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FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL OVERTIME RULES FOR SCHOOLS COPYRIGHT 2016 AMERICAN FIDELITY ADMINISTRATIVE SERVICES, LLC ESB-5353-0317 The views and opinions expressed in this presentation are those of the authors and do not necessarily reflect those of CASBO.
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FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Jul 14, 2020

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Page 1: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

FLSA ESSENTIALS:

KEEPING UP WITH THE FLSA - FEDERAL OVERTIME RULES FOR SCHOOLS

C O P Y R I G H T 2 0 1 6 A M E R I C A N F I D E L I T Y A D M I N I S T R AT I V E S E R V I C E S , L L C

E S B - 5 3 5 3 - 0 3 1 7

The views and opinions expressed in this presentation are those of the authors and do notnecessarily reflect those of CASBO.

Page 2: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Learning Objectives• Understanding Key FLSA Requirements

• Update on status of DOL Final Rule

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 3: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActBasic rule: All employees receive one and one-half times the regular rate of pay for working more than 40 hours per week UNLESS exempt by the law

Question: Who is exempt?

Answer: It’s complicated!

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 4: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Executive, Administrative, Professional Exemption

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 5: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

The so-called “white collar” exemption

Must meet BOTH of the following two tests ◦ The “Salary Basis” test

◦ The “Duties” test

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 6: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

The Salary Basis Test

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 7: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

1) “Salary Basis” test:

To meet the “Salary Basis” test, the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed.

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 8: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards Act Overtime Regulations

Executive, administrative, professional exemption:

2) “Salary Basis” test

To meet the “Salary Basis” test the amount of salary paid must meet a minimum specified threshold under the law, currently not less than $455 per week.

Not applicable to teachers

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 9: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards Act Overtime Regulations

Executive, administrative, professional exemption:

The “Salary Basis” test ◦ NOW: $455/week ($23,660 per year)

◦ DELAYED: $913/week ($47,476 per year) under the Final Rule

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 10: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActStatus of DOL Final Rule

Delayed by recent overtime litigation in the U.S. District Court of Eastern District of Texas

Court enjoined DOL from implementing and enforcing the Final Rule

DOL appeal of the injunction is still pending

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 11: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

Delayed: Periodic adjustments to the “Salary Basis” test ◦ Final Rule provided for

◦ Automatic adjustments every three years

◦ Use of nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 12: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActSpecial test for highly compensated employees

Must have a primary duty performing office or non-manual work

Must customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee

Must be paid at least $100,000 annually (Final Rule would increase to $134,004 level) ◦ DELAYED: Final Rule’s increase to the compensation requirement for “highly compensated employees”

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 13: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

Increased “Salary Basis” test projected to make an additional 4.2 million workers eligible for overtime

DOL Final Rule: Overtime Questions and Answers:

https://www.dol.gov/WHD/overtime/final2016/faq.htm

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 14: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActIf the Final Rule is enforced, how will employers respond?

May increase exempt employees’ salaries to the new level

May convert to nonexempt and pay overtime

Considerations◦ Budgetary impacts

◦ Impact on morale

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 15: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActIf the Final Rule is enforced, how will employers respond?

May require advance approval of overtime hours, but overtime accrues regardless◦ Can be difficult to cap/control hours

May make other changes to benefits or operations

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 16: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

The “Duties” Test

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 17: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards Act“Job titles never determine exempt status under the FLSA. Additionally, receiving a particular salary, alone, does not indicate that an employee is exempt from overtime and minimum wage protections.”

-Guidance for Higher Education Institutions on Paying Overtime under the Fair Labor Standards Act:

https://www.dol.gov/whd/overtime/final2016/highered-guidance.pdf

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 18: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

The “Duties” test

Remember how I said earlier that “it’s complicated”?

This is really complicated

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 19: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

The “Duties” test

To qualify for exemption, employees must meet the “Salary Basis” test and must meet the “Duties” test

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 20: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

3) The “Duties” test

To meet the “Duties” test, the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 21: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

The “Duties” test

Multi-factor test based on DOL regs◦ Depends on type of employee and on the facts and circumstances of each

position

◦ Misclassification is a common problem

◦ Proactive employers conduct FLSA audits to detect issues

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 22: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

Administrative Employees

The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 23: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

Executive Employees

The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;

The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and

The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 24: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

Professional Employees – Learned Professional

The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;

The advanced knowledge must be in a field of science or learning; and

The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 25: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActExecutive, administrative, professional exemption:

Professional Employees – Creative Professional

The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 26: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standards ActComputer Employee exemption: Computer EmployeesThe employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;

The employee’s primary duty must consist of:

1. The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;

2. The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;

3. The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or

4. A combination of the aforementioned duties, the performance of which requires the same level of skills.

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 27: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standard ActNext Steps

Audit all exempt job positions to determine which job positions are affected by the Final rule if implemented

Ensure accurate classification of exempt/non-exempt employees

◦ Employers may be liable for unpaid compensation for three (instead of two) years for a willful violation of the FLSA, liquidated (or double) damages, and attorney’s fees and costs for misclassifying an employee as overtime exempt

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 28: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Fair Labor Standard ActNext Steps

Require exempt and non-exempt employees to accurately report all work hours

Keep accurate time records for at least three years

Promptly pay all wages due, including overtime

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 29: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Questions?Learn more at:◦ HCReducation.com

◦ AmericanFidelityConsulting.com

◦ LCWLegal.com

◦ FLSAAudit.com

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO

Page 30: FLSA ESSENTIALS: KEEPING UP WITH THE FLSA - FEDERAL ... · Fair Labor Standards Act Overtime Regulations Executive, administrative, professional exemption: 2) “Salary Basis” test

Thank you!

American Fidelity Administrative Services

and

Liebert Cassidy Whitmore

2017 CASBO ANNUAL CONFERENCE & CALIFORNIA SCHOOL BUSINESS EXPO