FLSA – The Square Peg in the Round Hole 1 Laura E. Prather Jackson Lewis P.C. | Tampa |

FLSA Fair Labor Standards Act (“FLSA”) – enacted in 1938 establishes minimum wage, overtime pay, recordkeeping and youth employment standards U.S. Department of Labor administers and enforces the FLSA. 2

The Times, They Are A Changin’ In March of 2014, President Obama directed the DOL to update the regulations for overtime. Regulations to extend overtime protections to millions of employees who are currently classified as exempt. 3

Pay Attention! Potential Changes in FLSA Regulations Two reasons to listen to what we are saying… 4 80% of DOL investigations into employers’ wage practices result in a finding of a violation Data suggests that over 70% of employers are not in full compliance with the Fair Labor Standards Act

Liability Overview Significant Wage and Hour Litigation Continues Increased Government Audits Collective And Class Actions Liquidated Damages Are The General Rule And, Of Course, Plaintiffs’ Attorneys’ Fees 5

FLSA Filings, 1990 –

FLSA Basics Enacted in 1938-Great Depression Four key components:  Minimum wage  OT worked beyond 40 hours in a workweek  Recordkeeping requirements  “Oppressive child labor” prohibited 7

Overtime Non-exempt employees must receive overtime pay for hours worked over 40 per workweek. One and one-half times the regular rate of pay. The FLSA does not require overtime pay for work on weekends, holidays or regular days of rest. No requirements for double pay. 8

Hours Worked = Compensable Time Compensable Working Time Includes... Time spent in primary work activities; Idle or stand-by time controlled or requested by employer; Unauthorized working time; On-Call; Travel time; Time spent by an employee outside normal hours “required, suffered or permitted to work.” 9

Compensable Time – Additional Issues Waiting In Bag Check Lines Time Waiting To Be Engaged Waiting For Computers To Boot Up Changing Time Time Record Discrepancies Auto-Deducts For Meal Periods 10

Compensable Time – Additional Issues Rest Breaks Compensable Time Up to 20 minutes Time Records Not Filled Out By The Employee Remote Access/PDA’s 11

Meal Periods ● Not required by FLSA, but required by many state laws ● Meal periods are considered non-working time if: ● at least 30 minutes in duration; and, ● employee is completely relieved of duties ● Meal periods are compensable if the employee is frequently interrupted. Treatment of Breaks & Meal Periods 12

Rest Breaks There is no federal requirement. However, under the FLSA, if employers do offer short breaks (5 to 20 minutes), they are considered time for which employees must be compensated. 13

Exemptions – No Overtime Required Employees Who Are “Exempt” Are Not Entitled To Overtime. Employees Are Presumed To Be Non-Exempt – It Is Employer’s Burden To Prove Exemption. Numerous Exemptions – We Will Focus On White Collar Exemptions. Job Title Is Irrelevant. Paying Someone A Salary Does Not Make Them Exempt. High Salary Not Determinative. Everything might change – Soon. 14

White Collar Exemptions – Salary Basis White-Collar Exemptions Exempt Duties + Paid Salary basis Salary basis – Minimum salary of $455/wk (Federal) – higher in some states Unreduced for variations in the quality or quantity of work; Paid full salary for any week where any work performed, and Deductions cannot be made for absences occasioned by the employer or by the operating requirements of the business 15

Executive Employees’ Duties Test Primary duty is management of the enterprise or of a customarily recognized department or subdivision; Customarily and regularly directs the work of two or more other employees; and Authority to hire or fire other employees or whose suggestions and recommendations given particular weight. 16

Professional Employees’ Duties Test Primary duty requires knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction; OR Primary duty is the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. 17

Administrative Employees’ Duties Test Whose primary duty is the 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 Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. 18

The (Often-Abused) Administrative Exemption 1. Authority to formulate, affect, interpret, or implement management policies or operating practices 2. Authority to waive / deviate from established policies / procedures without prior approval 3. Authority to negotiate and bind the company on significant matters 4. Provides consultation or expert advice to management 5. Involved in planning long- or short-term business objectives 6. Authority to handle atypical or unusual situations? 19

Outside Sales Exemption Primary duty of making sales or of obtaining orders or contracts for services; or for the use of facilities for which a consideration will be paid by the client or customer; and, Customarily and regularly engaged away from the employer’s place or places of business; customary and regular typically done weekly [No Salary Basis Requirement!] 20

“Computer Professional” Exemption Primary duty of (A) application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional applications; or (B) design, development, documentation, analysis, creation, testing, or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; or (C) design, documentation, testing, creation or modification of computer programs related to machine operating systems; or (D) a combination of duties described in (A), (B) and (C), the performance of which requires the same level of skills; or; Employed as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field. [$455 per week or $27.63 per hour] 21

“Highly-Compensated” Test Performs office or non-manual work Be guaranteed total compensation of at least $100,000 per year, which includes minimum of $455 per week paid on salary basis. Customarily and regularly performs one or more exempt duties of an executive, administrative or professional employee Does not apply to computer exemption 22

Akerman | 23 Review for accuracy Ensure tip credit has been properly addressed Rate Retention Uniform purchases Proper time keeping Compensation and Overtime

New White Collar Regulations In March 2014, President Obama instructed the Secretary of Labor to: “Update” the white collar exemptions; “Address the changing nature of the workplace;” “Simplify the regulations to make them easier for both workers and businesses to understand and apply.” “Because these regulations are outdated, millions of Americans lack the protections of overtime and even the right to the minimum wage.” 24

Timing For The New Regulations Timetable the last time DOL amended these regulations: NPRM published: 3/31/2003; Comment period closed: 6/29/2003 (3 mos); Final Rule published: 4/23/2004 (10 mos); Effective date of Final Rule: 8/23/2004 (4 mos); If same schedule holds true this time, an NPRM issued in June 2015 would lead to a Final Rule in around July 2016 with an effective date in November

What Changes Are Coming? Expected changes include: Raising salary threshold. Currently-$455 per week, or $23,660 a year. In a January 2015 letter, 31 Democrats in Congress urged $69,000 a year, or more than $1,300 a week, which reportedly covers the same percentage of the workforce as $255 did in 1975 and would affect about 10 million currently exempt workers. Most commonly discussed figure: $42,000 a year, or around $800 a week, affecting 3.5 million workers. 26

What Changes Are Coming? “Primary duty” analysis may become a thing of the past. Concern over court interpretation. DOL may look to the California “primarily engaged in” standard, employee spends more than half of his or her working time performing exempt tasks. May use pre-2004 regulatory percentage (e.g., 20% or 40%) for amount of time employee spends on non-exempt duties unrelated to the employee’s exempt role. 27

What Can You Do Now To Prepare? 1.Review current job descriptions-accurate job duties and core functions and responsibilities of each position. 2.Identify currently exempt positions that may be in the gray zone. 3.Educate leaders that these regulations are coming. 28

What Can You Do Now To Prepare? 4.Develop contingency plans if the minimum salary for exempt status increases to $40,000, $50,000, or even $60,000. Raises to maintain exempt status Reclassifying roles to non-exempt 29

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