making business sense of wage-hour laws and litigation ... · making business sense of wage-hour...
TRANSCRIPT
September 2, 2015
Exempt or Non-Exempt? That is the Question…
Making Business Sense of Wage-Hour Laws and Litigation
1
Richard A. MillisorPartner
Fisher & Phillips LLPCleveland, Ohio Office
(440) 838-8800
Atlanta Boston Charlotte Chicago Cleveland Columbia Columbus 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 San Francisco Tampa Washington, DC
Relationship Between Federal and State Law
Fair Labor Standards Act
Ohio Minimum Fair Wage Standards Law
Exemptions Under the Federal (and Ohio) Law
Exemptions (“White Collar”)
Executive
Administrative
Professional
Outside Sales
Proposed FLSA “White Collar” Exemption Changes
If you raise the salary threshold to the 40th percentile of earnings of all full-time salaried workers – by 2016 the threshold would $970/week ($50,440/year) per DOL estimate.
Proposed FLSA White Collar” Exemption Changes
What you need to know today (Blaring headlines notwithstanding):
Although unknown, we expect:
• New Proposed salary thresholds to survive final rule
• No major changes to duties tests
These provisions are not in effect.
The exemption rules have not yet been
changed.
Employers are not required to do
anything differently for the moment.
Comment Period Now Closed. Final
Regulations likely in early-Spring 2016.
What you need to do:
Evaluate any exempt position earning less then $50,000 Options to convert non-exempt status with (or without)
increasing overall compensation: o Convert to hourly non-exempt (with or without onetime adjustment)o Covert to salary fluctuating work week non-exempt (with or without
onetime adjustment)o Increase salary threshold to save exempt status
Coming
SoonMore on
white collar exemptions
The Basics: What the Laws RequireFEDERAL Ohio
Minimum Wage
Unless exempt, employees must receive at least the minimum wage for every hour worked in each work week. The federal minimum wage is $7.25/hr, and no increases are currently planned. These amounts are applicable to the compensation calculations discussed in Chapter 6, “Exemptions under the Federal Law”.
All employees must receive at least the state minimum wage, $7.95, effective 01/01/14, for every hour worked. The minimum wage will increase to $8.10, effective 01/01/15.
Beginning in 2006, the Ohio Constitution was revised to require that each September the wage will increase and be implemented January 1st
of each year. The increase is tied to inflation.
Overtime
Unless exempt, employees must receive at least one and one-half times their “regular rate of pay” for all hours worked in excess of 40 in each work week. The “regular rate” consists of all compensation, including commissions and incentives.
Same.
Exemptions
The federal law contains eight different exemptions from minimum wage, overtime and record keeping or from overtime only that allow dealers to avoid paying overtime to certain employees who meet specific qualifications.
Same.
Record Keeping
Employers must keep an accurate record of the hours worked by each non-exempt employee each day and each week and a record of the amounts paid and deducted. Records must be retained for three years.
Same.
Child Labor
The law limits the hours of work and job duties of minors under 18 years of age.
The law limits the hours of work and job duties of minors under 18 years of age and closely tracks the restrictions under the federal law.
Most Favorable Provision
The provision of the federal, state or local law most favorable to the employee applies. That means an employer in Ohio must ensure that it is complying with federal, Ohio and even local laws.
What Constitutes “Hours Worked”?
Travel Time Training TimeMeal and Rest
Breaks
Work Performed Away from Employer
Time Worked at Other Related
Employer
Time Spent Performing
Additional Duties
Unapproved Overtime
On Call Time
Holidays, Vacation, Sick Pay
Medical Treatment/Drug
Test
Compensatory Time Off (“Comp
Time”)
Time Spent Changing Into and Out of Employer-
Provided Uniforms
Overtime Due Only After 40 “Hours Worked” in the
Work Week
Time Records Under Federal and Ohio Law
Who is required to Keep a Time Record?
What is Required to be Recorded?
How Should you Keep a Record of Hours
Worked?
How Should Time Card Be Corrected?
Employees who Punch in Early and
Work Unauthorized OT?
What About Rounding?
What About Automatic Meal
Period Deductions?
What About Docking Pay for Reporting Late or Other Disciplinary
Infraction?
Executive Exemption
Is in charge of a department or sub-department, and
Supervises the work of two or more full time employees, and
Receives a salary or guarantee of at least $455/wk, and
Has the authority to hire and fire.
Executive
EXEMPT
Dealer
Dep’t Manager
NOT EXEMPT
Ass’t Manager
CSI Manager
Lot Manager
Inventory Manager
Finance Manager
Administrative Exemption
Primary duty is performing office or
non-manual work related to
management policies or general
business operations, and
Exercises discretion and independent
judgment with little or no supervision
(holds a position of responsibility), and
Receives a salary or guarantee of at least $455/wk.
Administrative
EXEMPT
Finance
Human Resources Manager
Office Manager
Tax
Quality Control
Purchasing
Advertising/Marketing
Safety and Health
Labor Relations
Government Relations
NOT EXEMPT
Admins
Accounts Payable
Accounts Receivable
Clerical Workers
Employees who do not Exercise Sufficient Discretion
Professional Exemption
Performs duties requiring advanced knowledge in a field
of science or learning requiring specialized
instruction, and
Consistently exercises discretion
and independent judgment , and
Receives a salary or guarantee of at least
$455/wk.
Highly-Compensated Employees
Performs any one of the exempt duties of an executive, administrative, or professional employee.
Is guaranteed total annual compensation of at least $100,000 per year, and
Receives a salary or guarantee of at least $455/wk, and
Performs office or non-manual work, and
Can we “dock” a salary?
• “Salary basis of pay” means that an employee receives a fixed, predetermined amount, subject to very limited deductions, for any week in which any work is performed.
• “Docking” destroys the overtime exemption for executive, administrative, professional, and highly compensated employees.
• However, docking is permissible for all other categories of employees.
“Salary Basis” Safe Harbor
Calculating Overtime
Options Available to Reduce Overtime Costs
• Limit The Employee To A Maximum Of 40 Hours Per Week
• Restructure The Employee’s Job Duties To Bring Him Within One Of The Exemptions To Overtime
• Restructure The Employee’s Pay Plan To Pay Him Entirely On Commissions And Thereby Make Him “Commission-paid” Under The Federal And Ohio Law
• Use A Fluctuating Rate Pay Plan
• Base Overtime Payments Only On Hours Actually Worked
Reducing the Cost of Overtime
Deductions from Wages
Federal
0 hrs 40 hrs 50 hrs
PERMITTED DEDUCTION
$18.00
$12.00
$7.25
Example: Non-exempt employee is paid $12.00 per hour and works 50 hours. The maximum deduction that
may be made under the federal law is the difference between the employee’s hourly rate and current
minimum wage for the first 40 hours worked. The deduction may not affect any overtime due.
$12.00 - $7.25 = $4.75 x 40 hrs = $190.00
See Restrictions on Deductions from Salaries of Executive, Administrative, and Professional Employees
Meals and Rest Breaks
• Not Required unless minor or nursing mother.• Compensable unless 30min for meal, 20 minute for break
and completely relieved of duty.
Thank you!Questions?
24
Richard A. MillisorPartner
Fisher & Phillips LLPCleveland, Ohio Office
(440) 838-8800
Atlanta Boston Charlotte Chicago Cleveland Columbia Columbus 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 San Francisco Tampa Washington, DC