US DOL REGULATIONS ON OVERTIME: WHAT BOARD MEMBERS NEED TO KNOW PRESENTED BY: REBECCA E. REIF AHLERS & COONEY, P.C.

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US DOL REGULATIONS ON OVERTIME: WHAT BOARD MEMBERS NEED TO KNOW PRESENTED BY: REBECCA E. REIF AHLERS & COONEY, P.C. RREIF@AHLERSLAW.COM

DISCLAIMER: Please note that this presentation is intended for informational and educational purposes and to provide general statements of the law. Each situation varies based on the individualized facts and the law is constantly evolving. Please consult with your attorney for specific legal information, advice, or individualized inquiries.

The Fair Labor Standards Act ( FLSA ) guarantees a minimum wage and overtime for hours worked above 40 hours per workweek unless an exemption applies. Applies to public agencies Goals: The FLSA Incentivize employers to hire more employees rather than requiring existing employees to work longer hours, and Reduce overwork and its detrimental effect on the well-being of workers.

Exemptions White Collar Exemption Executive Employees Administrative Employees Professional Employees Highly Compensated Employees Computer Employees Many more...

Exemptions White Collar Exemption. Three general requirements: o Salary Basis: Pay on a salaried basis, or receive a predetermined amount of pay each pay period regardless of quantity or quality of work performed; o **Salary Threshold: The employee must make a certain threshold $455 per week, or $23,660 per year (CHANGING 12/1/16); and o Primary Duties: The employee must perform specified primary duties commonly associated with executive, administrative, or professional functions.

Primary Duty Executive Manages organization, department or subdivision Directs work of 2 or more FTEs, and Has authority to hire or fire employees or recommendations are given significant weight

Primary Duty Administrative Performs office or non-manual work directly related to the management or general business operations, and Duties include exercising discretion and independent judgment with respect to matters of significance

Primary Duty Professional Performs work requiring advanced knowledge, predominantly intellectual in character, which requires consistent exercise of judgment and discretion Advanced knowledge is in science or learning, and Advanced knowledge acquired by prolonged course of specialized intellectual instruction

Exemptions Highly Compensated Employees. Three general requirements: Perform office or non-manual work, Customarily perform at least one of the duties of an executive, administrative, or professional employee, and **Make at least $100,000 per year (CHANGING 12/1/2016).

NEW Final Regulations Goals of the proposed rules, as stated by the Department of Labor ( DOL ): Update white-collar salary threshold Make it easier to understand which employees are and are not exempt

Exempt Salary Threshold Increase white collar threshold from $455/week to $913/ week ($47,476 per year) Based on 40 th percentile of lowest wage region in Census Bureau - South

Exempt Salary Threshold Meaningful Update. Updates have been few and far between: 1975: $155 per week ($8,060 per year) 2004: $455 per week ($23,660 per year) lower than the poverty threshold for a family of four. Clarity vs. Duties Test. DOL thinks duties test will be applied less often with increased salary threshold

Highly Compensated Employees Increase in the threshold from $100,000 per year to $134,004 per year. Based on 90 th percentile of full-time salaried workers nationwide

Annual Threshold Requirement Self-adjusting update to the White-Collar salary threshold and the Highly Compensated Employee threshold every three years. The DOL will publish the updated rates : In the Federal Register at least 150 days before they become effective, and On the DOL's Wage and Hour website. Both salary threshold tests will be calculated based on the same data

Primary Duties Not This Time DOL sought commentary on whether the White-Collar primary duties tests are effective at screening in or out exempt employees. The DOL chose NOT to change primary duty tests at this time tasks or time

Electronic Devices The DOL did not propose regulations regarding overtime eligible employees who use electronic devices, such as smartphones or laptops, for work-related duties outside of work hours. The DOL found that this issue is beyond the scope of the rulemaking.

What Comes Next? The new regulations become effective December 1, 2016 But are they going to stay?

H.R. 6094 Regulatory Relief for Small Businesses, Schools, and Nonprofits Act To provide a six month delay in the effective date of the DOL rule increasing salary thresholds Passed House of Representatives on September 28, 2016: Yeas 246, Nays 177 President Obama has threatened a veto if the measure passes, but

Nevada et. al v. Dept. of Labor 16 states (including Iowa) have joined a federal lawsuit against the Department of Labor in the United States District Court for the Eastern District of Texas Allegations: The salary test alone does not properly differentiate white-collar workers; The three year automatic increase in salary threshold is unlawful (no accounting for economic conditions or rulemaking procedures); Unconstitutional enforcement of overtime rules constitutes improper federal control over State budgets/resources

Who It Does NOT Affect Teaching Employees - 29 C.F.R. 541.303(b) Primary Duty: Teaching, tutoring, instructing, lecturing, or imparting knowledge to students Includes: Teachers include professors, adjunct instructors, and teachers of skilled and semi-skilled trades and occupations *Coaches: Athletic coaches and assistant coaches may fall under the exemption if their primary duty is teaching, which may include instructing athletes in how to perform their sport. If, however, their duties primarily include recruiting athletes or doing manual labor, they are not considered teachers. DOL Guidance for Higher Ed

Who It Does NOT Affect Academic Administrative Professionals paid at least the same an entry level teachers - 29 C.F.R. 541.204(a)(1) Perform: administrative functions directly related to academic instruction or training Examples: Superintendents, principals, academic counselors and advisors

Who It Will Affect Non-academic administrative positions - 29 C.F.R. 541.204(c)(2) Building management and maintenance; Staff providing services for health of students; Social workers, psychologists, lunch room managers or dietitians. Note: May still meet other EAP exemptions, but will need to meet salary threshold Computer employees paid on an salary basis who are in essence White Collar employees FLSA Sec. 13(a)(1)

Potential Penalties for Misclassification Back Wages Money Damages Employees can seek payment of all wages wrongfully withheld - unpaid minimum wages or unpaid overtime compensation. 29 U.S.C 216(b). Liquidated Damages Money Damages Presumably to deter violations, the FLSA authorizes recovery of liquidated damages equal to the amount of unpaid wages. Id. Attorneys Fees and Costs Regardless of the amount of monetary damages awarded, the FLSA permits recovery of attorneys fees and costs. Id. Caution: Class Action Potential The FLSA permits employees to bring the claims of themselves and other employees similarly situated. Id.

The DOL suggests: - Raise salaries Preparations - Evaluate and realign employee workload - Pay overtime above a salary: Nonexempt employees do not have to be paid on an hourly basis (but still need to meet recordkeeping track timeand pay overtime)

Preparation for 12/1/16 Employee reclassification if needed (with thorough documentation); Training/information sessions regarding overtime eligibility, timekeeping requirements, and whether other benefits will change; Reviewing and revising job descriptions for accuracy; Reviewing and revising employee handbooks and policies; Plan for increased payroll and other administrative costs; Use of Compensatory time: Prohibited for private employers Public employers have basic authorization within set parameters

Preparation for 12/1/16 Managing expectations for newly non-exempt employees and their managers: Volunteering (paid & unpaid) Preapproval for overtime (still have to compensate!) Travel Time On-Call Time Determining Hours Worked Break and Meal Times

Questions? Rebecca E. Reif Ahlers & Cooney, P.C. 100 Court Avenue, Suite 600 Des Moines, IA 50309 515-243-7611 rreif@ahlerslaw.com