New Overtime Regulations: Now What?

Transcription

1 Firm/ Corp Logo New Overtime Regulations: Now What? Presented by Scott B. Mario King & Spalding LLP

2 Mission of Pro Bono Partnership of Atlanta: To maximize the impact of pro bono engagement by connecting a network of attorneys with nonprofits in need of free business legal services.

3 Pro Bono Partnership of Atlanta Eligibility & Other Information In order to be a client of Pro Bono Partnership of Atlanta, an organization must: Be a 501(c)(3) nonprofit. Be located in or serve the greater Atlanta area. Serve low-income or disadvantaged individuals. Be unable to afford legal services. Visit us on the web at We host free monthly webinars on legal topics for nonprofits To view upcoming webinars or workshops, visit the Workshops Page on our website Join our mailing list by ing rla@pbpatl.org

4 Legal Information: This webinar presents general guidelines for Georgia nonprofit organizations and should not be construed as legal advice. Always consult an attorney to address your particular situation All rights reserved. No further use, copying, dissemination, distribution or publication is permitted without express written permission of Pro Bono Partnership of Atlanta.

5 FLSA basics Overview The new FLSA regulations Reclassifying employees Compensating non-exempt employees Alternative workers: independent contractors, volunteers and interns

6 Fair Labor Standards Act ( FLSA ) Passed during the Great Depression Three components: Child labor Minimum wage Overtime

7 Basic Overtime Requirements Employer must pay overtime wages at the rate of 1 ½ times an employee s regular hourly rate for all hours worked over 40 in a workweek Employer must keep accurate records of all time worked

8 Exempt vs. Non-Exempt Exempt: exempt from FLSA s minimum wage and/or OT provisions Must fit within one of the specific exemptions created by Congress (e.g., executive, administrative, professional) Non-Exempt: not exempt from FLSA s minimum wage and/or OT provisions

9 Unusual FLSA Exemptions Employees engaged in the catching or harvesting of fish, shellfish, crustaceans, sponges or seaweeds Movie theater employees Homeworkers engaged in the making of wreaths composed principally of natural holly, pine, cedar or other evergreens

10 Three Requirements to be Exempt Duties Employee must perform job duties that satisfy the duties test for the applicable exemption Salary basis Employee must be paid on a salary basis (subject to some exceptions) Salary level Employee must be paid at or above the minimum salary level established by the DOL (subject to some exceptions)

11 New FLSA Regulations Were supposed to take effect Dec. 1, 2016 Double the minimum salary level (from $23,660 per year to $47,476 per year) Minimum salary level will adjust automatically every 3 years

12 What Happened? States and business groups sued to block the new regulations from going into effect Federal judge issued preliminary injunction on Nov. 22, 2016

13 DOL has appealed to the U.S. Court of Appeals for the Fifth Circuit Case may head to U.S. Supreme Court Possible action by Congress Possible action by new Labor Secretary What Comes Next?

14 What Should You Do Now? Wait until the dust settles Raise salary to new minimum salary level Reclassify employees from exempt to nonexempt

15 Wait Until the Dust Settles Explain that the new overtime rule was to take effect December 1. Explain that a court has issued an order that has temporarily stopped the new rule from going into effect. State that your organization will continue to monitor the status of the new rule, but in the meantime it will comply with the law that is currently in effect.

16 Raise Salary to New Minimum Level Recall that all 3 tests must be met for exemption to apply: Salary basis Salary level Duties

17 Reclassify Employees Hourly non-exempt Salaried non-exempt Fluctuating workweek

18 Hourly Non-Exempt Example 1: Employee earns $31,200 per year ($600/wk.) and works 40 hours per week Annual Salary 2080 = Hourly Rate $31, = $15 per hour $15 per hour 40 hours = $600

19 Hourly Non-Exempt Example 2: Employee earns $31,200 per year ($600/wk.) and works 45 hours per week $15 per hour 40 hours = $600 straight time pay $ = $ overtime pay Total earnings = $712.50

20 Hourly Non-Exempt Example 3: Employee earns $31,200 per year ($600/wk.) and works 45 hours per week Weekly Salary / (40 + (OT Hours 1.5)) = Hourly Rate $600 / (40 + (5 1.5)) = $12.63 $12.63 per hour 40 hours = $505 straight time pay $ hours = $95 overtime pay Total earnings = $600

21 Salaried Non-Exempt Example: Employee earns $31,200 per year ($600 per week / $15 per hour) Employee works 36 hours Total earnings = $600 Employee works 40 hours Total earnings = $600 Employee works 45 hours Total earnings = $ ($600 straight time pay + $ overtime pay)

22 Fluctuating Workweek Employee is paid a fixed amount as straight time pay for all hours the employee works in a workweek Employee is paid overtime at the rate of ½ (rather than 1 ½) times the employee s regular rate of pay Employee s hourly rate fluctuates depending on number of hours worked: the more the employee works, the lower the employee s hourly rate

23 Fluctuating Workweek Employee s hours must fluctuate from week to week Requires a clear mutual understanding Can be difficult to administer employee s hourly rate must be calculated each week Consult with counsel!

24 Managing the Changes Control overtime hours Adjust work hours to focus on critical periods Flextime not the same thing as comp time! Redistribute workload Hire additional employees Push work to part-time employees Use alternative workers

25 Breaking the News Explain that a change in the law requires the organization to change the way it compensates certain employees. Explain impact on pay and benefits stress that employee will not experience any decrease in pay assuming employee continues to work same number of hours. Emphasize that the change to non-exempt status is being driven by new OT rule and is not a demotion in any way. Train employees on relevant policies (timekeeping, OT, breaks, etc.).

26 Compensating Non-Exempt Employees Time worked Breaks Training and meetings Travel time

27 Basic principles: Time Worked Employee must be paid for all time that the employee is required to be on duty, on the employer s premises, or at any other prescribed place of work. This includes time that the employee is suffered or permitted to work even if the employee is off the clock.

28 Copyright 2016 CFODailyNews.com

29 Breaks 20 minutes or less Must be paid 30 minutes or longer Can be unpaid as long as the employee is completely relieved of duty (no answering phones or s)

30 Training and Meetings Must be paid unless all four of the following requirements are met: Attendance is outside regular working hours Attendance is voluntary The training/meeting is not job related The employee does not perform any productive work during the training/meeting

31 Travel Time Compensable: Travel between job sites during the work day Travel to another city for special one-day assignments (although normal commuting time can be excluded) Overnight travel, if during the employee s normal work hours (on a work or non-work day) Not Compensable: Normal home-to-work commuting, unless employee begins work prior to commuting Overnight travel, if outside the employee s normal work hours (on a work or non-work day)

32 What the FLSA Does Not Require Breaks Vacation/PTO, sick leave, holidays Extra pay for working nights, weekends or holidays simply for working at those times Extra pay for working more than 8 hours in a day

33 Pros: Alternative Workers: Independent Contractors, Volunteers and Interns Flexibility Not covered by FLSA and other employment laws Cons: If worker is misclassified, employer can be liable for back pay, back taxes, lost benefits, contributions for unemployment insurance, fines and penalties Not covered by workers comp

34 Some factors: Independent Contractors Degree of control How the job is performed vs. the end result Skill/independent judgment required Who provides equipment/tools to do the job Whether services rendered are an integral part of the organization s business Length of relationship

35 Volunteers A volunteer is someone who works freely without compensation or expectation of compensation. Employees cannot volunteer to perform the same or similar duties they are paid to perform as employees. Employers cannot direct employees to perform volunteer work during the employee s normal working hours, even if the duties are not the same.

36 Six factors: Interns 1. Internship is similar to training provided in an educational environment. 2. Intern is the primary beneficiary of the internship. 3. Regular employees are not displaced by the intern; instead, the intern works under their close supervision. 4. Employer derives no immediate advantage from the internship; instead, the internship may impede operations. 5. Intern is not necessarily entitled to a job when the internship ends. 6. Both the employer and the intern understand that the internship is unpaid.

37 Questions?

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