1 Overtime Exemptions and Misclassification Issues: Brewing Wage and Hour Violations Could Seriously Interrupt Your Craft Presented by: Megan Winter
2 Number One Mistake Related to Employee Classification Not just anyone can be paid a salary, come and go without keeping track of their time, and not receive overtime.
3 Exemptions: Exempt from What? One or more of the following: Minimum wage requirements Overtime premium
4 How to Calculate? Overtime Pay Count hours worked over 40 in a workweek.* Exceptions: Alaska, California, Colorado, Nevada Pay 1.5 times the "regular rate" of pay (all pay all hours the pay covers) Include in the regular rate things like bonuses, commissions, incentive pay and other kinds of extra pay
5 Overtime Pay Some payments can be excluded from the regular rate. For example: Pay for un-worked holidays Pay for un-worked vacation time Discretionary bonuses (be careful with this!)
6 Exemptions The default is non-exempt Employees must receive overtime unless an exemption applies Exemptions are defined by law, not by agreement, job descriptions, or either party s intention. Employer bears the burden to show that the employee meets the exemption requirements
7 Why Does It Matter? Employee compensation and related costs are often one of the largest cash outlays that business owners face. This is compounded by the risk of making a mistake on how individuals are compensated. Wage and hour lawsuits and administrative charges against employers rise every year.
8 Why Does It Matter? Back Wages Liquidated Damages Civil Money Penalties "Reasonable" Attorney's Fees Possible Individual Liability Probably Not Insurable Injunctions Criminal Penalties
9 White Collar Exemptions Atlanta Baltimore Boston Charlotte Chicago Cleveland Columbia Columbus Dallas Denver Fort Lauderdale Gulfport Houston Irvine Kansas City Las Vegas Los Angeles Louisville Memphis New Phone England (858) New Jersey New Orleans Orlando Philadelphia Phoenix Portland San Antonio San Diego San Francisco Tampa Washington, DC
10 White Collar Exemptions Executive Administrative Professional Each have a salary basis test Duties test Must meet both to qualify for exemption
11 White Collar Exemptions Requirement One: Salary Basis Test
12 White Collar Exemptions Salary Basis Test: Must be paid on salary basis of at least: $455 per week $ per month $23,660 per year *state law may have different salary requirements
13 White Collar Exemptions Salary Basis Test: Salary is a fixed, predetermined amount of compensation Weekly salary must be paid without reduction for quantity or quality of work for any week in which any time was worked. No de minimus rule on work performed test
14 White Collar Exemptions May dock in full-day increments for one or more days of absence caused by: First and last week of employment Full-day absences for personal leave, vacation, and religious observances Full-day absences for illness or accidents if employer has bona fide paid leave program for sickness or accident and employee has no accrued benefits under that program Qualifying FMLA/CFRA leave can dock in smaller increments
15 White Collar Exemptions Requirement Two: Duties Test
16 Duties Test Exemptions Relate To Individuals Not To Job Descriptions, Pay Classifications, Positions, Job Groups, Conventional Wisdom, Etc. Detailed, Accurate, Current Job Information Is Essential. Must Be Based Upon Actual Work, Real Facts. Job Descriptions Do Not "Make Employees Exempt".
17 Job Descriptions Current, Accurate, Well-Written Ones Can Play A Role In Defending Exempt Status. Unrealistic, Inaccurate, Puffed-up, Out-Of-Date, Or Poorly- Written Job Descriptions Can: Cause Management To Make An Incorrect Decision Regarding Exempt Status, Hurt Defense Efforts.
18 White Collar Exemptions Customarily and Regularly Exercises Discretion and Independent Judgment as to Matters of Significance: Authority to make independent choices without immediate supervision about matters of significance. Contrast with the mere application of procedures and policies.
19 White Collar Exemptions Primarily engaged in duties which meet the test of the exemption Actual duties must meet test, although employee cannot underperform out of an exemption.
20 Primary Duty Relative importance of exempt duties. Percentage of time spent performing exempt duties. Relative freedom from supervision. Comparison of salary vs. hourly pay for non-exempt work.
21 White Collar Exemptions: Executive Four-part duties test: Management of enterprise or subdivision; Supervises 2 or more full-time employees; Authority to hire and fire; and Customarily and regularly exercise discretion and independent judgment
22 Staffing meets the Two or More Requirement General Manager Assistant Manager Assistant Manager Assistant Manager Full-time Employee Full-time Employee Half-time Employee Half-time Employee Half-time Employee Full-time Employee Half-time Employee Half-time Employee Half-time Employee
23 White Collar Exemptions: Executive Who meets this duties test? General Manager? Tasting Room manager? Assistant Manager?
24 White Collar Exemptions: Administrative Three-part duties test: Office or non-manual work related to general business operations of employer or customer Customarily and regularly exercise discretion and independent judgment Regularly assists a proprietor or bona fide executive or administrative employee; OR performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge; OR executes under only general supervision special assignments and tasks.
25 White Collar Exemptions: Administrative Who meets these duties? Controller Human Resources professional Marketing manager Event coordinator?
26 White Collar Exemptions: Professional & Creative Employee s primary duty is the performance of work requiring advanced knowledge, predominantly intellectual in character Work that requires advanced knowledge in a field of science or learning and is customarily acquired by a prolonged course of specialized intellectual instruction. Examples: law, medicine, theology, accounting, engineering, architecture, teaching, pharmacy OR Primary duty is performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor
27 Highly Compensated Employee Earns annual compensation of at least $100,000 or more, which includes at least $455 per week on salary basis Primary duty includes performing office or non-manual work Customarily and regularly performs at least one of the exempt duties of an exempt executive, administrative or professional employee
28 What About Brewmaster/Head Brewer? Level of importance to the business is not a factor Usually engaging in manual work If large enough, and he or she is managing at least two employees, then can fit in executive exemption Management must be primary duty
29 OTHER EXEMPTIONS Atlanta Baltimore Boston Charlotte Chicago Cleveland Columbia Columbus Dallas Denver Fort Lauderdale Gulfport Houston Irvine Kansas City Las Vegas Los Angeles Louisville Memphis New Phone England (858) New Jersey New Orleans Orlando Philadelphia Phoenix Portland San Antonio San Diego San Francisco Tampa Washington, DC
30 Outside-Sales Exemption Primary duty: making sales, or obtaining orders for contracts for services, products, or use of facilities for which the customer or client will pay. The employee is customarily and regularly engaged in this activity away from the employer s place of business. More than occasional but less than constant, normally done every work week No minimum pay requirement
31 Family Members & Business Owners Business that has as its only regular employees the owner, parent, spouse, child or other immediate family member, may not be an enterprise engaged in commerce pursuant to the FLSA. Business owners who own a bona fide 20% equity interest and who are actively engaged in management, are bona fide exempt employees.
32 The Big Picture Regularly Reconsider Exemption Status: Work Evolves Over Time Sometimes Away From Exempt Status, Sometimes Towards It. New Positions Continually Introduced No Assumptions About Exemption Status! Don't Fall For "Conventional Wisdom": "Everybody Treats These Jobs As Exempt." "The Employees Want To Be Exempt." "The Employee Agreed To Be Exempt. Quickly Consider What To Do To Correct Any Problems Be Careful About How You Implement The Changes Compliance Does Not Necessarily Mean Higher Wage Costs
33 The Big Picture Whether A Particular Job Will Be Ruled Exempt Is Often Uncertain. To Some Extent, A Question Of Risk And Risk-Tolerance. The "Scale" Approach: Ranking From 1 To 5. (1) : Successful Defense Prospects Are Low (5) : Successful Defense Prospects Are High (2), (3), (4) : Shades of Gray Resist Any Urge To Rationalize Exempt Status The Risk Of Claims And The Risk Of Loss Are Real.
34 Fisher & Phillips LLP ATTORNEYS AT LAW Solutions at Work Final Questions? Presented by: Megan Winter Phone: (858) Atlanta Boston Charlotte Chicago Cleveland Columbia Dallas Denver Fort Lauderdale Houston Irvine Kansas City Las Vegas Los Angeles Louisville Memphis New England New Jersey New Orleans Orlando Philadelphia Phoenix Portland San Diego Phone San (858) Francisco Tampa Washington, DC
35 Fisher & Phillips LLP ATTORNEYS AT LAW Solutions at Work Thank You Presented by: Megan Winter Phone: (858) Atlanta Boston Charlotte Chicago Cleveland Columbia Dallas Denver Fort Lauderdale Houston Irvine Kansas City Las Vegas Los Angeles Louisville Memphis New England New Jersey New Orleans Orlando Philadelphia Phoenix Portland San Diego Phone San (858) Francisco Tampa Washington, DC
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