the fair labor standards act : recent developments and issues of interest presentation by: scott m....
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The Fair Labor Standards Act:Recent Developments and Issues of Interest
Presentation By:Scott M. McElhaney
901 Main Street, Suite 6000Dallas, Texas 75202
(214) 953-6147(214) 953-5822 (fax)[email protected]
Written By:Ray C. Clark
901 Main Street, Suite 6000Dallas, Texas 75202
(214) 953-5956(214) 953-5822 (fax)
Presentation By:Jay K. Rutherford
301 Commerce Street, Suite 2400Fort Worth, Texas 76102
(817) 334-7246 (817) 334-7290 (fax)[email protected]
Amendments to the FLSA Minimum Wage
• Presently $5.15
• $5.85 as of July 24, 2007
• $6.55 as of July 24, 2008
• $7.25 as of July 24, 2009
FLSA Audits, Litigation & Other WHD Activities
2002 – $143 million for 242,000 ees
2003 – $182.1 million for 315,000 ees
2004 – $165.4 million for 266,000 ees
2005 – $134.2 million for 219,000 ees
2006 – $135.7 million for 222,000 ees
FLSA Audits, Litigation & Other WHD Activities
• FLSA wage & hour cases in federal court increased by 137% since April, 1999
• 4,389 FLSA cases filed between April 2005 and March 2006 (more than in any other recent 12 month period)
FLSA Audits, Litigation & Other WHD Activities
• Still far more civil rights cases (15,408) and ERISA cases (10,417)
• FLSA filings increased from 2000 – 2003
• In the years 2003 – 2005, FLSA filings declined or remained constant
• In 2006, FLSA filings increased again
FLSA Audits, Litigation & Other WHD Activities
Will there be increased WHD audit activity and litigation to ensure that employers honor the first phase of the minimum wage increase scheduled to take place next month?
FLSA Audits, Litigation & Other WHD Activities
WHD Opinion Letters:
• Since the 2004 FLSA Regulations, more than 100 attempting to explain exemptions
• from 2001 to 2003, only 35 such letters
FLSA Audits, Litigation & Other WHD Activities
Opinion Letter FLSA2006-7 (March 10, 2006)
• Deductions from exempt employees’ salaries for damage to or loss of company equipment violates FLSA salary requirement
• Deductions from non-exempt employees’ salaries can violate minimum wage and OT provisions
FLSA Audits, Litigation & Other WHD Activities
Does your company have a policy requiring employees to reimburse the company for damage or losses of company equipment, such as cell phones, lap tops, or other tools?
FLSA Audits, Litigation & Other WHD Activities
Opinion Letter FLSA2007-6 (Feb. 8, 2007)
• Full-day deductions from exempt employees’ salaries pursuant to state leave acts are permissible
• Partial-day deductions are not permissible unless expressly authorized by the FLSA regulations
• Leave under state leave acts may not qualify as FMLA leave, so no partial-day deductions
FLSA Audits, Litigation & Other WHD Activities
Be careful when administering state law leave.
Partial-day deductions for such leave are permissible only if the leave also qualifies as FMLA leave.
FMLA & the FLSA Salary Requirement
Partial-day deductions are permitted for partial-day absences due to intermittent or reduced schedule FMLA leave
If an exempt employee performs work while on FMLA leave, pay for only the hours worked (instead of full-day pay) is permissible
Intern Programs
Interns must be compensated unless the internship program that satisfies all six of the following criteria:
1.The training is similar to that which would be given in a vocational school.
2.The training is for the benefit of the trainee.
3.Trainees do not displace regular employees, but work under close observation.
Intern Programs
(continued):
4. The employer derives no immediate advantage from trainees’ activities and on occasion operations may actually be impeded.
5. Trainees are not necessarily entitled to a job at the completion of the training period
6.There is an understanding that trainees are not entitled to compensation
Review of FLSA “Exemptions”and the 2004 FLSA Regulations
FLSA exemptions exist for:• Executives• Administrators• Professionals• Computer Systems Analysts & Programmers• Outside Salespeople• Combination Exemption• Highly-Compensated Employees
The Two-Pronged Test
Prong 1: The Salary Requirement• Paid on a fee or salary basis on a weekly or less
frequent basis• With certain limited exceptions, pay must not be
subject to deductions
Prong 2: The Duties Requirement• “Primary duties” must be those of the applicable
exemption
The Salary Requirement
Safe harbor for improper salary deductions is now permitted where employers:
1. promulgate a clear policy (with an employee complaint mechanism) prohibiting improper deductions;
2. reimburse employees for improper deductions; and
3. commit in good-faith to comply with the FLSA overtime provisions in the future.
The Salary Requirement
Does your company have an FLSA “Safe Harbor” policy?
Executive Employees
Prong 1: Salary• $455 per week
Prong 2: Duties• Manages enterprise or department thereof• Directs the work of two or more other
employees• May hire or fire or make recommendations that
are “given particular weight”
Administrative Employees
Prong 1: Salary• Paid $455 per week
Prong 2: Duties• Performs office or non-manual work directly
related to the employer’s or customer’s management or general business operations
• Exercises discretion and independent judgment with respect to matters of significance
Professional Employees
Prong 1: Salary• Paid $455 per week
Prong 2: Duties• Learned Professional - work requires knowledge
of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction, or
• Creative Professional - performs work requiring invention, imagination, originality or talent in a field of artistic or creative endeavor
Computer Employees
Prong 1: Salary• Paid $455 per week or $27.63 per hour
Prong 2: Duties• Performs systems analysis techniques and
procedures, including consulting with users to determine hardware, software or system functional applications; or
Computer Employees
Prong 2: Duties (continued)
• Designs, develops, documents, analyzes, creates, tests, or modifies computer systems or programs, including prototypes, based on and related to user or system design specifications; or
• Designs, documents, tests, creates or modifies computer programs related to machine operating systems; or
• A combination of all of the above
Computer Executives & Administrators
Prong 1: Salary
• Not specified
Prong 2: Duties
• Performs a combination of exempt duties for exempt computer employees, executives, and/or administrators
Outside Sales Employees
Prong 1: Salary• No compensation requirement
Prong 2: Duties • Making sales or obtaining orders or contracts for
services or for the use of facilities• Customarily and regularly engaged away from
the employer’s place or places of business
Combination Exemption
Prong 1: Salary• Not specified
Prong 2: Duties • Performs a combination of exempt duties for
exempt executives, administrators, professionals, outside sales and/or computer employees
Highly Compensated Employees
Prong 1: Salary• $100,000 annual compensation, at least $455
weekly
Prong 2: Duties• Performs any one or more of the exempt duties for
exempt executives, administrators or professional employees
• Does not apply to employees who perform manual labor
Calculating FLSA Overtime
Common Errors• Confusion over the workweek• Omission of non-discretionary bonuses• Confusion over activity that counts as “hours
worked” under the FLSA
The Fair Labor Standards Act:Recent Developments and Issues of Interest
Presentation By:Scott M. McElhaney
901 Main Street, Suite 6000Dallas, Texas 75202
(214) 953-6147(214) 953-5822 (fax)[email protected]
Written By:Ray C. Clark
901 Main Street, Suite 6000Dallas, Texas 75202
(214) 953-5956(214) 953-5822 (fax)