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Greater Sumter Chamber of Commerce FLSA: Exempt or Not Exempt, That is the Question May 23, 2012 David Dubberly Certified Specialist in Employment and.

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Presentation on theme: "Greater Sumter Chamber of Commerce FLSA: Exempt or Not Exempt, That is the Question May 23, 2012 David Dubberly Certified Specialist in Employment and."— Presentation transcript:

1 Greater Sumter Chamber of Commerce FLSA: Exempt or Not Exempt, That is the Question May 23, 2012 David Dubberly Certified Specialist in Employment and Labor Law

2 A Dramatic Question To be or not to be [exempt], that is the question [for HR Managers]. [With apologies to] William Shakespeare

3 Overview FLSA review and enforcement trends White collar exemptions – Executive employees – Administrative employees – Professional employees – Computer employees – Outside sales employees Salary basis rule and safe harbor – Business owners – Highly compensated employees

4 FLSA History Enacted in 1938 Can be tough to apply to modern work practices – Telecommuting – Flexible hours – Use of smartphones outside work

5 Main Provisions Minimum wage Overtime pay – Exemptionsmostly for white collar employees Focus of most FLSA litigation Regulations updated 2004 Youth employment Recordkeeping

6 Enforcement WHD – Investigations – Lawsuits Injunctive relief Back wages and liquidated damages Private Lawsuits – Back wages, liquidated damages, attorneys fees, and costs – Collective actions DOJ – Criminal prosecution and civil money penalties

7 WHD Getting More Aggressive 350 more investigators since 2009 13,500 more investigations since 2009

8 WHD Getting More Aggressive DOL-ABA Bridge to Justice referral program DOL apps for smart phones – Timesheet app » Can provide evidence for FLSA lawsuit » But time recorded on app may be inaccurate – Eat Shop Sleep app » DOL: Access hotel/motel, restaurant and retail industry enforcement data and easily identify violators – iCitizen Labor Report app » Adds OSHA data

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13 WHD Getting More Agressive Investigation information on internet at http://ogesdw.dol.gov http://ogesdw.dol.gov – MSHA, OSHA, EBSA, OFCCP, and WHD – On WHD: Employer names and addresses Back wage amount Employees due back wages Penalties

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15 Private Lawsuits Continue to Increase 2011 FLSA suits in federal court = 7,000 Approx. 200 class actions In 10 years, 300% increase in FLSA suits v. 1% increase in all suits Frequent complaints: Misclassifying employees as exempt Improper deductions from exempt employees salaries

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18 Executive Employees Pay: salary basis at least $455/week ($23,600/year) Management: primary duty is management of business or customarily recognized department or subdivision – Setting and adjusting employee pay and hours – Maintaining production or sales records – Evaluating employee performance – Handling employee complaints and grievances

19 Executive Employees Supervision: customarily and regularly supervises work of two or more other employees in department Authority: hires or fires other employees – Or recommendations as to hiring, firing, or other status changes given particular weight

20 Jobs that May Qualify* Plant manager Department supervisor Store manager Construction project superintendent *Depending on factsjob title alone insufficient to establish status

21 Jobs that Typically Dont Qualify* Working foreman Relief supervisor Store manager who spends only small part of time on exempt work

22 Case Study: Gooden v. Dolgencorp Inc. and Thomas v. Dolgencorp Inc. Decided Apr. 3, 2012 by federal court in SC Two DG store managers covered by executive exemption Primary duties were managerial – Hiring, supervising, and disciplining employees – Promoting, demoting, and firing employees – Providing training and setting and adjusting work schedules – Delegating and prioritizing tasks and assignments

23 Case Study: Gooden v. Dolgencorp Inc. and Thomas v. Dolgencorp Inc. Spent over 50% of time on these managerial duties These duties important to ensure success of stores Mostly exercised discretion in performing these duties – Not overly limited by district managers or SOP Paid more than nonexempt employees – And could earn bonuses based on store profitability

24 Salary Basis No reduction in pay for variations in quality or quantity of work – Can reduce paid sick or personal leave time Pay of full salary for any week in which any work performed, regardless of number of days or hours worked – Dont have to pay for any week in which no work performed

25 Permitted Deductions Absence for one or more full day for personal reasons other than sickness or disability Absence for one or more full days for sickness or disability if employee is covered under sick leave policy Offset equal to amount received for jury fees, witness fees, or military pay

26 Permitted Deductions Penalties imposed in good faith for violating safety rules of major significance Unpaid disciplinary suspension of one or more full days imposed in good faith for violation of written workplace conduct rules Partial workweek during first or last week of work Unpaid FMLA leave

27 Safe Harbor Policy Exemption not lost over salary basis if: – Clearly communicated policy prohibiting improper deductions with complaint mechanism – Reimburse employees for improper deductions – Good faith commitment to comply Not available if employer willfully violates policy by continuing to make improper deductions after complaints

28 Business Owners Own at least a bona fide 20% equity interest in business where works Actively engaged in management of business Salary level and salary basis requirements dont apply No duties test

29 Highly Compensated Employees Pay: total annual compensation of at least $100,000/year – At least $455/week paid on salary basis – Including commissions, non-discretionary bonuses, and other non-discretionary compensation – Excluding cost of benefits

30 Highly Compensated Employees Duties: customarily and regularly performs at least one exempt duty of an EAP employee – Primary duty includes performing office or non- manual work

31 Administrative Employees Pay: salary or fee basis at least $455/week ($23,600/year) Duties: primary duty is – Performance of office or non-manual work – Directly related to management or general operations of employer or employers customers

32 Administrative Employees Discretion: primary duty includes exercise of discretion and independent judgment with respect to matters of significance – Exercise of discretion and independent judgment = comparing and evaluating possible courses of conduct, and acting or making decision after various possibilities considered

33 Jobs that May Qualify* Insurance claims adjuster Certain financial industry employees Team leader for major projects Administrative assistant to senior executive HR manager Purchasing agent

34 Jobs that Typically Dont Qualify* Inspector Examiner/grader Comparison shopper Personnel clerk Mortgage loan officers

35 Case Study: Foster v. Nationwide Mutual Insurance Co. Decided Jan. 5, 2012 by federal court in OH 91 special investigators administratively exempt Primary duty was conducting investigations to resolve indicators of fraud in suspicious claims – Interviewed witnesses – Gathered information – Recommended and sometimes supervised vendors

36 Case Study: Foster v. Nationwide Mutual Insurance Co. Involved exercise of discretion and independent judgment – Used experience and knowledge … to distinguish relevant from irrelevant, fact from untruth, to resolve competing versions of events – Had nearly unilateral discretion in referring cases with unresolved fraud indicators to law enforcement Related to matters of significance – Helped determine if claims paid or not

37 Learned Professional Employees Pay: salary or fee basis (some professionals exempt from this) at least $455/week ($23,600/year) Duties: primary duty is performance of work requiring advanced knowledge – Work must be predominantly intellectual and require consistent exercise of discretion and judgment – Advanced knowledge must be in field of science or learning customarily acquired by prolonged course of specialized intellectual instruction

38 Jobs that Typically Qualify* Medical doctor, osteopathic physician, podiatrist, dentist, optometrist Registered nurse Certified medical technologist Dental hygienist Certified physician assistant Pharmacist Lawyer Engineer Teacher Accountant Executive chef, sous chef Certified athletic trainer

39 Jobs that Typically Dont Qualify* Licensed practical nurse Nurse aide Paramedic Paralegal, legal assistant Engineering technician Accounting clerk, bookkeeper Cook

40 Creative Professional Employees Pay: salary or fee basis (film industry employees exempt from this) at least $455/week ($23,600/year) Duties: primary duty is performance of work requiring invention, imagination, originality, or talent in recognized field of artistic or creative endeavor

41 Jobs Typically Qualify* Musician, composer, conductor, soloist Novelist, play writer Writer for ad agency Actor Painter, photographer Investigative news reporter Typically Dont* Beat reporter

42 Computer Employees (Other than those qualifying for EAP exemptions) Pay – At least $27.63/hour for every hour worked, including overtime, or – Salary or fee basis at least $455/week ($23,600/year) Duties – Apply systems analysis techniques – Design, document, analyze, create, or modify computer systems or programs – Modify computer programs

43 Jobs Typically Qualify* Computer systems analyst Most computer programmers Typically Dont* Entry level programmers Computer manufacture and repair CAD operators Help desk workers

44 Outside Sales Employees Pay: no requirement on basis or amount Duties: primary duty must be making sales or obtaining orders or contracts for services or use of facilities Location: customarily and regularly engaged away from employers place of business

45 Jobs that Typically Qualify* Most sales reps Pharma sales rep case heard by U.S. Supreme Court on Apr. 16, 2012 ( Christopher v. SmithKlineBeecham Corp. d/b/a GlaxoSmithKline ) Some real estate agents

46 Common Errors to Avoid Assuming all employees paid salary are exempt Improperly applying exemption Making improper deductions from salary Job descriptions and employee handbook not up to date

47 Questions/Comments? David Dubberly 803-253-8281 ddubberly@nexsenpruet.com


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