the fair labor standards act for public employers
TRANSCRIPT
The Fair Labor Standards Act and Public Employers
Wisconsin Public Employer Labor Relations AssociationJanuary 22, 2015
Christopher L. [email protected](414) 277-5519
Fred [email protected](608) 283-2618
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• The FLSA establishes:
– Minimum wage
– Overtime
– Recordkeeping
– Youth employment standards
• Enacted in 1938, applied to public sector employers since 1986
• Wisconsin overtime law defers to the FLSA and its implementing regulations for public sector employees
The Fair Labor Standards Act (“FLSA”)
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• FLSA and state wage and hour litigation continues to outpace all other employment litigation
• Threat of collective and class action lawsuits
• Impact of 2011 Wisconsin Act 10
– Reconsider exempt classifications for employees
Recent FLSA Trends
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• Wage & Hour Division (“WHD”) of DOL continues stepped up enforcement:
– Recently initiated web based Bridge to Justice program
• In 2013, the DOL collected over $250 million from employers in back wages as part of wage & hour compliance investigations
Highly Active Department of Labor
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• In April, Obama instructed DOL to review and update “white collar” overtime exemptions
– Expecting proposed revisions in early 2015 that will focus on increasing the $455 minimum salary requirement and including a requirement that the salary be sufficiently large to ensure that it provides at least minimum wage for all hours worked
– Could be as high as $40,000 - $45,000 per year
• Providing more bright-line tests for the duties portion of the white collar exemptions
• Increase of minimum wage on federal contractors to $10.10
FLSA On President Obama’s Radar
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• Off-the-clock work
• Proper exemption classification
• Improper deductions
• Who is a volunteer?
• Determining the regular rate of pay
• Training time
Common FLSA Mistakes for Public Employers
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• All work “suffered or permitted” by the employer is considered hours worked by the employee, even if the employer did not request the employee to perform the work
• Even work an employer does not actually know about but reasonably believes is occurring must be compensated
• Employees who “volunteer” to work through lunch or past the end of their shift are performing work that must be compensated
Off-the-Clock Work (non-exempt employees)
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• Particular concerns:
– Telecommuting
– Working from home
– Easy access to email
• What should the employer do?
– Adopt rules that prohibit nonexempt employees from performing unknown work before or after work hours, or requiring written authorization from a supervisor before a nonexempt employee works overtime
– Enforce the rule when violations occur
Off-the-Clock Work (non-exempt employees)
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• The FLSA exempts certain “white collar” employees from the Act’s overtime requirements so long as they receive a minimum salary of $455 per week (or $17.63 per/hr for computer employees) and they perform exempt duties
– Administrative
– Professional
– Executive
• Must meet salary basis and duties test
• Extensive regulations promulgated by the DOL
• Analysis requires careful consideration the actual job duties
• Avoid making determinations based on job title, bargaining unit membership or the fact that an employee is paid on a salary basis
Proper Exempt Classification
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• To be paid on a “salary basis” generally means that the employee receives a predetermined amount of pay this is not reduced because of variations in quantity or quality of work performed
– If work is performed, employee receives full salary regardless of the number of days or hours worked
Salary Basis Test (exempt employees)
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• Certain deductions are permissible
– Full-day deduction for disciplinary suspensions for breaking workplace conduct rules
– Full-day deduction as penalty imposed for violation of safety rules of major significance
– Full-day deduction caused by sickness or disability, if the company maintains a plan that provides compensation for loss of salary caused by sickness and disability and the employee exhausted his or her “bank” of leave
– Public employers, unlike private employers, may take partial-day deductions for personal reasons or illness if pursuant to policy or practice consistent with principles of public accountability
The Salary Test Limits Permissible Deductions
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• Primary duty means the position’s “principal, main, major or most important duty that the employee performs.”
• Factors to consider include:
– The relative importance of the exempt duties as compared with other types of duties;
– The amount of time spent performing exempt work;
– The employee’s relative freedom from direct supervision;
– The relationship between the employee’s salary and the wages paid to other employees for the kind of non-exempt work performed by the employee.
Duties Test: What Does “Primary Duty” Mean?
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• Primary duties must include:
– Management of the enterprise or of a recognized department or subdivision thereof
– Direct the work of two or more other employees or their full-time equivalents
– Authority to hire or fire or offer valued suggestions as to hiring, firing, advancement, promotion or any other change of status
White Collar Exemptions: Executive
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• Primary duties must include:
– Performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
– Exercise of discretion and independent judgment with respect to matters of significance.
White Collar Exemptions: Administrative
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• Employee who leads a team of other employees assigned to complete major projects (e.g., selling part of business, negotiating real estate transaction, designing and implementing productivity improvements) for the employer even if the employee does not have direct supervisory responsibility over the other employees on the team.
• Sales engineer that assists sales by custom-designing telecom systems to meet each prospective customer’s unique needs in which employee was required to compare and evaluate discrete product options.
• Account manager responsible for learning customer’s business and translating their needs into technical specifications to be developed by in-house software engineers in order to adapt software to customer’s needs.
Examples of Exempt “Administrative” Employees
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• Includes persons employed as
– Computer systems analysts
– Computer programmers
– Software engineers and other similarly skilled workers in the computer field.
Computer Employee Exemption
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• Employees engaged in the manufacture or repair of computer hardware and related equipment;
• Employees whose work is highly dependent upon, or facilitated by, the use of computers and computer software programs;
• Individuals who work in a “help desk” capacity who perform installation or troubleshoot computer or network issues.
Computer Employees do not include:
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• A “volunteer” is an “individual who performs service for civic, charitable or humanitarian reasons, without promise, expectation or receipt of compensation
– The FLSA excludes volunteers from the definition of individuals covered by the Act
• Public employers are permitted to pay volunteers for expenses, “reasonable benefits” and a “nominal” fee and typically include:
– Uniform allowances/cleaning; clothing wear and tear; costs of attending classes needed to perform volunteer services
– Group insurance/pension
– Nominal fees must be justified, cannot be substitute for compensation
Volunteer Work (statutory non-employees)
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• Non-exempt employees must be paid 1.5 times their “regular rate” for overtime work
• Regular rate is not the same as an employees’ hourly rate of pay
• Regular rate includes “all remuneration for employment paid to, or on behalf of, the employee” except specific exemptions
• Must include:
– Shift differential pay
– Standby pay/on-call pay
– Non-discretionary bonuses
– Special assignment pay
– Compensable travel time
Determining the Regular Rate of Pay (non-exempt employees)
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• In general, time spent at lectures, meetings, etc. is compensable unless attendance is:
– Voluntary (no expectation from supervisor or department to share knowledge)
– Outside of the employee’s regular working hours
– Not directly related to the employee’s job, and
– Employee does not perform any productive work during the training
Training Time
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• FLSA does not require, for example, meal breaks, on-call pay, premium pay (other than overtime) or restrict the number of hours an employee (over age 16) may work per day or per week
• BUT, when offered, the FLSA does come into play
• For example,
– Meal periods – Must be completely relieved of duty, must receive 30 minutes consecutive time off, Wisconsin employees must be permitted to leave the employer’s premises
– On-call pay – Pay must be included in regular rate; time is compensable if employer places significant restrictions on the employee
• Always consider CBAs, and state or local requirements
FLSA Triggering Actions
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• Non-willful violations under the FLSA have a two-year statute of limitations
• Willful violation have a three year statute of limitations
– Employer knew or violation or showed reckless disregard for the law
• Compliance measures should be taken by employer
Time Period for Claiming Damages
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• Conduct training of supervisors and payroll staff
– Supervisors are the first line of defense and also likely key witnesses in any litigation
– Training should include all aspects of wage and hour compliance
– Payroll staff should also receive comprehensive training
Preventative Measures to Avoid Claims Liability
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• Create Comprehensive Compensation Policies
– Clear policies need to address issues such as impermissible deductions, overtime payments, time recording and off-the-clock work issues
– Policies should spell out appropriate rules and also provide reporting mechanisms for employees to raise potential violations
Preventative Measures to Avoid Claims Liability
The Fair Labor Standards Act and Public Employers
Wisconsin Public Employer Labor Relations AssociationJanuary 22, 2015
Christopher L. [email protected](414) 277-5519
Fred [email protected](608) 283-2618