the wage & hour trifecta -...

The Wage & Hour TrifectaDOL Proposals on Overtime Exemptions, the Overtime Calculations and Joint EmploymentMay 1, 2019

Lori BrownCEO, ComplianceHR

[email protected] @labrown1419

• Former Littler Shareholder• Former General Counsel / HR

Chief of Global Security Organization

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Answering Your Questions

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OBJECTIVES FOR TODAY’S SESSION:

1. Joint Employment2. Exemptions from Overtime3. Calculating Overtime – the Regular Rate 4. Technology Can Help!5. ComplianceHR Free Trial Code

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Tammy McCutchenVP Strategy, ComplianceHR

[email protected] @tdmccutchen

• Littler Principal• Former Administrator, US-DOL

Wage & Hour Division and author of 2004 revisions to the overtime regulations

• Leading authority on federal and state wage and hour laws


Joint Employment

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Under the FLSA, an employee may have one or more joint employers

29 C.F.R. Part 791, which defines when two companies are considered joint employers, was last revised in 1961, 58 years ago

A joint employer is jointly and severally liable for any FLSA violations

Joint Employment Basics


Published in Federal Register on April 9

60-day public comment period Comments due on June 10

www.regulations.gov

Search for RIN # 1235-AA24

The Notice of Proposed Rulemaking


http://www.regulations.com/

Does the potential joint employer actually exercise the power to:

1. Hire or fire the employee

2. Supervise and control the employee’s work schedules or conditions of employment

3. Determine the employee’s rate and method of payment

4. Maintain the employee’s employment records

New Four-Part Balancing Test


The FLSA definition of “employ” as “to suffer or permit work”

“Economic dependence” on the potential joint employer

Whether the employee: Is in a specialty job or a job otherwise requiring special

skill, initiative, judgment, or foresight Has the opportunity for profit or loss based on managerial

skill Invests in equipment or materials required for work Employs helpers or assistants

Not Relevant to the JE Analysis


Operating as a franchisor Requiring a business partner to institute workplace

safety measures, wage floors, or sexual harassment policies

Providing a sample employee handbook Allowing a business partner to operate on your

premises Jointly participating in an apprenticeship program,

association health plan, or retirement plan

Business Practices that Do Not Impact JE Status


Review your contracts with business partners in light of the DOL’s proposed four-part balancing test

Preparing for Change –Joint Employment


Overtime


Minimum salary of $455 per week ($23,660 annual)

Salary must be guaranteed and paid in full for each week the employee performs any work No salary required for lawyers, doctors,

teachers and outside sales

Computer employees also may be paid $27.63 per hour

Meet the duties tests for exemption:

Executive

Administrative

Professional

Computer

Outside sales


“White Collar” Exemption Basics

Published in Federal Register on March 22

60-day public comment period Comments due on May 21 www.regulations.gov Search for RIN # 1235-AA20




Minimum Salary Level

POLL: Is the Minimum Salary Level:


Too highToo lowJust right

Up to 10% of the minimum salary level may be satisfied with non-discretionary bonuses, commissions and other incentive pay that are paid annually or more frequently

Let’s do the math:$679 – 10% = $611.10 weekly salary

plus

$35,308 x 10% = $3,530.90 bonuses/commission paid during the year


Bonuses, Incentive Payments, Commissions

POLL: How Likely Is Your Company To Use The 10% Rule?


Unlikely Likely Very likely

DOL will review every four years 20th percentile of salaries in

South/Retail for minimum salary

Through notice-and-comment rulemaking

No automatic increases


Future Increases

Review salary levels Review job duties


Preparing for Change –Overtime Exemptions

Increase Salary or Reclassify? Pull salary and incentive pay data

for all employees earning below $35,309

Calculate the cost of increasing salary to the minimum $35,309

Compare with the cost of paying overtime: (weekly salary / 40) * 1.5 * expected OT hours


Review Salary Levels

• Review HRIS data• Review documents• Conduct interviews• Research and apply the law

Review Job Duties:The Manual Process


• Complete a questionnaire

• Get an answer

Review Job Duties: An Easier Way


Let’s Check it Out!


Traditional OT Audit690 Minutes

Navigator OT20 Minutes

97% Less Time Per Evaluation


Regular Rate


Under the FLSA, non-exempt employees must be paid after 40 hours worked in a week overtime at 1.5 times an employees “regular rate” of pay

The “regular rate” of pay includes “all remuneration for employment” earned in a work week divided by all hours worked in a work week

Some types of compensation are excluded from the regular rate by statute

All Remuneration ÷

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Regular Rate Basics

INCLUDED

Hourly wages or salary Commissions Non-discretionary bonuses Prizes and awards related to work Shift or job differentials On-call pay

EXCLUDED

Employee benefits Payments for time not worked Business expense

reimbursements Certain premium pay Gifts for Christmas or special

occasions Discretionary bonuses


Compensation Included and Excluded

Published in Federal Register on March 29

60-day public comment period

Comments due on May 28 www.regulations.gov Search for RIN # 1235-AA24



Tuition reimbursement and repayment of student loans

Payments for bona fide meal periods and certain types of “call-back” pay

Business expense reimbursements, even if not “solely” for the benefit of the employer


Proposed Exclusions from the Regular Rate

Wellness benefits, including gym memberships, fitness classes and on-site specialist treatment

Discounts on retail goods and services

Payouts to employees of unused vacation and sick leave

Accident, unemployment and legal services benefits

No proposed changes to the definition New examples of excludable

discretionary bonuses Bonuses paid to employees who

make unique or extraordinary efforts that are not awarded according to pre-established criteria

Bonuses for overcoming challenging or stressful situations

Employee-of-the-month bonuses Severance bonuses


Discretionary Bonuses

Conduct an audit of your pay codes Identify codes used for non-exempt

employees that are not being included in the regular rate

For each code, identify specific exclusion from the regular rate, if any 29 USC 207(e) 29 CFR Part 778 (current and

proposed)


Preparing for Change –Regular Rate

EarningsCode Description

1 REG HRLY2 OT HRLY6 SAFETY7 INCENTIVE10 VACATION11 SICK PAY12 HOLIDAY20 BONUS25 SHIFT PREMIUM30 S/T DISABILITY40 HEALTH INS PRE TAX50 401(k)61 AUTO ALLOW63 OPERATOR INCENTIVE68 PER DIEM

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clients.”

- Senior Employment CounselFortune 100 Company


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