Overview of the Fair Labor Standards Act (FLSA). Depression Era Legislation Enacted by Congress in 1938 Means of economic recovery from depression.

Overview of Overview of the Fair the Fair Labor Labor Standards Standards Act (FLSA)Act (FLSA)

Depression Era Depression Era LegislationLegislation Enacted by Congress in 1938

Means of economic recovery from depression

Purpose of FLSAPurpose of FLSA

Prevent wage exploitation of vulnerable workers by establishing minimum wage

Promote fair competition in interstate commerce

Generate jobs

Basic RequirementsBasic Requirements

FLSA sets:◦minimum wage◦overtime requirement◦equal pay◦recordkeeping◦child labor standards

For covered employees who are not exempt from specific provisions

Basic RequirementsBasic Requirements

The FLSA does not, however, require severance pay, sick leave, vacations, or holidays

Governed by Civil Service law

Application of FLSA Application of FLSA to Government to Government EmployersEmployers Initially FLSA applied only

to private employers directly engaged in commerce

Government employees added by amendments adopted in 1966 & 1974◦1966: school, hospital,

nursing home, local transit employees added

◦1974: coverage expanded to include most state and local government employees

Record Keeping Record Keeping RequirementsRequirements

Mandatory records for non-exempt employees (29 C.F.R. § 516.2)◦Name◦Home address,

including zip code◦Date of birth, if under

19◦Sex ◦Occupation or position◦Time of day and day of week in which employee’s work week begins

Record Keeping, cont.Record Keeping, cont.

◦Regular hourly rate of pay for any work week in which overtime is due, plus the basis for the regular rate and any exclusions

◦Hours worked each work day and total hours worked each work week

◦Total premium pay for overtime hours

Record Keeping, cont.Record Keeping, cont.

◦Total additions to, or deductions from, wages each pay period

◦Total wages paid each pay period

◦Date of payment and pay period covered by payment

Minimum WageMinimum Wage

Washington minimum wage for 2009 is $8.55 per hour◦Increases each January 1,

based on CPI

Federal minimum wage is $ 6.55 per hour◦Will increase to $7.25 per

hour on July 24, 2009

Employers must comply with higher

Who must be paid Who must be paid minimum wage?minimum wage?

Department of Labor & Industries Rules

With certain exceptions, most workers must be paid the minimum wage for all "hours worked"

Full time students at least 14 years old employed in retail or service establishments may be paid 85% of the adult minimum wage

OvertimeOvertime Overtime eligible

employees are entitled to be paid 1.5 times their “regular rate” of pay for any time worked over 40 hours in a seven-day workweek

An employer who “requires”, “suffers”, or “permits” an employee to work over 40 hours is generally required to pay the employee overtime

“Suffers” means not required or permitted but has reason to know employee working anyway

WorkweekWorkweek

A workweek is seven consecutive 24 hour periods◦Sunday 12:01 a.m. through

Saturday midnight ◦Wednesday 12:01 a.m.

through Tuesday midnight◦Friday 1:00 p.m. through

Friday noon (where employee works four 9 hour days, an 8 hour day, four 9 hour days, and gets every other Friday off)

The employer designates the workweek

Workweek need not correspond to pay period

Calculating Calculating OvertimeOvertime

Determine regular rate of pay

Cannot be less than minimum wage

Regular Rate of PayRegular Rate of Pay

Average hourly rate derived from earnings Earnings may be determined

on an hourly, salary, commission, or some other basis

Unless paid hourly rate, generally calculated by dividing the total pay for employment in any workweek by the total number of hours worked Washington uses semi-

monthly salary divided by total hours in a pay period

Regular Rate of PayRegular Rate of Pay

Includes, e.g.,◦Commissions◦Shift differentials◦Premiums for weekend or

holidays worked◦Payments for achieving

certain levels of certification

◦Education incentives◦Longevity pay◦Hazardous duty pay◦Special assignment or

acting pay◦On-call pay

Regular Rate of PayRegular Rate of Pay Excludes, e.g.,

◦Vacation pay◦Sick leave◦Sick leave cash outs

or bonuses for nonuse◦Bereavement pay◦Jury duty leave◦Discretionary

bonuses◦Holiday pay, if equal

to regular earnings◦Premium pay time◦Idle time beyond

control of the employer

◦Severance pay

Regular Rate of Pay Regular Rate of Pay - Exclusions, cont.- Exclusions, cont.

◦Pension, profit sharing, thrift and savings plan payments

◦Call-back premium pay

◦Travel expense, if business trip other than commute

◦Show up or reporting pay to the extent pay exceeds hours worked

◦Weekly overtime pay◦Health and welfare

fund benefits received by employee

◦Death benefits

Regular Rate of Pay Regular Rate of Pay - Exclusions, cont.- Exclusions, cont.

◦Employer paid disability benefits, hospitalization, medical care, retirement benefits, workers compensation, or other employer paid health and welfare contribution, including all insurance premiums

Dual EmploymentDual Employment

Employee in a single workweek works at two or more different types of work for which different straight-time rates have been established

Regular rate for that week is the weighted average of such rates

Earnings from all such rates are added together and this total is then divided by the total number of hours worked at all jobs

Alternative: trace the OT to the job that caused it Requires tracking hours at

each job

Compensatory Time Compensatory Time OffOff Public employers allowed to

provide compensatory time off in lieu of paid overtime

Compensatory time off need not be used in same pay period

Accrued at 1 ½ hours for every hour of overtime worked

Most employees allowed to accumulate 240 hours of comp time (160 hours of OT)

Employees in public safety activities allowed to accumulate 480 hours of comp time (320 hours of OT)

Compensatory Time Compensatory Time OffOff

Agreement or understanding required prior to performance of overtime work

Agreement can be part of collective bargaining agreement, memorandum of understanding or any other agreement between employer and employee

Compensatory Time Compensatory Time OffOff Employer may limit amount of

comp time that can be accrued

Employees do not have right to demand that they be allowed to accrue statutory maximum

Comp time left after employee leaves employment must be cashed out using hourly rate in effect at time leave employment

Employer may cash out comp time periodically

Use of comp time can be at employee’s request or at employer’s direction

Hours WorkedHours Worked Broader concept under MWA

than FLSA Defined in WAC 296-126-002(8) All hours during which the

employee is authorized or required to be on duty on the employer’s premises or at a prescribed work place

"Hours worked" includes – Preparation time Opening and closing the

business Required meetings Training

Any time spent by an employee in the performance of these duties must be recorded and paid

Hours WorkedHours Worked

Use of Blackberries and cell phones after hours is compensable work time

Remote computer access is compensable work time

Paid Leave and Paid Leave and HolidaysHolidays

WAC 357-28-265WAC 357-28-265

◦For purposes of computing eligibility for overtime compensation, paid holidays during the employee's regular work schedule are considered time worked.

◦Leave with pay during the

employee's regular work schedule is not considered time worked.

Rest PeriodsRest PeriodsWAC 296-126-WAC 296-126-

092092 Employees must be given a

rest period of not less than ten minutes, on the employer's time, for each four hours of working time.

Rest periods must be scheduled as near as possible to the midpoint of the work period.

No employee allowed to work more than three hours without a rest period.

Intermittent rest periods allowed.

Meal PeriodsMeal PeriodsWAC 296-126-WAC 296-126-

092092 Between second and fifth hour of

work day Paid time when the employee is

required by the employer to remain on duty on the premises or at a prescribed work site in the interest of the employer.

Employees not allowed to work more than five consecutive hours without a meal break.

If meal period interrupted, employee must be allowed to resume and complete total meal period or be compensated

Hours WorkedHours Worked

Commute time generally not compensable

Stevens v. Brink’s Home Security Decided by State Supreme

Court in 2007 Under WAC definition of

“hours worked”, employees who drove company trucks from home to first job site of the day and from last job site of the day to home were “on duty” at a “prescribed work place” during this drive time and entitled to compensation under MWA

Travel TimeTravel Time

Travel on business to a location other than the regular workplace, within a single workday ◦Ordinarily, an employee who

travels from home before the regular workday and returns home at the end of the workday is engaged in ordinary home-to-work travel, whether the employee works at a fixed location or at different work sites.

◦Normal travel from home to the work site is not work time and does not require compensation, even if the work site varies.

Travel TimeTravel Time

Where an employee regularly works at a fixed location and is given a special assignment to another location, the time spent in traveling to and returning from the other location is work time.

Employer may deduct time the employee would normally spend commuting to the regular work site. ◦For example, an employee’s

normal commute to her workplace is 20 minutes. The employee drives 60 minutes from home for a particular assignment in another city. The employee’s compensable travel time is 40 minutes.

Travel TimeTravel TimeOvernight travel

◦Travel away from home is work time when it occurs during the employee's normal working hours. The employee has merely substituted travel for other duties.

◦Time spent in traveling on days other than normal workdays, such as Saturday or Sunday, is also work time if it occurs during the employee’s normal working hours.

Travel TimeTravel Time

If an employee regularly works from 8 a.m. to 5 p.m. from Monday through Friday, the travel time is work time if it occurs between 8 a.m. and 5 p.m. on Saturday and Sunday as well.

Time spent in travel outside the normal working hours on any of the seven days of the workweek, i.e., before 8 a.m. and after 5 p.m., is not regarded as working time provided the employee performs no work.

Meal Periods During Meal Periods During Travel Time Travel Time

Employer need not count as hours worked meal periods while employee is in travel status

Meal period must be “bona fide”

Employee is completely relieved from duty for the meal period.

Overtime Overtime ExemptionsExemptions

““White Collar” White Collar” ExemptionsExemptions

Federal Overtime Regulations

April 23, 2004, U.S. Department of Labor (DOL) published final regulations

Effective August 23, 2004

Statutory ProvisionStatutory Provision

FLSA Section 13(a)(1) provides an exemption from both minimum wage and overtime pay requirements for employees who are employed in a bona fide:◦executive◦administrative or◦professional capacity

Computer Computer ProfessionalsProfessionals Certain computer

employees may be exempt professionals under Section 13(a)(1) or exempt under Section 13(a)(17)

Minimum Salary Minimum Salary Level $455Level $455 For most employees, the

minimum salary level required for exemption is $455 per week

Must be paid “free and clear” The $455 per week may be

paid in equivalent amounts for periods longer than one week:◦Biweekly: $910.00◦Semimonthly: $985.83◦Monthly: $1,971.66◦Annually: $23,660.00

The $455 per week is not pro rated for part time employees

Salary Basis TestSalary Basis Test

Regularly receives a predetermined amount of compensation each pay period (on a weekly or less frequent basis)

The compensation cannot be reduced because of variations in the quality or quantity of the work performed

Must be paid the full salary for any week in which the employee performs any work

Need not be paid for any workweek when no work is performed

Deductions From Deductions From SalarySalary An employee is not paid

on a salary basis if deductions from the predetermined salary are made for absences occasioned by the employer or by the operating requirements of the business

If the employee is ready, willing and able to work, deductions may not be made for time when work is not available

Permitted Permitted DeductionsDeductions Seven exceptions from the

“no pay-docking” rule:

◦Absence from work for one or more full days for personal reasons, other than sickness or disability

◦Absence from work for one or more full days due to sickness or disability if deductions made under a bona fide plan, policy or practice of providing wage replacement benefits for these types of absences

Permitted Permitted Deductions, cont.Deductions, cont.

◦To offset any amounts received as payment for jury fees, witness fees, or military pay

◦Penalties imposed in good faith for violating safety rules of “major significance”

◦Unpaid disciplinary suspension of one or more full days imposed in good faith for violations of workplace conduct rules

Permitted Permitted Deductions, cont.Deductions, cont.

◦Proportionate part of an employee’s full salary may be paid for time actually worked in the first and last weeks of employment

◦Unpaid leave taken pursuant to the Family and Medical Leave Act

Public EmployeesPublic Employees

A public employee who otherwise meets the requirements will not be disqualified from the white collar exemptions on the basis that such public employee is paid according to a pay system that:

◦Is established by statute, ordinance, or regulation, or by a policy or practice established according to principles of public accountability, under which the public employee accrues sick or personal leave; and

Public Employees, Public Employees, cont.cont.

◦Permits the public employee's pay to be reduced or the public employee to be placed on leave without pay for absences for personal reasons or because of illness or injury of less than one work day when accrued leave is not used by a public employee

Public Employees, Public Employees, cont.cont.Deductions may be made

from a public employee's accrued leave banks in any increment in accordance with any statute, ordinance, or regulation, or by a policy or practice established according to principles of public accountability

Effect of Improper Effect of Improper DeductionsDeductions An actual practice of making

improper deductions from salary will result in the loss of the exemption:◦ During the time period in

which improper deductions were made

◦ For employees in the same job classifications

◦ Working for the same managers responsible for the actual improper deductions

Isolated or inadvertent improper deductions, however, will not result in the loss of exempt status if the employer reimburses the employee

Payroll Practices Payroll Practices That That Do NotDo Not Violate Violate the Salary Basis the Salary Basis TestTest

Taking deductions from exempt employees accrued leave accounts

Requiring exempt employees to keep track of and record their hours worked

Requiring exempt employees to work a specified schedule

Implementing bona fide, across-the-board schedule changes

Additional Additional CompensationCompensation

An employer may provide compensation in addition to the $455 minimum guaranteed weekly salary, such as:◦Commissions◦Bonuses◦Additional pay based

on hours worked beyond the normal workweek Exchange time

Executive DutiesExecutive Duties

Primary duty is management of the enterprise or of a customarily recognized department or subdivision;

Customarily and regularly directs the work of two or more other employees; and

Authority to hire or fire other employees or whose suggestions and recommendations as to hiring, firing, advancement, promotion or other change of status of other employees are given particular weight

Primary DutyPrimary Duty

The principal, main, major or most important duty that the employee performs

Factors to consider include, but are not limited to: ◦ Relative importance of the

exempt duties;◦ Amount of time spent

performing exempt work;◦ Relative freedom from direct

supervision; and◦ Relationship between the

employee’s salary and the wages paid to other employees for the same kind of nonexempt work

Primary DutyPrimary Duty

Employees who spend more than 50% of their time performing exempt work will generally satisfy the primary duty requirement

However, the regulations do not require that exempt employees spend more than 50% of time performing exempt work

ManagementManagement Interviewing, selecting, and

training employees

Setting and adjusting pay and work hours

Maintaining production or sales records

Appraising employee productivity and efficiency

Handling employee complaints and grievances

Disciplining employees

ManagementManagement

Planning and apportioning work among employees

Determining the techniques to be used; the type of materials, supplies, machinery, equipment or tools to be used; or the merchandise to be bought, stocked and sold

Providing for the safety and security of employees or property

Planning and controlling the budget

Monitoring or implementing legal compliance measures

Department or Department or SubdivisionSubdivision A “customarily recognized

department or subdivision” must have a permanent status and continuing function◦ Need not be physically within

the employer’s establishment, and may move from place to place

◦ Continuity of the same subordinate personnel is not essential to the existence of a recognized unit

◦ The employee in charge of each branch establishment is in charge of a recognized subdivision

Does not include a mere collection of employees assigned from time to time to a specific job

Customarily and Customarily and RegularlyRegularly A frequency that must

be greater than occasional but which, of course, may be less than constant

Includes work normally and recurrently performed every workweek

Does not include isolated or one-time tasks

Two or MoreTwo or More

The phrase “two or more other employees” means two full-time employees or the equivalent

Full-time generally means 40 hours per week

The supervision of the same employees can be distributed among two or more exempt executives, but the hours worked by an employee cannot be credited more than once

Particular WeightParticular Weight

Factors include, but are not limited to:◦Whether it is part of the

employee’s job duties to make suggestions and recommendations

◦The frequency with which suggestions and recommendations are made or requested

◦The frequency with which the employee’s suggestions and recommendations are relied upon

Particular WeightParticular Weight

Suggestions and recommendations may be reviewed by a higher level manager

The exempt executive need not have authority to make the ultimate decision

Making an occasional suggestion regarding a change in status of a co-worker does not meet the “particular weight” standard

Concurrent DutiesConcurrent Duties

Concurrent performance of exempt and nonexempt work does not automatically disqualify an employee from exemption

Exempt executives generally decide when to perform nonexempt duties and remain responsible for the success or failure of business operations

Nonexempt employees generally are directed by a supervisor to perform the exempt work or perform the exempt work for defined time periods

Administrative Administrative DutiesDuties Primary duty is 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

Primary duty includes the exercise of discretion and independent judgment with respect to matters of significance

Management or Management or General Business General Business OperationsOperations Refers to the type of

work performed by the employee

Work must be directly related to assisting with the running or servicing of the business

Does not include working on a manufacturing production line or selling a product in a retail or service establishment

Management or Management or General Business General Business OperationsOperationsExamples: Tax, Finance,

Accounting, Budgeting, Auditing, Insurance, Quality control, Purchasing, Procurement, Advertising, Marketing, Research, Safety and Health, Human Resources, Employee Benefits, Labor Relations, Public and Government Relations, Legal and Regulatory Compliance, Computer Network, Internet and Database Administration

Employer’s Employer’s CustomersCustomers Employees acting as

advisors or consultants to clients or customers

Examples:◦ Tax expert advises a client

on tax laws for a start-up enterprise and another client on tax consequences of corporate merger

◦ Financial consultant advises a client on investment options and another client on obtaining financing for building new manufacturing facility

Discretion and Discretion and Independent Independent JudgmentJudgment The comparison and

evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered

Must be exercised with respect to “matters of significance,” which refers to the level of importance or consequence of the work performed

Decisions and recommendations may be reviewed at a higher level and, upon occasion, revised or reversed

Discretion and Discretion and Independent Independent JudgmentJudgment Factors include, but are not

limited to:◦ Whether the employee has

authority to formulate, affect, interpret, or implement management policies or operating practices

◦ Whether the employee carries out major assignments in conducting the operations of the business

◦ Whether the employee has authority to waive or deviate from established policies and procedures without prior approval

Discretion and Discretion and Independent Independent JudgmentJudgment

◦ Whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment of the business

◦ Whether the employee has authority to commit the employer in matters that have significant financial impact

◦ Whether the employee has authority to negotiate and bind the company on significant matters

Discretion and Discretion and Independent Independent JudgmentJudgment

◦ Whether the employee provides consultation or expert advice to management

◦ Whether the employee is involved in planning long- or short-term business objectives

◦ Whether the employee investigates and resolves matters of significance on behalf of management

◦ Whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances

Discretion and Discretion and Independent Independent JudgmentJudgment

Discretion and independent judgment does not include:◦Applying well-established

techniques, procedures or specific standards described in manuals or other sources

◦Clerical or secretarial work

◦Recording or tabulating data

◦Performing mechanical, repetitive, recurrent or routine work

Use of ManualsUse of Manuals

Exempt employees may use manuals, guidelines or other established procedures if they:◦ Contain or relate to highly

technical, scientific, legal, financial or other similarly complex matters

◦ That can be understood or interpreted only by those with advanced or specialized knowledge or skills

Employees are not exempt if they use manuals to apply well-established techniques or procedures within closely prescribed limits

Other Exempt Other Exempt PositionsPositions An employee who leads a team

of other employees assigned to complete major projects

Executive assistant or administrative assistant to a business owner or senior executive of a large business who has been delegated authority regarding matters of significance

Management consultants who study the operations of a business and propose changes in organization

Non-exempt Non-exempt PositionsPositions Ordinary inspection work

involving well-established techniques and procedures

Examiners and graders who perform work involving comparison of products with established standards

Comparison shoppers who merely report the prices at a competitor’s store

Public sector inspectors or investigators

Learned Learned ProfessionalProfessional The employee’s primary

duty must be the performance of work requiring advanced knowledge

In a field of science or learning

Customarily acquired by a prolonged course of specialized intellectual instruction

Advanced Advanced KnowledgeKnowledge Predominately intellectual in

character

Includes work requiring the consistent exercise of discretion and judgment

The advanced knowledge is generally used to analyze, interpret or make deductions from varying facts or circumstances

Not work involving routine mental, manual, mechanical, or physical work

Cannot be attained at the high school level

Field of Science or Field of Science or LearningLearning

Occupations with recognized professional status, as distinguished from the mechanical arts or skilled trades

Examples: Law, Accounting, Actuarial Computation, Theology, Teaching, Physical Sciences, Medicine, Architecture, Chemical Sciences, Pharmacy, Engineering, Biological Sciences, Culinary Sciences

Prolonged Course Prolonged Course of Specialized of Specialized Intellectual Intellectual InstructionInstruction Specialized academic training is

a prerequisite for entering the profession

Best evidence that an employee meets this requirement is possession of the appropriate academic degree

The learned professional exemption is not available for occupations that may be performed with:◦ Only the general knowledge

acquired by an academic degree in any field

Prolonged Course Prolonged Course of Specialized of Specialized Intellectual Intellectual InstructionInstruction

◦ Knowledge acquired through an apprenticeship

◦ Training in the performance of routine mental, manual, mechanical or physical processes

The exemption also does not apply to occupations in which most employees acquire skill by experience

CustomarilyCustomarily

Exemption is also available to employees in learned professions who:

◦ Have substantially the same knowledge level and

◦ Perform substantially the same work as the degreed professionals,

◦ But attained the advanced knowledge through a combination of work experience and intellectual instruction

CustomarilyCustomarily

Examples:

◦Lawyer who did not attend law school

◦Chemist who does not have a chemistry degree

Nonexempt Nonexempt ProfessionsProfessions Accounting clerks and

bookkeepers who normally perform a great deal of routine work

Cooks who perform predominantly routine mental, manual, mechanical or physical work

Paralegals and legal assistants

Engineering technicians

Computer-Related Computer-Related OccupationsOccupations

Paid either on salary or fee basis at no less than $455 per week or compensated hourly at no less than $27.63 per hour

Employed as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field

Computer-Related Computer-Related OccupationsOccupations

Primary duty

◦ Application of systems analysis techniques and procedures

◦ Design, development, documentation, analysis, creation, testing or modification of systems or programs

◦ Design, documentation, testing, creation or modification of computer programs related to machine operating systems

◦ Combination of the above

Computer-Related Computer-Related OccupationsOccupations

Does not include:

◦ Employees engaged in manufacture or repair of hardware or related equipment

◦ Employees whose work is highly dependent upon, or facilitated by, the use of computers and software programs, but who are not primarily engaged in systems analysis and programming or other similarly skilled occupations

Comparison State Comparison State and Federal Lawsand Federal Laws

When state laws differ from FLSA, an employer must comply with the standard most protective of employees

Disciplinary Disciplinary SuspensionsSuspensions The new federal rule allows

an employer to impose unpaid disciplinary suspensions of one or more full days for workplace-conduct rule infractions.

Washington State allows an unpaid disciplinary suspension in increments of less than one week only for violations of safety rules of major significance. Unpaid disciplinary suspensions for non-major safety violations cannot be in less than full-week increments.