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  • The FLSA: Avoiding common pitfalls and costly mistakes

    April 8, 2014

    Compensation

  • Your panel

    Linda Ulrich Principal

    Buck Consultants Compensation Practice

    Don Berman Principal &

    Professional Services Leader HRTMS

    Julia Zuckerman, JD

    Director Buck Consultants

    Knowledge Resource Center

    Nancy Vary, JD Director

    Buck Consultants Knowledge Resource Center

    The information contained in this presentation and any accompanying documents does not constitute legal advice; consult with your legal and tax advisors before applying this information to your specific situation.

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

    https://www.bucknet.buckconsultants.com/my/MyWPPage/MySiteProfile.aspx

  • Agenda

    Given the current litigious landscape, it is important for organizations to ensure they are in compliance with federal, state, and local wage and hour laws

    Today, we will focus on key FLSA compliance challenges

    Determining exempt and nonexempt status

    Tracking hours worked

    & calculating wages correctly

    Understanding the role of job descriptions

    Is our programmer/

    analyst exempt or nonexempt?

    What about our assistants use of a

    company smartphone to respond to emails

    after work?

    What about bonuses that nonexempt

    employees receive? The job description lists technology that doesnt even exist

    anymore!

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • FLSA compliance challenges

    Federal laws State laws Lawsuits Penalties

    ITS COMPLICATED!

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • FLSA basics: federal minimum standards

    The Fair Labor Standards Act (FLSA) establishes federal standards for: minimum wage overtime pay recordkeeping youth employment

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • FLSA basics: coverage The FLSA covers:

    full-time and part-time employees (excludes independent contractors and volunteers) working for:

    o businesses involved in interstate commerce with $500k or more in sales/revenue annually

    o hospitals, nursing homes, residential care facilities, schools/preschools, and government agencies

    The FLSA requires employers to pay: covered employees no less than the federal minimum wage (currently

    $7.25 per hour) for all hours worked

    one and one-half times their regular rate of pay for all hours worked > 40 hours in a workweek

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • Compliance failures pose major liabilities for employers: The DOLs watchful eye

    The Department of Labor (DOL) is strengthening its outreach and enforcement The DOL estimates that almost 70% of employers are not in compliance Over the past few years, the DOL has increased the number of wage-hour

    investigators and taken other steps to encourage employees to report violations We can help program DOL timesheet app In FY2013, the DOL recovered nearly $250 million in back wages from employers The Administrations budget proposal for FY2015 shows a continued emphasis on

    workplace pay issues Aggressive enforcement efforts are expected to continue throughout 2014 and beyond

    The impact

    Employers time, distraction, reputational damage, litigation costs and potential $$$ liability

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • Compliance failures pose major liabilities for employers FLSA litigation is on the rise Wage and hour lawsuits are up over the past 5 years, with a

    particular surge in collective and class actions 10% increase in FLSA cases filed in 2012-2013

    Employers can incur enormous costs to defend even unproven claims

    FLSA regulations are intricate and case law is ever evolving, and complying with the FLSA can be confusing and challenging, particularly as: technology alters how, when, and where work can be performed job responsibilities shift and market pressures affect staffing and budgets

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • Reported 2014 FLSA settlements

    A long line of well-known, sophisticated companies have reportedly agreed to pay large sums to settle wage-hour lawsuits (some settlements still awaiting court approval). Most recently: Walgreens - $23M Wells Fargo - $15M JP Morgan Chase - $16M Tyson Foods $18.8M Roto-Rooter $14.2M PetSmart $10M

    How are such sizeable numbers possible? Is any relief on the way?

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • Obamas directive to the DOL: change overtime rules

    March 13, 2014 Presidential Memorandum orders DOL to: update existing protections in keeping with the intention of the FLSA address the changing nature of the American workplace simplify the overtime rules to make them easier for both workers and businesses

    to understand and apply

    Expected to narrow executive, administrative, and professional employees exemptions (so-called "white collar" exemptions) by: raising salary threshold of $455 per week changing current job duties tests

    Bright-line overtime test (requiring a certain % of work time be spent on exempt duties) a possibility

    Changes unlikely for some time if DOL pursues normal rulemaking process

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • Exempt or nonexempt: that is the question!

    Statutory exemptions from minimum wage and overtime pay for: executive employees administrative employees professional employees outside sales employees computer employees highly compensated employees

    Job titles do not determine exemption status!

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • Exempt or nonexempt: qualifying for an exemption

    To qualify for one of the FLSAs white-collar exemptions, an employee generally must satisfy the following 3 tests: salary level test

    Must be paid on a salary basis of at least $455 per week $100,000 for highly compensated employees Excludes outside sales, doctors, teachers, lawyers, certain computer-related jobs

    salary basis test Must receive a set amount of compensation each pay period regardless of variations in

    quantity or quality of work Must be paid a full salary for any workweek but need not be paid when no work is performed

    during the entire workweek Excludes outside sales, doctors, teachers, lawyers, certain computer-related jobs

    job duties test Distinct job duties for each exempt classification that depend on actual duties performed Percentage of time spent performing exempt duties v. non-exempt duties does not necessarily

    determine exemption status

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • #1 - A field technician sells an HVAC system while out on a call to service a customers heating system.

    Does this position qualify for an exemption?

    Webinar poll outside sales exemption

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • Outside sales exemption

    To qualify for this exemption: the employees primary job duty must be making sales, obtaining

    orders or contracts for services or for the use of facilities for which the client will be paid

    the employee must customarily and regularly work away from the companys place of business

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • #2 - A programmer analyst meets with internal clients to identify issues in their computer system and then programs a modification

    to rectify the issues.

    Does this position qualify for an exemption?

    Webinar poll computer employees exemption

    April 8, 2014

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    The FLSA: Avoiding common pitfalls and costly mistakes

    2014 Buck Consultants. All rights reserved

    Compensation

  • Computer employees exemption

    To qualify for this exemption, the employee must: be engaged in systems analysis and consulting with users design, analyze, and test computer systems design or test computer programs perform a combination of the above receive either a salary or fee of at least $455 per week or $27.63 per

    hour

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