1. Fair Labor Standards Act: Overview and Trends for Government Employers
John E. Pueschel Womble Bond Dickinson (US) LLP October 12, 2018
© 2018 Womble Bond Dickinson (US) LLP

2. Fair Labor Standards Act
The Fair Labor Standards Act (FLSA) is the primary federal law governing wages and hours in employment
The FLSA:
Establishes a federal minimum hourly wage rate
Establishes overtime pay
Restricts the employment of minors (child labor)
Requires equal pay for men and women
Establishes recordkeeping requirements

3. FLSA Basics Who is covered?
The FLSA covers public agencies, which include the government of the United States, the governments of the states and their political subdivisions, and any agencies of the federal government, the states, or their political subdivisions

4. Overtime
Non-exempt employees are entitled to overtime pay in the amount of one and one- half times their regular rate for all hours worked in excess of 40 hours each work week
All employees are presumed to be overtime eligible
Burden is on the employer to prove that the employee is exempt from overtime

5. Hours Worked Hours worked includes time suffered and permitted
Must pay for all time worked

6. “Comp” Time
Comp time is paid at a rate of not less than one and one-half hours for each overtime hour worked
Under certain prescribed conditions, employees of State or local government agencies may receive compensatory time off instead of cash overtime pay

7. “Comp” Time
Law enforcement, fire protection, and emergency response personnel and employees engaged in seasonal activities may accrue up to 480 hours of comp time; all other State and local government employees may accrue up to 240 hours of comp time
An employee must be permitted to use compensatory time on the date requested unless doing so would “unduly disrupt” the operations of the agency

8. “Comp” Time at Termination
At the time of termination an employee must be paid the higher of (1) his or her final regular rate of pay or (2) the average regular rate during his or her last three years of employment for any compensatory time remaining "on the books" when termination occurs

9. Equal Pay
Employers may not pay lower wages based on gender for equal work where the performance of work requires “equal skill, effort and responsibility, and under similar working conditions”
Exceptions:
Seniority system
Merit system
System that measures earnings by quantity or quality of production
A differential based on any other factor besides gender

10. Improper Deductions from Exempt Employees’ Pay
The employer will lose the exemption if it has an actual practice of making improper deductions from exempt employees’ salaries.

11. Pay Deduction Safe Harbor
If an employer (1) has a clearly communicated policy prohibiting improper deductions and including a complaint mechanism, (2) reimburses employees for any improper deductions, and (3) makes a good faith commitment to comply in the future, the employer will not lose the exemption
UNLESS, the employer willfully violates the policy by continuing the improper deductions after receiving employee complaints

12. Proper Deductions From Salary of Exempt Employees
When employee has performed no work during entire workweek
When employee is absent for a full day for personal reasons other than illness or disability
When employee is absent for one or more full days due to sickness or disability if the deduction is made pursuant to bona fide plan, policy, or practice of providing compensation for salary lost due to illness

13. Proper Deductions From Salary of Exempt Employees
When employee has violated safety rule of major significance
When employee misses any work due to taking unpaid FMLA leave
To offset amounts employees receive as jury or witness fees, or for military pay
When employee is in initial or terminal week of employment, the employer may pay a proportionate part of salary for the time actually worked
Unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions

14. Special Pay Docking Rules for Public Employers
The FLSA provides an exception to the non-pay- docking rule for employees who are paid according to a pay system established by statute, ordinance or regulation, or by a policy or practice established pursuant to principles of public accountability
This means that public agencies may dock pay of exempt employees when accrued leave is not used because:
It has not been sought or has been sought and denied;
Accrued leave has been exhausted; or
The employee chooses to use leave without pay

15. Inclement Weather and the FLSA
If an employer is open for business, the DOL considers an absence caused by transportation difficulties experienced during weather emergencies as an absence for personal reasons

16. Inclement Weather and the FLSA
the employer does not have a bona fide benefits plan;
the employee has no accrued benefits in the leave bank;
the employee has limited accrued leave benefits and reducing that accrued leave will result in a negative balance; or
the employee already has a negative balance in the accrued leave bank
If an employer is closed for business for less than a full workweek, the employer must pay exempt employees’ full salary even if 

17. Compensable Time During Emergencies
On Call Time
Waiting Time
Volunteer Time

18. FLSA Exemption for Fire Protection and Law Enforcement Employees
Any employee who in any workweek is employed by an agency employing less than 5 employees in fire protection or law enforcement may be exempt from overtime

19. Definitions: Employees Engaged in Fire Protection
Fire protection personnel include firefighters, paramedics, emergency medical technicians, rescue workers, ambulance personnel, or hazardous material 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 State
Are engaged in the prevention, control, and extinguishment of fires or response to emergency situations where life, property, or the environment is at risk

20. Definitions: Employees Engaged in Law Enforcement
Law enforcement personnel 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

21. Special Rules for Fire Protection and Law Enforcement Employees
Fire protection and law enforcement employees may at their own option perform special duty work in fire protection and law enforcement for a separate and independent employer without including the wages and hours in regular rate or overtime determinations for the primary public employer
Fire Departments or Police Departments may establish a work period ranging from 7 to 28 days in which overtime needs to be paid only after a specified number of hours in each work period

22. Overtime on a “Work Period” Basis
For example, fire protection personnel are due overtime under a plan after 212 hours worked during a 28-day period, while law enforcement personnel are due overtime after 171 hours worked during a 28-day period
Overtime pay is required when the number of hours worked exceeds the number of hours that bears the same relationship to 212 (fire) or 171 (police) as the number of days in the work period bears to 28

23. Other FLSA Exemptions White collar workers: Executives Administrators
Professionals
Outside salespersons
Computer employees
Highly compensated employees

24. FLSA Exemptions: 2 Prong Test
Salary test: An employee must be paid on a “salary basis” to be exempt from the FLSA’s overtime requirements
Duties test: The DOL requires a duties test in addition to the salary level requirements

25. Salary Basis Test
Employees must regularly receive a predetermined and fixed salary for each pay period in which they perform any work
An employee’s salary cannot be reduced due to (1) variations in quality or quantity of work; and (2) employer has no work available as long as employee is willing & able to work
A salaried employee does not have to be paid for a week in which he performs no work.
Predetermined and fixed salary must not be less than $455 per week

26. Duties test for Executive Exemption
Primary duty is management of the enterprise or of a customarily recognized department/subdivision;
Customarily and regularly directs the work of other employees; and
Authority to hire or fire other employees or whose suggestions and recommendations as to hiring, firing, advancement, promotion or other change of status of other employees are given particular weight

27. Duties test for Administrative Exemption
Primary duty is the performance of office or non manual work directly related to the management or general business operations; and
Primary duty includes the exercise of discretion and independent judgment with respect to matters of significance

28. Duties test for Learned Professional Exemption
Primary duty is the:
(1) performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment,
(2) the advanced knowledge must be in a field of science or learning, and
(3) the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction

29. Duties Test for Creative Professional Exemption
Creative Professional: Primary duty is the performance of work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor

30. Duties Test for Outside Sales Exemption
Primary duty of making sales or obtaining orders for services or the use of facilities for which consideration will be paid; and
Customarily and regularly engaged in such work away from the employer’s premises.
Not subject to salary requirement!

31. Duties Test for Highly Compensated Employee Exemption
Total annual compensation of at least $100,000
Performs office or non-manual work
Customarily performs any one or more of the exempt duties for the executive, professional or administrative exemption

32. Independent Contractors
One who is entrusted to undertake a specific project but who is left free to do the assigned work and to choose the method for accomplishing it
Not an employee under the FLSA.
No overtime
No record keeping requirements

33. Independent Contractors: Economic Realities Tests
The extent to which the services rendered are an integral part of the principal's business
The permanency of the relationship
The amount of the alleged contractor's investment in facilities and equipment
The nature and degree of control by the principal
The alleged contractor's opportunities for profit and loss
The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor
The degree of independent business organization and operation

34. Independent Contractor: Irrelevant Factors
Label of “employee” or “ contractor ”
Full-time or part-time status
Class of employee
Title of employee

35. FLSA Penalties
Enforced by Wage & Hour Division of the Department of Labor and by private litigation
Recovery of monetary damages:
unpaid minimum wages or overtime wages for previous 2 years, if willful then 3 years
liquidated damages in an amount equal to the unpaid wages
attorney’s fees and court costs

36. FLSA Penalties
Civil penalties up to $1,964 per violation for repeated or willful violations
Criminal sanctions for willful violations
Injunctions are possible
Statute of Limitations:
2 years
If willful violation, then 3 years

37. FLSA Retaliation Claims
Test: The internal complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the FLSA and a call for protection.

38. Questions? Comments?