, all employees of that enterprise are subject to the FLSA

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FLSA Individual Coverage

� Covers individual workers involved in interstate commerce

• What is interstate commerce?

� Chauffeurs covered if:

• Cash wages from 1 employer at least $1,800/yr (for 2012)

• Work more than 8 hrs/wk


Notable FLSA Exemptions

Exemption What is Exempt?

“White Collar” Employees

Minimum Wage; Overtime- Administrative Employees

- Professional Employees

- Executive Employees

Interstate Motor Carrier Overtime

Outside Sales Employees Minimum Wage; Overtime

Commissioned Sales Overtime

Taxi Cab Overtime

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THE WORKWEEK


The Workweek

�What is a workweek?

• 7 consecutive 24-hr periods

• May begin any hour of day

• Need not coincide with calendar

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Minimum Wages


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Minimum Wages

� Federal minimum wage = $7.25/hr• effective July 24, 2009

� Tipped employees• Customarily & regularly receive

> $30/month in tips• Employers must pay a direct wage of at

least $2.13/hr if they claim a tip credit


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Minimum Wages…cont’d

� DOL Sept. 2005 Opinion Letter• Gratuities imposed upon customers ≠ tip

� DOL Nov. 2012 Letter• Discretionary gratuities = tip

–May not be subject to overtime–But, it depends on the facts in each case

• Key is customer discretion, notice, & variation in amts

• Compulsory gratuities (i.e., mandatory 15% of bill) ≠ tip: –Considered part of employee wages and

is subject to overtime


Notice

� Notice to Employees• Must post FLSA notice

in conspicuous place

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Overtime


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Overtime

� Must pay overtime for all hours worked > 40 hrs/week• No limit on number of hours employees aged 16

& older may work in any workweek

� FLSA Overtime Rate = 1 ½ times employee’s “regular rate” of pay


What is the “Regular Rate” of Pay?

� Regular rate = all remuneration for employment• except certain payments excluded by FLSA

� Regular rate of pay cannot be less than the minimum wage

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Hours Worked

� Employees must be compensated for all hours worked

• Included:

–Mid-shift breaks of 20 minutes or less (e.g., coffee or smoke breaks)

–On-call time where employee is “engaged to wait”

• Excluded:

–Uninterrupted meal times–Time “waiting to engage”


Hours Worked

� “Hours worked” • includes any additional time employee is allowed to

work

� IBP, Inc. v. Alvarez (2005)• U.S. Supreme Court held:

– time spent “donning and doffing” unique protective clothing is compensable under the FLSA

� Travel from home to work and back • normally not compensable time

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Hours Worked

� DOT limits max driving time for passenger-carrying vehicles • Only applies to motor carriers and

drivers subject to FMCSRs

� Hours’ Restrictions• Max. 15 hrs on-duty following 8 consecutive hrs off duty• Max. 10 hrs driving following 8 consecutive hrs off duty

� Restrictions on Periods of Driving• 70 hour/8 day Rule

– If employing motor carrier operates CMVs every day

• 60 hour/7 day Rule– If employing motor carrier does not operate CMVs every day


REMEMBER: Notable FLSA Exemptions

Exemption What is Exempt?

“White Collar” Employees

Minimum Wage; Overtime- Administrative Employees

- Professional Employees

- Executive Employees

Interstate Motor Carrier Overtime

Outside Sales Employees Minimum Wage; Overtime

Commissioned Sales Overtime

Taxi Cab Overtime

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White Collar Employee Exemptions

� Three types:• Executive• Administrative• Professional

**Exempt from minimum wage and overtime


White Collar Employee Exemptions

� “White Collar” employee classified as exempt if employee is:1. Paid on a salary basis2. Paid salary of not less than $455/week3. Meets “primary duties” test for executive,

administrative, or professional employee

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Executive Exemption

� Primary duty =• managing enterprise• managing customarily

recognized department or subdivision of enterprise

� Customarily/regularly directs work of ≥ 2 other full-time employees

� Authority to hire & fire others

** Business owners may be classified as exempt executives


Administrative Exemption

� Primary duty = • performance of office or non-manual work directly

related to management or general business operations

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Professional Exemption

1. Learned Professional Employee

• Primary duty = – performance of work requiring advanced

knowledge

2. Creative Professional Employee

• Primary duty = – performance of work requiring invention,

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


Motor Carrier Exemption� Employee is not entitled to overtime payment if :

1. Employee is employed by “motor carrier” or “motor private carrier” subject to the FMCSR

AND2.A Employee operates a CMV

or2.B Employee duties affect the operational safety of CMVsAND3. Vehicle operated, or worked on, by employee transports property or

passengers on public highways in interstate or foreign travel

� When will the exemption not apply?• When operating a non-CMV (small vehicles - i.e., sedans)• When operating only in intrastate commerce• Mixed workweeks

– Operating both interstate and intrastate– Operating both CMV and non-CMVs

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Outside Sales Employees Exemption

� Primary duty = • making sales

or• obtaining orders/contracts for

services or for use of facilities where client/customer pays consideration

AND

� Must be customarily & regularly engaged away from employer’s place of business

**Exempt from minimum wage and overtime


Commissioned Sales Exemption

� Employee must meet all 3 conditions:1. Be employed by retail or service establishment2. Regular rate of pay must exceed 1 ½ times

applicable minimum wage3. >½ total earnings in representative period must

consist of commissions

� Tips paid to service employees by customers ≠ commissions

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Records and Recordkeeping


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� Accurate records are critical to avoiding compliance problems

� Requirements generally applicable to employers of workers subject to FLSA’sminimum wage & overtime pay requirements



� FLSA requires employers to make, keep & preserve certain records

• Payroll records, collective bargaining agreements, sales & purchase records

– Retain at least 3 yrs

• Wage computations records– Retain at least 2 yrs

� Need not be kept in any particular form

� Time clocks not required

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14 Basic Records to be Maintained

1. Employee’s full name and SSN

2. Address (including zip)3. Birth date (<19 yrs old)4. Sex & occupation5. Beginning time & day of

workweek 6. Hrs worked each day7. Total hrs worked each

workweek8. Basis on which employee's

wages are paid (e.g., “$9/hr” or “$420/wk”)

9. Regular hourly pay rate10. Total daily or weekly

straight-time earnings11. Total overtime earnings for

workweek12. All additions to, or

deductions from, employee’s wages

13. Total wages paid each pay period

14. Payment date & pay period covered


Enforcement

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Recent DOL Enforcement

� May 2012• DOL sues CT limo company for back wages &

liquidated damages for more than 50 employees– Drivers regularly operated Lincoln Town Cars and

SUVs

Motor carrier exemption does not apply to small vehicles


Questions?

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Crystal N. SkeltonMichael F. Morrone

Manesh K. RathKeller and Heckman LLP

1001 G Street NWSuite 500 West

Washington, DC 20001(202) 434-4254

[email protected]

Thank you!

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Timekeeping and the Law - final · 2013-02-20 · Motor Carrier Exemption Employee is not entitled...

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