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12/2/2019
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Paying Employees on a Salary Basis
Deductions from Pay Affecting Exempt and
Non-Exempt Employees
ADVANCED FAIR LABOR STANDARDS COURSE
DECEMBER 11-12, 2019
The North Carolina Wage and Hour Act does not
apply to government employers.
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The FLSA Does Not Require
❑ Vacation, holiday, severance or sick pay
❑ Meal or rest periods, holidays off, or vacations
❑ Pay raises or fringe benefits
❑ Premium pay for weekend or holiday work
❑ Immediate payment of final wages to fired employees
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o Must be paid on a salary-basis
o Must earn a minimum weekly salary:
$455/week or $23,660/year
o Must satisfy one of three duties tests:
• Executive employee
• Administrative employee
• Professional employee
Exempt Employees – Right Now
o Must be paid on a salary-basis
o Must earn a minimum weekly salary:
$684/week or $35,568/year
o Must satisfy one of three duties tests:
• Executive employee
• Administrative employee
• Professional employee
Exempt Employees – As of Jan. 1, 2020
Salaried Employees
1. What is meant by “salaried”?
2. May nonexempt employees be paid on a
salary basis?
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Nonexempt Salaried Employees
For how many hours per week is the salary
intended to compensate the employee?
If salary is monthly or semimonthly or biweekly,
it must be reduced to its workweek equivalent.
Deductions
That Will Not
Destroy an
Exemption
Absences when employee has no
accrued sick or vacation leave or
has taken leave without approval
(public sector only)
o May be taken in less than full-day
increments
Deductions
That Will Not
Destroy an
Exemption
Full-Day Disciplinary Suspensions
for Major Workplace Misconduct
o Must be a written policy
o Policy must be uniformly applied
DOL examples:
o Violation of sexual harassment policy
o Violation of workplace violence rules
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Deductions
That Will Not
Destroy an
Exemption
Penalties for Violating Safety
Rules of Major Significance
“Safety rules of major significance
include those relating to the
prevention of serious danger in the
workplace or to other employees,
such as rules prohibiting smoking in
explosive plants, oil refineries and
coal mines.” 29 CFR 541.602(b)(4)
What Is a Major Safety Rule Violation for a Police Officer?
o Absent from post while on duty
o Using illegal drugs/alcohol on duty
o Sleeping on duty
o Loss of service weapon
o Misclassifying crime reports
o Failure to follow orders
o Soliciting bribes
o Committing insurance fraud
o DUI off-duty
o Cheating on police exam
o Soliciting a prostitute off-duty
Major Safety Violation Not a Major Violation
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Major Safety Rule Violation: LEO
City's two day suspension of patrol sergeant for failure to
respond to traffic accident injury situation was infraction of
safety rule of major significance: sergeant's failure to respond
could well have endangered EMTs and other public safety
colleagues who were deprived of his supervision and
assistance in routing traffic around accident while they
administered aid, in clearing roadway of obstructed vehicles, or
in performing other emergency functions.
Childers v. City of Eugene, 922 F. Supp. 403 (D. Or. 1996) aff'd, 120 F.3d 944 (9th Cir. 1997)
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Major Safety Rule Violation: Fire
Fire department employees' suspensions for driving to
wrong address and missing street when responding to
emergency call fell within exemption of FLSA's general
prohibition against deductions from exempt employees' pay
for violations of safety rules of major significance, and thus
did not destroy employees' exempt status.
Watkins v. City of Montgomery, 2013 WL 1123696 (M.D. Ala. Mar. 19, 2013), aff’d, 775 F.3d 1280 (11th Cir. 2014).
Deductions That Will Not Destroy an Exemption –Numbers 1, 2 and 3
1. Absences when employee has no accrued sick or
vacation leave or has taken leave without approval
(public sector only)
2. Full-day disciplinary suspensions for workplace
misconduct
3. Penalties for infractions of safety rules of major
significance
Deductions That Will Not Destroy an Exemption –Numbers 4, 5 and 6
4. To offset any amounts received as payment for jury
fees, witness fees, or military pay
5. Part-week initial and final weeks
6. Unpaid FMLA leave
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Effect of
Improper
Deductions
An actual practice of making improper
deductions from salary will result in the
loss of the exemption:
❑ For the time period in which improper
deductions were made
❑ For employees in the same job
classifications
❑ Working for the same managers
responsible for the actual improper
deductions
DEDUCTIONS FROM THE WAGES OF
BOTH EXEMPT AND NONEXEMPT EMPLOYEES
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Deductions for the Overpayment of Wages
When the employer has accidentally paid an
employee more than it owes the employee, it may
deduct the amount of overpayment from the
employee’s wages either in a lump sum or over time.
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Advances of Vacation and Sick Leave
1. No FLSA regs or 4th Cir. case law on this issue.
2. Advances of leave as advances of wages.
3. Inform employees that unearned but used sick and vacation
leave will be deducted from last paycheck.
4. May be done even if reduces final paycheck hourly rate below
federal minimum.
5. Hourly rate deducted must be rate employee was earning when
leave advanced, not rate at end of employment.
Destruction or Loss of Employer Property:
Cash, Uniforms, Equipment
Exempt Employees:
Deductions from the cost of lost or damaged
property or missing funds from the wages of an
exempt employee will destroy the exemption.
Destruction or Loss of Employer Property:
Cash, Uniforms, Equipment
Nonexempt Employees:
29 CFR § 531.35 says that an employee must be paid wages
unconditionally and “free and clear:”
“[t]he wage requirements of the Act will not be met where the
employee ‘kicks-back’ directly or indirectly to the employer or
to another person for the employer's benefit the whole or part
of the wage delivered to the employee.”
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Destruction or Loss of Employer Property:
Cash, Uniforms, Equipment
Nonexempt Employees:
Voluntary deductions permitted with certain
caveats.
→ Make deduction for lost or destroyed property
part of policy.
So-called “Voluntary” Deductions from Wages for
Destroyed or Missing Employer Property
Workweeks without Overtime
▪ The deduction cannot reduce below the minimum
wage the amount of money the employee receives
in compensation.
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Overtime Workweeks
o Deductions can only be made if there is an agreement in
advance between employer and employee that deductions will be
made for particular items for specified reasons.
o Employee must affirmatively agree or assent to the employer’s
deduction policy. BoP on employer.
o Deduction cannot reduce below the minimum wage the amount of
money the employee receives in compensation for straight-time
hours.
o Deduction cannot reduce the amount of overtime pay that the
employee receives.
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Deductions for the Cost of Training
▪ Not addressed by statute or regs.
▪ Courts analogize with loan.
▪ Probably okay but courts require that rate
never go below minimum wage in a week
in which the deduction is made.
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No Deductions for Unpaid Utility Bills Owed to the
Employing City or County
❑ No authorization in the FLSA or anywhere else.
❑ Violates the free and clear rule.
❑ Probably a violation of the Due Process Clause of
the 14th Amendment if done without notice and an
opportunity to be heard.
DON’T DO IT
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Garnishments
Requires order from NC Superior Court: General creditors
Doesn’t require court order:
IRS – only requires a “Notice of Levy on Wages” (IRS Form 668-W)
NC Dep’t of Revenue – only requires a notice of garnishment per GS 105-242.1
Local tax collector -- only requires a notice from tax collector per GS 105-368(b)
Federal student loan guaranty agencies pursuant to the Higher Education Act
Other non-tax federal administrative garnishments pursuant to the Debt
Collection Improvement Act
Special Case of Child Support and Alimony:
Called “wage withholding orders”
Issued by Superior Court or by child support enforcement agency
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What is the difference between an
across-the–board pay cut and a furlough?
Across the Board Pay Cuts
Wage increases and decreases are within the
sole discretion of the employer.
Implement pay cuts at the beginning of a full
week.
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Across the Board Pay Cuts of Exempt Employee Salaries
OK:
Prospectively reducing the predetermined salary amount to be paid
regularly to an exempt employee when the budget must be cut.
NOT OKAY:
Deductions from predetermined pay occasioned by day-to-day or
week-to-week operating needs. These are impermissible deductions
from the predetermined salary and will result in the loss of the
exemption.
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Furloughs
Nonexempt employees
Exempt employees -- 29 CFR § 541.710 (b)
Deductions from the pay of an employee of a public agency
for absences due to a budget-required furlough shall not
disqualify the employee from being paid on a salary basis
except in the workweek in which the furlough occurs and for
which the employee's pay is accordingly reduced.
Exempt employees must keep time.
Exempt employees should not work more than 40 hours in a
furlough week.
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ADVANCED FLSA COURSEDECEMBER 11-12, 2019
VOLUNTEERS
INTERNS
INDEPENDENT CONTRACTORS
VOLUNTEER
An individual who performs hours of service for a
public agency
1. for civic, charitable, or humanitarian reasons
2. freely, without pressure, without coercion –
direct or implied - and
3. without promise, expectation or receipt of
compensation for services rendered
is considered to be a volunteer during such hours.
Volunteers may be paid
expenses, reasonable
benefits, a nominal fee, or
combination of the three.
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Examples :
a uniform allowance or reimbursement for cleaning or for wear-an- tear
on personal clothing
reimbursement for out-of-pocket expenses such as the cost of meals
and transportation
reimbursement for tuition and transportation involved in attending
classes intended to teach volunteers to perform their services
cost of books, supplies, or other materials essential to volunteer training
inclusion of individual volunteers in group insurance plans
“length of service” awards or
a nominal “per call” payment to volunteer firefighters or law
enforcement reserve officer, emergency medical personnel.
WHAT IS A NOMINAL FEE?
Distance traveled;
Time and effort expended by the volunteer;
Whether the volunteer has agreed to be
available around-the-clock or only during
certain specified time periods; and
Whether the volunteer provides services as
needed or throughout the year.
An individual who volunteers to provide periodic services on a year-round basis may
receive a nominal monthly or annual stipend or fee without losing volunteer status.
A volunteer receives $11.00 per hour for
each hour worked while responding to
fire calls or attending training sessions.
This payment plan will result in an
employment relationship. This payment
may not reasonably approximate any
expenses incurred by the volunteer.
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A volunteer receives an annual
stipend of $600 to coach the parks
and rec girls basketball team for a
season that runs October through
March. This is a reasonable, nominal
or de minimis fee.
WHEN YOUR OWN EMPLOYEES
VOLUNTEER
An individual shall not be considered
volunteer if the individual is otherwise
employed by the same public agency to
perform the same type of services as those
for which the employee proposes to
volunteer.
See 29 USC 203(e)(4)(ii); 29 CFR 553.101(d).
VOLUNTEERS
With Same Employer
May volunteer in any capacity other than
to do their normal job
May not volunteer to perform the services
which they are employed to perform
With Different Employer
May volunteer to perform the same
services that they are employed to perform
by another employer
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A bona fide “volunteer” fire department is not a
“public agency”.
Volunteer fire departments are nonprofit
corporations.
Elected officials or officials who are responsible to
elected officials have no authority over the fire dept.
Compare: a city or county fire department where
there are both paid firefighters and volunteer
firefighters.
1. Can a city firefighter volunteer for a VFD in
the same city or county?
2. While a city firefighter is volunteering with the
VFD, the VFD is called to assist on a fire where
the city department is also the primary
firefighting department?
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3. Where towns have mutual aid agreements,
the hours for an employee of Town A who is
also a volunteer for VFD B would not have
his/her hours combined.
See 29 CFR 553.105
INTERNS: PRIVATE VERSUS PUBLIC SECTOR
Requirements for Private Sector:
the internship -- even though it takes place at the employer’s place of business -- is similar to training which would be given in an educational environment;
the internship experience is for the benefit of the intern;
the intern does not displace regular employees, but works under close supervision of existing staff;
the employer gets no immediate advantage from the activities of the intern; and on occasion its operations may actually beimpeded;
the intern is not necessarily entitled to a job at the conclusion of the internship; and
the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
INTERNS: PUBLIC SECTOR
“Unpaid internships in the public sector and for non-
profit charitable organizations, where the intern
volunteers without expectation of compensation, are
generally permissible."
U.S. DOL – 2010 Fact Sheet
DOL currently is reviewing the need for additional
guidance on the topic of internships in the non-profit
sector.
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BOTTOM LINE
Interns are volunteers. Treat them as such:
No salary
No per hour wages
No stipend
Reimbursement of actual expenses: OK
De minimis compensation: OK
Example: $50.00/per week
Alternative:
Make your “interns” temporary
employees and pay them minimum
wage.
HOW CAN YOU TELL THE DIFFERENCE?
DOES THE DISTINCTION HAVE LEGAL
CONSEQUENCES?
INDEPENDENT CONTRACTOR V. EMPLOYEE
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THE INDEPENDENT CONTRACTOR
Not entitled to benefits
Not subject to FLSA, FMLA
No withholding of taxes
Not covered by workers’ comp
Not eligible for LGERS
Not subject to the SHRA
WHAT’S WRONG WITH THIS PICTURE?
The immigrant population of Paradise County
has exploded over the past 5 yrs. The county
needs three add’l nurses and three translators
for its clinics, but it can’t afford them. The
comm’rs authorize the health director to hire on
an independent contractor basis as many
nurses and as many translators as needed to
cover a total of 100 nurse hours and 100
translator hours per week.
FLSA Issues:
• Nonexempt positions & overtime
IRS Issues:
• Income tax & FICA withholding
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Employer concerned only
with results
Employer does not specify
means, methods, manner
of getting the work done
Employer does not
supervise
Employer does not
criticize, discipline or
terminate
Employer gives
assignments
Employer may
require particular
methods
Employee may be
disciplined or
terminated
Employee Independent
Contractor
“The general rule is that an individual is
an independent contractor if you, the
person for whom the services are
performed, have the right to control or
direct only the result of the work and not
the means and methods of
accomplishing the result.”
“Under the FLSA, employees are those who as a
matter of economic reality are dependent upon
the business to which they render service.”Dubois v. Sec’y of Defense (4th Cir. 1998).
“ . . . courts must determine whether, as a matter
of economic reality,” an individual is an employee
or an independent contractor in business for
himself.
Chao v. Mid-Atlantic Installation Svcs, Inc., (4th Cir. 2001).
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Six-Factor FLSA Test:
Degree of control employer has over worker
Worker’s opportunity for profit or loss
Worker’s investment in equipment/ materials
needed for the job
Whether the work requires a special skill
Permanency/duration of relationship
Extent to which services rendered are integral
part of employer’s operations.
Degree of Behavioral Control
Degree of Financial Control
Nature of the Relationship
➔No one factor is dispositive
Every situation different
IRS factors include FLSA factors
The IRS Divides Factors into Three Categories:
1. Must worker follow instructions?
• when & where to do work
• which tools/equipment to use
• what order or sequence to follow
• what other workers to use on job
• which worker should perform which part
of the job
• where to purchase supplies
Degree of Behavioral Control:
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Degree of Behavioral Control cont.:
2. Will the employer train the worker?
3. Where is the work performed?
4. Degree of skill, initiative or judgment
required to do the work
5. Opportunity for profit/loss
single most important factor
6. Worker investment
7. Business expenses reimbursed?
Degree of Financial Control:
8. Continuing relationship?
9. Key role in employer’s operation?
10. Benefits
11. Flat fee or regular wage/salary?
12. Does worker perform services for more
than one client?
13. Services offered thru corp.?
Nature of the Relationship:
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14. Can worker be discharged?
15. Can employer refuse to pay?
16. Written contract?
Nature of the Relationship (cont.):
When in doubt:
EMPLOYEE
Why Does it Matter?
PENALTIES!!!
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FLSA PENALTIES
Investigation by US DOL:
Back wages (2/3 yrs)
Liquidated damages
Injunction
Civil Penalty of $2,014
per violation
Can lead to criminal prosecution by US DOJ
Private Suit by Employee:
Back wages (2/3 yrs)
Liquidated Damages
Attorney’s Fees
IRS PENALTIES
Employer liability for 1.5% - 3% - 100% of
employee’s federal income tax liability
Employer liability for employer FICA
contribution and 20% - 40% - 100% of
employee’s FICA contribution
Interest on underwithheld amounts
Additional penalties
MYTHS:
The employer is not liable if:
• the worker wants to be an independent
contractor.
• the worker signed a contract.
• the worker works on a part-time, when
needed or occasional basis.
• the worker has another job.
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WHEN IN DOUBT . . . .
CLASSIFY AS AN EMPLOYEE.
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Advanced Fair Labor Standards Act Course
December 11-12, 2019
Compensable Time
Diane Juffras
Bob Joyce
Some Compensable Time Concepts
A. Principal activity or activities
B. Continuous workday rule
C. Integral and indispensable part of the
principal activity
Compensable Pre- or Post-Work Activities:
–Changing into required safety gear;
–Conducting safety checks;
–Moving equipment or other items needed
to perform the principal activity from a
storage location to the employee’s
workspace;
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Compensable Pre- or Post-Work Activities:
–Briefing an incoming shift;
–Receiving a briefing from an outgoing shift;
–Any other activities performed for the
benefit of the employer
Francine has a 20-minute lunch break.
“It’s short,” said her boss, “but if you stay in the
building, I give you permission not to respond to
any calls or e-mails during that time. That way
you’ll have plenty of time to eat.”
Francine’s boss routinely deducts the 20-minute
break from her wages. Lawful or unlawful?
Breaks And Meals
The FLSA does not require
employers to provide break time or
meal time.
Breaks of fewer than 30 minutes are
work time.
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Breaks And Meals
For meal periods to be UNPAID, they must be:
1. at least 30 consecutive minutes
2. uninterrupted, and
3. the employee must be free to use the
time for his or her own purposes
Meal Period at the Work Station
Bad idea:
It only takes one interruption to convert
the entire meal time to PAID work time
Sleep Time
Shift of fewer than 24 hours
Shift of exactly 24 hours or more
than 24 hours
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On-call time
“Engaged to wait”
vs.
“Waiting to be engaged”
“Engaged to Wait”
An employee who is required to remain
on his/her employer’s premises or so
close that he/she cannot use the time
effectively for his/her own purposes is
working while on call
→ Compensable Work Time
“Waiting to be engaged”
Periods during which an employee is
completely relieved from duty and which
are long enough to enable him/her to use
the time effectively for his/her own
purposes are not considered hours worked
→ NOT compensable work time
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How Do These Affect Whether On-Call
Time is Compensable?
• Beeper/cell phone/telephone/email
• Mileage limits – from workplace, on travel
• Discipline for failing to respond
• Responding electronically
• Frequency of calls
• Employee’s ability to trade on-call shifts
Compensable or Noncompensable? 1
City firefighters
1. carry pagers during their on-call shifts to
notify them of second-alarm calls
2. receive an average of six second-alarm
calls/month
3. are encouraged, but not required to
respond to 80% of second-alarm calls and
4. are allowed to trade shifts.
Compensable or Noncompensable? 2
EMTs and paramedics
1. are called back on average 1.1 and 1.4
times every four days;
2. have pager and are not required to remain
at station while on-call;
3. have five minute response time; and
4. are allowed to trade on-call time.
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Compensable or Noncompensable? 3
County maintenance employees are on call for
one week every four or five weeks and:
1. Are able to trade their on-call rotations;
2. Are called in infrequently;
3. Are not required to stay at work or at home
4. Must answer a page within an hour
5. Must be ready to report to work in 1 ½ hrs
Compensable or Noncompensable? 4
Electronic utility technicians are on-call to
monitor facility alarms weekdays from 4:30 p.m.
to 7:30 a.m. and 24 hours a day on weekends.
The technicians get 3 - 5 calls per on-call
period. Technicians don’t always have to report
to the workplace, but are required to take some
action by computer within 15 minutes of a call.
Compensable or Noncompensable? 5
Biomedical equipment repair technician at
county hospital
1. must wear a beeper;
2. must restrict his alcohol consumption; and
3. must return to the hospital within 20-30 min.
Employee has not had relief from on-call duties
over period of almost one year.
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Compensable or Noncompensable? 6
During after hours on-call time, receptionist
1. has no duties to perform other than to
wait for telephone calls or visitors; and
2. spends at least one or two hours
working on personal matters
Training Time Not Compensable If:
attendance is outside employee’s regular
working hours;
attendance is voluntary;
course not directly related to the
employee’s job; and
employee does not perform any
productive work during time at the course.
Paradise NC requires all new Public Works
employees to complete an OSHA general work
safety course as a condition of employment. It
does allows new employees 3 months in which
to complete the course, which is offered at the
local community college in the evening.
If an employee does not complete the course
within three months, s/he is fired.
Is Buena Vista required to pay employees for
this training time?
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Paradise NC requires all EMTs to take an
emergency medical treatment refresher course
every three years.
The course is offered in the evenings through
the local community college.
EMTs’ shifts are scheduled around the course
while they are enrolled in the course.
Is the time spent in the course compensable?
Paradise NC sends 1 employee to the Municipal
& County Administration course each year.
Attendees are usually exempt employees, but
this year the employee is nonexempt.
Buena Vista compensates the employee for
class time which is between 8:30 and 5. The
employee has asked to be compensated for
time spent doing homework in the evening.
If a state requires employees to attend
training to meet state certification
requirements, the time spent in training
is not hours worked.
Such training is voluntary.
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Travel Time
1. Home to Work
2. Travel All In The Day’s Work
3. Travel Away From “Home Community”
Home to Work/Work to Home
• Travel from home to work/work to home is
not compensable work time.
Travel All in the Day’s Work
1. Travel from home to first worksite =
non-compensable time
2. Travel from worksite to worksite during the day =
compensable work time
3. Travel from employer’s premises to work site =
compensable work time
4. Travel from last work site to employer’s premises =
compensable work time
5. Travel from last work site to home =
non-compensable time
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Travel Away From Home Community
1. Travel away from home is compensable when it
occurs during the employee's workday. The
employee is simply substituting travel for other
duties.
2. Travel away from home is compensable when it
occurs during what would be working hours, but
on nonworking days.
3. Time traveling away from home outside of regular
working hours as a passenger on an airplane,
train, boat, bus, or automobile is not compensable.
Travel - Example
• Regular work hours – 8 am to 5 pm
• Employee leaves Paradise for Chapel Hill
for a Monday morning meeting on Sunday
at 2 pm. Arrives in Chapel Hill at 6 pm.
• Time from 2 pm to 5 pm is compensable
work time.
• Time from 5 pm to 6 pm is not work time –
unless the employee is driving.
Travel Time Problem
Paradise, NC is sending four nonexempt employees
to a SOG Workshop in Chapel Hill.
• The Workshop runs from 8:30 – 3:30.
• The employees’ usual hours are 8:30 – 5:30.
• The trip to Chapel Hill takes two hours.
Two employees drive from Paradise to Chapel Hill
together, leaving at 6:30 am. One of the two does all
of the driving.
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• A third employee drives to Chapel Hill on
Sunday afternoon, leaving Paradise at 3 pm.
• The fourth employee takes the train to
Chapel Hill on Sunday leaving at 3 pm.
• What if the employee takes a train leaving at
7 pm on Sunday?
Telecommuting / Working from Home
• Exempt and non-exempt
• Accurate records of hours worked
• Awareness of what is work
• “Working off the clock”
• After hours contact by management
“Working off the clock” occurs when a
nonexempt employee works after either signing
out for the day.
Can result in working extra hours beyond the
employee’s scheduled or approved hours and
lead to potential overtime situations.
Can easily happen when nonexempt
telecommuters check their work email or use
agency smart phones/pads for agency business
after hours.
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Attending Grievance Hearings:
Always Compensable.
See 29 CFR § 785.42
Employee is injured on the job. His workers
comp carrier treating physician allows him to
return to work on light duty.
The injury requires repeated visits to physical
and occupational therapy. Some of the visits
occur during the workday and some after
working hours.
Is the employee compensated for any of the
physical and occupational therapy visits?
Medical Appointments
Time spent by an employee waiting for and
receiving medical attention on the premises
or off-premises at the direction of the
employer during the employee's normal
working hours is compensable.
Even where an employee is injured on the
job, if any of the required medical treatment
is provided after working hours or on non-
working days, that time is not compensable.
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Caring for K-9s
Work time is =
bathing, brushing, exercising, feeding,
grooming, cleaning of the dog’s kennel or
transport vehicle, administering drugs or
medicine for illness and/or transporting the
dog to and from an animal hospital or
veterinarian and training the dog at home.
Methods of Compensation
1. Have handler track time spent. Add to
work period.
2. Adopt a compensation arrangement for
dog duty based on actual hours worked.
Information from other agencies with this
experience may be considered.
3. Avoid “flat rate” or percentage
compensation arrangements.
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Advanced Fair Labor Standards Act Course
December 11-12, 2019
A Detailed Look at Calculating the
Regular Rate
Diane Juffras
Bob Joyce
Calculating Overtime:
The Regular Rate of Pay Includes
Hourly rate / or pro
rata salary
Nondiscretionary
bonuses
Payment for
compensable on-call
time
Longevity pay
Shift differentials
Retroactive salary
increases
Straight-fee payment
for non-compensable
on-call time2D
Examples of Nondiscretionary Bonuses
Bonuses to induce employees to work more
steadily, more rapidly or more efficiently or to
remain with the organization;
Attendance bonuses;
Individual or group production bonuses;
Bonuses for quality and accuracy of work;
bonuses for continuing in employment until the
time the payment is to be made.
3D
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Calculating Overtime:
Regular Rate Does NOT Include
Overtime pay
Value or payout of sick or vacation leave
Holiday pay or premium pay for work on the
weekends is excludable from the calculation
of the regular rate if the holiday or premium
pay rate is at least 30
4D
Calculating Overtime:
Regular Rate Does NOT Include
Discretionary bonuses
Reimbursement of travel, tuition or other
expenses
Value of benefits
Gifts (e.g., 20 year service award)
Severance pay
Uniform or car allowances
5D
Calculating Overtime with a Bonus or Straight-
Fee for Non-compensable On-Call Time
a. Paramedic Joe works 44 hours this week.
b. His hourly rate of pay is $10/hour.
c. He is on-call two nights during the week and is
paid an additional $27.50/on-call shift or $55.
What is his regular hourly rate?
D 6
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What is his regular hourly rate?
________________________________________
_____________________________
D 7
§ 778.110 Hourly rate employee.
(a) Earnings at hourly rate exclusively. If the employee is
employed solely on the basis of a single hourly rate, the
hourly rate is the “regular rate.” For overtime hours of work
the employee must be paid, in addition to the straight time
hourly earnings, a sum determined by multiplying one-half
the hourly rate by the number of hours worked in excess of
40 in the week. Thus a $12 hourly rate will bring, for an
employee who works 46 hours, a total weekly wage of $588
(46 hours at $12 plus 6 at $6). In other words, the employee
is entitled to be paid an amount equal to $12 an hour for 40
hours and $18 an hour for the 6 hours of overtime, or a total
of $588.D 8
§ 778.110 Hourly rate employee.
(b) Hourly rate and bonus. If the employee receives,
in addition to the earnings computed at the $12 hourly
rate, a production bonus of $46 for the week, the
regular hourly rate of pay is $13 an hour (46 hours at
$12 yields $552; the addition of the $46 bonus makes
a total of $598; this total divided by 46 hours yields a
regular rate of $13). The employee is then entitled to
be paid a total wage of $637 for 46 hours (46 hours at
$13 plus 6 hours at $6.50, or 40 hours at $13 plus 6
hours at $19.50).D 9
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Diane has to figure out Bob’s regular rate of pay.
Bob is a nonexempt employee of Paradise, NC.
Bob is paid $456 per week for a 37.5 hour
workweek.
Bob has worked 42 hours this week.
Bob is also entitled to a $100 for working on
Justin Bieber’s Birthday (March 1).
Longevity is always paid out at the end of the
week on which Justin Bieber’s Birthday occurs.
Bob will be due $2600.
What is Bob’s regular rate this week? D
10
§ 778.113 Salaried employees - general.
(a) Weekly salary. If the employee is employed solely on a weekly
salary basis, the regular hourly rate of pay, on which time and a
half must be paid, is computed by dividing the salary by the
number of hours which the salary is intended to compensate. If an
employee is hired at a salary of $350 and if it is understood that
this salary is compensation for a regular workweek of 35 hours, the
employee's regular rate of pay is $350 divided by 35 hours, or $10
an hour, and when the employee works overtime the employee is
entitled to receive $10 for each of the first 40 hours and $15 (one
and one-half times $10) for each hour thereafter. If an employee is
hired at a salary of $375 for a 40-hour week the regular rate is
$9.38 an hour.
11D
§ 778.113 Salaried employees - general.
(b) Salary for periods other than workweek. Where the salary covers a period
longer than a workweek, such as a month, it must be reduced to its workweek
equivalent. A monthly salary is subject to translation to its equivalent weekly wage
by multiplying by 12 (the number of months) and dividing by 52 (the number of
weeks). A semimonthly salary is translated into its equivalent weekly wage by
multiplying by 24 and dividing by 52. Once the weekly wage is arrived at, the
regular hourly rate of pay will be calculated as indicated above. The regular rate of
an employee who is paid a regular monthly salary of $1,560, or a regular
semimonthly salary of $780 for 40 hours a week, is thus found to be $9 per hour.
Under regulations of the Administrator, pursuant to the authority given to him in
section 7(g)(3) of the Act, the parties may provide that the regular rates shall be
determined by dividing the monthly salary by the number of working days in the
month and then by the number of hours of the normal or regular workday. Of
course, the resultant rate in such a case must not be less than the statutory
minimum wage.
12D
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How to Handle Longevity Pay
If longevity pay is added to the employee’s
base salary, then no special calculation or
addition need be made.
13D
How to Handle Longevity Pay
If longevity pay is paid in a lump sum annually or
bi-annually, the employer does not have to take
the bonus into account in calculating the hourly
rate until the bonus is paid.
– Once the bonus has been paid, the employer
must retrospectively compensate the employee for
the difference between the amount of overtime
previously paid for those weeks and the amount of
overtime the employee should have received had
the appropriate pro-rata amount of the bonus
been part of the calculation of the regular rate.
14D
The Best Way to Make an Overtime Pay Adjustment to
Include Longevity Pay in the Regular Rate
1. Pay out the longevity pay on the day designated by your policy
(Dec. 31, anniversary of hire, July 1, or even National Pastrami Day)
2. Pay out the regular rate/overtime pay adjustment on the payday
following the longevity payout.
3. Take the amount of longevity pay and divide it by the total number of
hours the employee worked during the year the longevity pay covers.
– Add both straight-time and overtime hours for the entire year.
– The year for which you are counting the hours does not have to be a
calendar year if, for example, you payout longevity on the anniversary of
hire date.
4. Divide this number by two and multiply by the total number of overtime
hours worked during the year represented by the longevity pay bonus.
This is the overtime adjustment payout number.
15D
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Calculating Bob’s Overtime Differential
Bob is a salaried nonexempt employee of Paradise, NC.
Bob is paid $456 per week for a 37.5 hour workweek or $12.16/hr.
Bob works 12 hours of overtime each month -- 144 hours annually.
Bob is paid $2600 in longevity pay.
Bob has worked a total of 1900 hours of straight time this year. (I’m
just telling you this; you can’t figure it out).
That means he has worked a total of 2,044 hours.
We divide: $2600 2,044 = $1.28 – $1.28 is the hourly longevity rate.
Multiply (½ x $1.28) by 144 overtime hours: $.64 x 144 = $92.16
Paradise owes Bob $92.16 to make up for the fact that his regular
rate did not include his longevity pay. D
16
Recap: The Hourly Rate of Salaried Employees
1. Establish what the salary is meant to cover.
Is E being paid for 40 hours, 37.5 hours, 45, 50?
2. Is E being paid flat salary for any hours worked?
3. If E is being paid a salary based on 37.5 hours,
then regular rate is salary divided by 37.5 and
so on. If E is being paid a salary for any hours
worked, then the regular rate will be different
each week.
4. Cannot be less than minimum wage.17
D
Salary Deductions and
the Regular Rate of Pay
The regular rate of pay is based on the
regular hourly rate or the regular rate before
any non-statutory deductions are made.
18D
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Deductions for the following reasons cannot
be taken into account in determining the
regular rate:
– salary advances
– lost or damaged property
– training costs
– disciplinary penalties
19D
When a nonexempt employee works
overtime hours, lawful deductions may be
made from the employee’s non-overtime
hours, but may not be taken into
account in calculating overtime.
20D
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Advanced Fair Labor Standards Act Course
December 11-12, 2019
Issues in Overtime Compensation
Diane Juffras
Bob Joyce
Seasonal Employee Exemption:
Establishment Requirement
Job duties must be carried out at a
facility that is a distinct, separate
physical place of business.
2D
Beaches
Boardwalks
Golf courses
Stadiums
Swimming pools
Nature centers
Summer camps
Fairgrounds
Ice-skating rinks
Tennis courts
Zoos
Museums
Examples that are publicly operated:
3D
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“Seasonal” means:
The separate establishment does not operate
more than seven (7) months per calendar year.
4D
An employee of a seasonal recreational or
amusement establishment cannot work in
another capacity for the same city or county
during that part of the year that the seasonal
facility is closed or business is slow.
True or False?
5D
Second job for the same employer:
Regular
Regular: Work that is regularly performed
in a second role for the same employer
must be counted as hours worked in that
workweek. If the total is over 40, then
overtime compensation must be paid.
6B
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Second job for the same employer:
Occasional and Sporadic
Occasional/Sporadic: The hours employees
who, at their option, work occasionally or
sporadically on a part-time basis for the
same agency in a capacity different from
their regular employment do not have to be
combined with the hours worked in the
primary job for to determine overtime liability.
7B
Special Detail Assignment
Firefighters
Law Enforcement
Voluntary
Independent employer
8D
Special Detail Assignments
1. The special detail work must be performed
solely at the employee’s option, and
2. The employers are separate and
independent.
– Determination on a case-by-case basis.
– The primary employer may facilitate the
employment or affect the conditions of
employment of such employees.
9D
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Not A Special Detail
Where an employee is directed by
his or her employer to perform work
for a second employer
10D
Employees with fluctuating shifts –
The 207(k) exemption
Available for LEOs and fire fighters
Alternative to 5 day/40 hour work week
Work period of 7 to 28 days rather than
work week
11D
Fire Fighters Are
Firefighters, paramedics, EMTs, rescue workers, or
hazardous materials workers who:
are trained in fire suppression;
have the legal authority and responsibility to engage
in fire suppression;
are employed by a fire department of a municipality,
county, fire district, or the state; and
prevent, control and extinguish fires or respond to
emergency situations where life, property, or the
environment is at risk. D 12
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Law Enforcement Officers Are
Employees who are empowered by State or
local ordinance to:
enforce laws designed to maintain peace
and order, protect life and property, and to
prevent and detect crimes;
who have the power to arrest; and
who have undergone training in law
enforcement. 13D
Also Law Enforcement
Security personnel in correctional institutions
who have responsibility for
•controlling and maintaining custody of inmates;
•safeguarding them from other inmates; or
•supervising such functions, regardless of
whether their duties are performed inside the
correctional institution or outside the institution.
This includes non-sworn detention officers who
meet the above test.D 14
Who Isn’t?
A building or health inspector, an
animal control personnel, and
sanitarians would normally not meet
the definition of an employee engaged
in law enforcement activities.
15D
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Who Isn’t?
Employees who may be members of a
fire or police department and who
perform support activities, such as
dispatchers, radio operators, repair
workers, clerks, or janitors do not qualify
for the 7(k) exemption.
16D
More – Who Isn’t
Dispatchers
Telecommunicators
911 operators
17D
Work Periods
May be any length from 7 to 28 days
Overtime is required after number of
hours specified for law enforcement
and fire fighters respectively
18D
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Examples of 7k Work Periods
Days in Work
Period
Fire Fighters Law
Enforcement
7 53 43
14 106 86
21 159 128
28 212 171
19D
Bona Fide Meal Periods for 207(k) Personnel:
A. Law enforcement tour of 24 hrs or less OR
more than 24 hours:
Meal periods of 30 min. may be excluded
unless officers are on-call during that time.
B. Firefighter shift of 24 hrs or less:
Meal periods may NOT be excluded.
C. Firefighters on duty more than 24 hrs:
Meal periods may be excluded if they are 30
min. and employee is relieved of duties (that is,
the employee is not on-call). 20D
Sleep Time for Non-207(k) Personnel
Shifts of less than 24 hours – no exclusion
Shifts of 24 hours or more – exclude no
more than 8 hours, must have 5
uninterrupted hours to exclude
Non 207(k): 29 CFR 785.21 and 785.22
21D
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Sleep Time for 207(k) Personnel
• Shifts of less than 24 hours – no exclusion
• Shifts of exactly 24 hours – no exclusion
• Shifts of more than 24 hours – exclude no
more than 8, must have 5 uninterrupted
hours to exclude
207(k): 29 CFR 553.222
22D
THE FLUCTUATING WORK WEEK
23D
How Does It Work?
Employee must be paid a fixed salary
for all hours worked, regardless of
whether the employee works fewer
than 40 hours or more than 40 hours
in a given workweek
24D
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1. There must be an understanding
between the employer and the
employee that the employee will be paid
using the fluctuating workweek method.
The Details
25D
2. The workweek must actually be
a fluctuating one.
26D
3. The employee must be paid a fixed
salary regardless of the number of
hours worked each week.
27D
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4. The salary must be large enough so
that the regular rate of pay is never
below minimum wage.
28D
5. In addition to the fixed salary, the
employee must be paid overtime for any
hours worked over 40 in the workweek.
The overtime rate is 50% of the regular
rate of pay for that workweek.
29D
Example 1 – No Overtime
Week One:
Employee works 40 hours
Regular salary for 40 hours is $400.
Regular rate of pay:
$10.00 ($400 divided by 40 hours)
Overtime:
No
Total salary for Week One:
$40030D
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Example 2 – No Overtime
Week Two:
Employee works 35 hours
Regular salary for 40 hours is $400.
Regular rate of pay:
$11.43 ($400 divided by 35 hours)
Overtime:
No
Total salary for Week Two:
$40031D
Example 3 –Overtime
Week Three:
Employee works 44 hours
Regular salary for 40 hours is $400.
Regular rate of pay:
$9.09 ($400 divided by 44 hours)
Four hours of overtime:
4 overtime hours x the overtime rate of pay
$4.55 ($9.09 divided by one-half) = $18.20
Total salary for Week Three:
$418.2032D
Example 4 – More Overtime
Week Four:
Employee works 50 hours
Regular salary for 40 hours is $400.
Regular rate of pay:
$8.00 ($400 divided by 50 hours)
Ten hours of overtime:
10 overtime hours x the overtime rate of pay
$4.00 ($8.00 divided by one-half) = $40.00
Total salary for Week Three:
$440.00
33D
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