1. PH HR
Paul Hilton, Human Resources Consulting, L.L.C.

2. PH HR 35 Years of Human Resources Management Experience
Acknowledged by the Society for Human Resources Management (SHRM) as a Certified Professional in Human Resources (SHRM-CP)
Certified by the Human Resources Certification Institute as a Professional in Human Resources (PHR)

3. The Fair Labor Standards Act

4. The Fair Labor Standards Act Hours WorkedPH
The Fair Labor Standards Act Hours Worked HR
Minimum Wage Deductions
Child Labor Tip Credit
Waiting Time On Call Time
Rest/Meal Periods Home to Work Travel
Other Travel Time Sleep Time
Lectures, Meetings, and other Training Programs
Travel away from and back to Home Community
Overtime Pay

5. Exemptions from Overtime Pay RequirementsPH
Exemptions from Overtime Pay Requirements HR
Certain employees who work on commission for retail or service establishments
Employees of railroads, air carriers, taxi drivers
Some announcers, news editors of local broadcasting stations
Employees of motion picture theaters
Farm workers
DOT Truck Drivers

6. Fair Labor Standards Act (FLSA)PH HR
Fair Labor Standards Act (FLSA)
Requires employees to pay their employees at least the federal minimum wage (currently $7.25 per hour) and overtime pay of time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.
FLSA was enacted in 1938 to serve two functions:
To spread employment across the largest possible span of available workers, and
To alleviate oppressive work conditions, including excessive hours worked.

7. Three Types of EmployeesPH HR
Three Types of Employees
Hourly – non exempt
Salaried – non exempt
Salaried – exempt

8. PH HR
Exempt or Not?
Section 13(a)(1) of the Fair Labor Standards Act (FLSA) exempts from overtime pay any individual employed in a bona fide executive, administrative, professional, computer or in a capacity of outside salesman.
The Department of Labor has developed three tests to define these exemptions. If any one of these three tests are failed, the position must be classified as hourly/non exempt.

9. The 3 Basic Tests Applicable to All White Collar Overtime Exemptions:PH HR
The 3 Basic Tests Applicable to All White Collar Overtime Exemptions:
The Salary Level Test
– last revised in 2004
The Salary Basis Test
The Job Duties Test

10. What is the “Salary Level” Test?PH HR
What is the “Salary Level” Test?
The Salary Level Test is simply the minimum weekly salary that an individual must make in order to be classified as exempt.
Presently= $455.00/week or $23,660.00/year

11. What is the “Salary Basis” Test?PH HR
What is the “Salary Basis” Test?
Exempt employees must generally be paid a set salary that cannot be reduced because of variations in the quality or quantity of their work.
They must be paid their full salary for any week in which:
They perform any work regardless of how many hours or days they work, or
They are ready, willing and able to work but are not able to work because no work is available.

12. What is the “Job Duties” Test?PH HR
What is the “Job Duties” Test?
Each of the white collar classifications (Executive, Administrative, Professional, Computer, Outside Sales) must satisfy a job duties test applicable to the respective classification to qualify as exempt.
Common to all classifications is a “primary duty” requirement.

13. EXECUTIVE EMPLOYEES At least $455 per week.
SALARY LEVEL TEST
At least $455 per week.
JOB DUTIES
TEST
The employee’s primary duty must be management-related.
AND
The employee must customarily and regularly direct the work of two or more full time employees, including the “authority to hire or fire” other employees, or the employee must be in a position to make “suggestions and recommendations as to the hiring, firing, advancement, promotion or another change of status of other employees” that will be given particular weight.
SALARY
BASIS TEST
Must be paid on a salary basis.

14. ADMINISTRATIVE EMPLOYEES
SALARY LEVEL TEST
At least $455 per week.
JOB DUTIES
TEST
The employee’s primary duty must consist of “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
The employee’s primary duty includes “the exercise of discretion and independent judgment with respect to matters of significance.”
SALARY
BASIS TEST
Must be paid on a salary basis.

15. PROFESSIONAL EMPLOYEES
SALARY LEVEL TEST
At least $455 per week.
(Does not apply to Outside Sales, Teachers, Doctors or Lawyers
JOB DUTIES
TEST
The employee’s primary duty must require “knowledge of an advanced type (defined as work which is predominantly intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment) in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction.” OR
The employee’s primary duty is “the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.”
SALARY
BASIS TEST
Must be paid on a salary basis. (Does not apply to Outside Sales, Teachers, Doctors or Lawyers)

16. COMPUTER EMPLOYEES At least $455 per week.
SALARY LEVEL TEST
At least $455 per week.
JOB DUTIES
TEST
Computer systems analysts, computer programmers, software engineers or other similarly skilled workers in the computer field are eligible for exemption, but only if the employee’s primary duty consists of:
The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
The 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;
The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
A combination of the aforementioned duties, the performance of which requires the same level of skills.
SALARY
BASIS TEST
Must be paid on a salary basis.

17. OUTSIDE SALES EMPLOYEES
SALARY LEVEL TEST
No minimum salary required.
JOB DUTIES
TEST
Whose primary duty is making sales or 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
Who is customarily and regularly engaged away from the employer’s place or places of business in performing such primary duty,
SALARY
BASIS TEST
Must be paid on a guaranteed salary, commission or fee basis

18. Payroll Recordkeeping RequirementsPH HR
Payroll Recordkeeping Requirements
Employee’s full name and SSN
Address including zip code
Birth date if younger than 19
Sex and occupation
Time and day of the week when workweek begins
Total hours worked each day
Total hours worked each workweek

19. Payroll Recordkeeping RequirementsPH HR
Payroll Recordkeeping Requirements
Basis on which employee is paid
Regular hourly rate
Total daily or weekly straight time earnings
Total overtime earnings for the week
All additions to or deductions from wages
Total wages paid each pay period
Date of payment and the pay period covered by the payment

20. The Top 10 Reasons Employees File Overtime LawsuitsPH HR
The Top 10 Reasons Employees File Overtime Lawsuits
Employees are working "off the clock" without being paid.
Employees are working "on the clock" but are not being paid for all of their work time.
Workers are wrongly classified as "exempt" from the overtime pay requirements.
Employees learn that they cannot “volunteer” their time without pay.
Shift differentials and bonuses are not being included in overtime calculations.

21. PH HR
More of the Top 10
Employees are not compensated for "training time.”
Employees work through lunch without pay.
Unlawful use of "Comp time."
Employees who work two different jobs within the same organization are not paid overtime for all hours worked after 40.
Workers are wrongly classified as “independent contractors”/1099 employees.

22. DOL Says that Most Independent Contractors Are Actually EmployeesPH HR
DOL Says that Most Independent Contractors Are Actually Employees
July 15, 2015, 15-page memorandum, Administrator’s Interpretation #2015-1
Is the worker performing services that the company is in the business of providing?
A worker who has the opportunity to hire others or purchase equipment and materials in order to increase his own profits is likely to be considered independent.

23. DOL Says that Most Independent Contractors Are Actually EmployeesPH HR
DOL Says that Most Independent Contractors Are Actually Employees
Workers should make some significant investments in their business in order to be considered an independent contractor in business for themselves.
A worker’s “business skills, judgement and initiative, not his technical skills, will aid in determining whether the worker is economically independent”… profit or loss.

24. DOL Says that Most Independent Contractors Are Actually EmployeesPH HR
DOL Says that Most Independent Contractors Are Actually Employees
A long term relationship between the parties suggests that the worker is an employee. Typically, an Independent Contractor works one project for an employer then moves on to another contract for another employer.
The worker must control meaningful aspects of the work to be performed such that it is possible to view the worker as a person conducting his own business.

25. The Profile of a Typical Independent ContractorPH HR
The Profile of a Typical Independent Contractor
He/she is in business for him/herself and has/does the following:
Business Cards, Marketing Materials, Website/Facebook
Needs no instruction on how, when or where to do the work.
Can hire assistants to do the work if needed
Incorporation, City/County Business License
Pays own business, furnishing, travel and equipment expenses
6. Membership in business/community organizations.
7. Liability Insurance
Continued. . .

26. The Profile of a Typical Independent ContractorPH HR
The Profile of a Typical Independent Contractor
An established office with needed tools/ materials.
Works for a variety of businesses and organizations.
Submits contracts for work to be accomplished.
Is paid when the contract is completed.
Works at his/her desired time and location using own methods and materials.
Has the very real possibility of making a profit or incurring a loss.
Anything short of this is an EMPLOYEE.

27. What the FLSA Does Not RequirePH HR
What the FLSA Does Not Require
Vacation, holiday, severance or sick pay
Meal or rest periods, holiday pay
Premium pay for weekends or holidays
Pay raises or other fringe benefits
A discharge notice, reason for discharge or immediate payment of final wages to terminated employees

28. DOL Statistics PH HR Complaints Registered: 2014 2015 22,557 21,902
22, ,902
Enforcement Hours:
1,188, ,154,373

29. DOL Statistics PH HR Overtime Back Wages Collected: 2014 2015
$240,831, $246,780,891
Number of Workers Receiving Back Wages
270, ,340

30. Top Industries for Overtime ViolationsPH HR
Top Industries for Overtime Violations
Restaurants
Healthcare
Daycare
Agriculture/Landscaping
Hotels and Motels
Construction
Non-Profits

31. FLSA Violations PH HR
The recovery period for FLSA violations is two years for non-willful violations and three years for willful violations.
Failure to pay appropriate overtime could result in the employer paying the employee for all overtime hours worked over the last two or three years, plus the possibility of paying the employee double back pay as a penalty.

32. PH HR
FLSA Violations
An employer does not have to intend to violate the law in order to be held liable.
Ignorance of the statute is no defense or excuse.

33. PH HR
FLSA Violations
Employers frequently believe that as long as their employees agree to certain pay arrangements, there is no violation of the law.
Employees cannot agree to waive their rights under the FLSA.
The law, not the employer nor the employee, defines an employer’s FLSA obligations.

34. PH HR
Non Compliance
The DOL estimates that 70% of all employers are not in compliance with the provisions of the FLSA.

35. Paul Hilton, Human Resources Consulting, L.L.C.PH HR
This presentation and the recommendations herein do not constitute legal advice, which can be offered only by an attorney in response to a detailed discussion of specific and factual situations.
Paul Hilton, Human Resources Consulting, L.L.C.