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FAIR LABOR STANDARDS ACT
BASICS
Objective
• Background
• Requirements
• Exempt v. Non-Exempt
• Compensable Time
• Violations
• Penalties
Background
• The Fair Labor Standards Act (FLSA) was enacted in 1938.
• Establishes standards affecting employees in private and public sector
• Minimum Wage
• Overtime Pay
• Recordkeeping
• Youth Employment
Why You Need to Know
• Wage and hour issues are critical to the operations of our organization
• FLSA affects employee compensation
• YOU play an important role in COMPLIANCE
FLSA Does Not Require
• Vacation, Holiday, Severance or Sick Pay
• Meals or Rest Periods
• Premium Pay for Weekend or Holiday Work
• Pay Raises
• Immediate Payment if Separated
Minimum Wage Requirement
• Covered, Non-Exempt Employees must be paid at least the minimum wage for all hours worked
• Effective July 24, 2009, the minimum wage was established at $7.25
What is a Work Week?
• A work week is 7 consecutive 24 hours periods.
• USC’s work week begins at 12:01 am Sunday and ends at midnight the following Saturday.
• Each work week stands by itself in determining overtime compensation for Non-Exempt employees.
Exception to the Work Week
• USC’s Law Enforcement employees may work a variable schedule 28-day work period (171 hours) that begins at 12:01 am Sunday and ends 28 day later at midnight.
Who is Covered?
• Most Employees in the United States are “Covered” by the FLSA
• Examples of Employees Not Covered
– Prisoners
– Elected Officials
– Political Appointees
– Bona Fide Volunteers
Under FLSA, Employees are considered
• Non-Exempt
• Exempt
Minimum Wage
Overtime (Compensatory Time)
Recordkeeping
Paid for the hours worked
Non-Exempt
Do not Earn Overtime
Paid “to get the job done” no matter how many hours worked in a work week
Exempt
What Determines if a Position is Exempt or Non-Exempt?
• Currently, employees paid less than $23,660 per year ($455 per week) are non-exempt
• New rule effective December 1, 2016 for $47,476 per year ($913 per week)
Salary Test
• Permits positions to be considered Exempt by performing high level of work
• Falls into Executive, Professional or Administrative, Computer Professional or Highly Compensated Categories
• Job Titles do not determine Exempt Status
Duties Test
Who at USC determines the exemption status of positions?
• The Classification and Compensation Area of the Division of Human Resources determines exemption status of positions system wide for USC.
Executive Duties Test
• Regularly supervises two or more full-time employees, and
• Management is the primary duty of the position, and
• Genuine input into the hiring, firing, promotions, discipline or assignments of other employees.
Professional Duties Test
• May be learned or creative professional
• Learned professional:• Requires advanced knowledge in a field of
science or learning• Predominantly intellectual • Acquired by a prolonged course of specialized
instruction
Professional Duties Test
• Creative Professional:
• Primary duty must be the performance of work requiring invention, imagination, originality, or talent
• Performs work in a recognized field of artistic or creative endeavor
Administrative Duties Test
• Primary duty must be office or non-manual work; and
• Directly related to management policies or general business operations; and
• Customarily and regularly requires the exercise of discretion and independent judgment
Computer Professional Test
• Employed as a computer systems analyst, programmer or software engineer or similar skilled worker
• Primary duties consist of:– Applications of systems analysis techniques;– Design, development, documentation, analysis, creation,
testing, or modification of computer systems or programs;– Design, documentation, testing, creation,
or modification of computer programs related to machine operating systems; or
– Combination of the above, which requires same skill level.
Highly Compensated Employee Test
• Must perform non-manual work and
• Paid more than $100,000 per year and
• Perform at least one of the duties of an executive, administrative or professional employee
Note: New salary threshold of $134,004 per year will be effective December 1, 2016.
Non-Exempt Employees
• Do not meet the Salary Test of $455/week or the Duties Test of Executive, Professional, Administrative, Computer Professional or Highly Compensated Employee
Note: New rule has the salary test changing to $913/week or $47,476/year.
Non-Exempt Employees (cont.)
• Must receive 1 1/2 times their regular ratefor all hours worked in excess of 40 in a work week (unless Law Enforcement)
• Hours worked included only those hours actually worked.
– Example: Sue records 45 hours worked in a work week but 8 of those hours are due to a holiday, so no overtime is paid.
Non-Exempt Employees (cont.)
• FLSA allows State Government to use compensatory time in lieu of overtime pay.
• Compensatory time gives the employee leave that can be used in the future.
• Compensatory time must be accumulated at 1-1/2 times overtime hours.
Non-Exempt Employees (cont.)
• USC has a policy where all unused compensatory time is paid out at the end of the fiscal year.
• Non-Exempt employees are paid out unused compensatory time at the time of separation from USC.
• Non-Exempt employees must use or be paid out their compensatory time if they move to an Exempt position.
What is Compensable Time for Non-Exempt Employees?
• All time employees are required to be on duty or at a prescribed workplace and permitted to work.
• Includes work performed on or away from premises if supervisor knows or has reason to believe work is being performed.
What is Compensable Time for Non-Exempt Employees? (Cont.)
• Unauthorized work
• Employees who arrive to work early and start working.
• Employees who work through lunch.
• Required to attend training, lectures, meetings, etc.
What is Compensable Time for Non-Exempt Employees? (Cont.)
• Travel time during regular working hours as well as during corresponding hours of non-working days.
• Required to remain on premises or prescribed workplace, or must remain accessible to the point the employee may not use his/her time for own purposes.
Violations to FLSA
• U.S. Department of Labor enforces FLSA
• Burden of proof is on the employers
• Employees can sue their employers for the recovery of back wages & liquidated damages for up to 3 years if violation is found to be willful
• Employers cannot retaliate
against employees for “whistle
blowing”
Penalties from DOL
• Unpaid wages (2 - 3 years of back wages)
• Fines ($10,000)
• Imprisonment (6 months)
• Liquidated damages (2x)
• Attorney’s fees and costs
• Individual liability
Contacts
Belinda Ogorek777-3259
Rontreal Tyler777-1188
