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ADP and the ADP logo are registered trademarks of ADP, LLC. ADP – A more human resource.
is a service mark of ADP, LLC. Copyright © 2016 ADP, LLC. ALL RIGHTS RESERVED.
New Overtime Rules & Pay Scenarios
Do I have to pay my employees for that?
2
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Today’s Presenter
Aldor H. Delp
DVP & GM for ADP Resource
Aldor has held senior leadership roles in various business
units, including Dir. of Business Development, Dir. of Market
Intelligence, Implementation Executive, & GM of HR
Solutions.
3
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Welcome!
This information is the property of ADP, LLC (ADP). It may not be distributed, reproduced, modified, sold or used without the written permission of ADP.
The information is provided “as is” without any expressed or implied warranty, is based on generally accepted HR practices and is advisory in nature.
This content provides a high level overview and practical information concerning the subject matter covered and is provided with the understanding that neither the publisher nor the writers are rendering legal advice or other professional services.
Employers are encouraged to consult with their in-house legal counsel or with an experienced employment law attorney for legal advice regarding specific facts concerning the organization’s compliance with applicable legislation.
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Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Agenda
• FLSA & Final Overtime Rules
• Contractor vs. Employee
• Unauthorized Work
• Training & Working Interviews
• Meal & Rest Periods
• Reporting & Waiting Time
• Travel Time
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
FLSA & Final Overtime Rules
6
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Federal Minimum Wage & Overtime
Minimum wage:
$7.25 per hour
State and local rates may be higher
Overtime:
1.5x regular rate for hours worked over 40
Some states require daily overtime
7
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Exempt vs. Non-Exempt Status
DOL Fact Sheet 17A: http://www.dol.gov/whd/overtime/fs17a_overview.pdf
Non-Exempt Exempt
• Paid for all hours worked
• Entitled to overtime
• Typically paid on hourly basis
• Paid a set salary each week
• Not entitled to overtime
• Must meet job duties tests
8
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Common Exemption Tests Administrative, Professional, & Executive
Salary-basis test
Paid a fixed salary each
pay period
Salary-level test
Earns at least $455/week
(until Dec. 1, 2016)
Duties test
Job duties meet
established criteria
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Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Final Rules: Timeline
JULY ‘15 SEPT. ‘15 MAR ‘16 MAY ‘16 DEC. ‘16
Proposed rules
published
Public comment
period ends Proposal submitted
to the OMB
Final rules published
on May 18, 2016 Final rules effective
December 1, 2016
The DOL reviewed over
250,000 public comments
Review your options
Prepare to comply
Communicate with employees
10
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Final Rules: Minimum Salary
Administrative, Executive, Professional Highly Compensated Employee
Current (Since 2004) Effective Dec. 1, 2016
$23,660/year
($455/week)
$47,476/year
($913/week)
$100,000/year
$134,004/year
11
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Bonuses, Commissions, & Incentive Pay
Nondiscretionary bonuses,
commissions & incentive pay can be
used to satisfy 10% of the minimum
Announced in advance, tied to
reaching agreed upon performance
metrics
Already permitted for highly
compensated employee exemption
12
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Salary Adjustments Every 3 Years
Administrative, Professional, & Executive:
40th percentile of earnings for full-time salaried
workers in lowest wage region
Highly Compensated Employee:
90th percentile of earnings for full-time salaried
workers nationally
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Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Raise exempt
employees’ salaries
to meet the new
requirement
What You Can Do to Prepare
Reclassify exempt
employees as non-
exempt, making them
overtime eligible
OR
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Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Option 1: Raise Wages
• Best for employees who:
– Salary is approaching new minimum
– Regularly work over 40 hours/week
• Considerations:
– Review job duties to ensure
exemption still applies
– Plan for automatic adjustments
15
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Option 2: Reclassify Exempt Employees
Average 40 hours/week Average 40+ hours/week
Account for overtime premium
$715 weekly salary
[40 hours+ 10 overtime hours x 1.5 ]
= $13 hourly rate
$715
40 hours = $17.88 hour
Hourly Rate = Weekly Salary
40 hours
Example: Example:
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Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Communicating Changes to Employees
Let employees know you’re evaluating the rules
Provide written notice of pay changes
Be sensitive to reclassified employees
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Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Other Considerations
Train supervisors on the final rules
Train reclassified employees on timekeeping
Avoid policies prohibiting pay discussions
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Contractor vs. Employee
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Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
An independent contractor is
self-employed and offers his or
her services to the general public
under terms specified in a
contract.
20
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
DOL Economic Realities Test
Integral Part of Business
Is work performed integral
to the business?
Opportunity for
Profit & Loss
Does the worker have an
opportunity for profit and
loss?
Investment in
Facilities & Equipment
Does worker make
investments?
How does their investment
compare to the company’s?
21
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
DOL Economic Realities Test (cont’d)
Permanency of
Relationship
How long is the
worker going to work
with the employer?
Worker’s Skill & Initiative
Is the worker in open
competition with others?
Degree & Nature
of Control
How is the worker paid?
Who sets the hours?
Who determines how
the work is done?
22
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Scenario
A firm hires Joe for a 3 month
project. Joe is paid a set
salary each week, reports to
the office daily, and uses the
company's computers. Is Joe
an independent contractor or
an employee?
23
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Solution
Permanency of
Relationship
Works for firm
indefinitely
Degree & Nature
of Control
Reports to the office
daily, attends meetings,
paid a set salary each
week
Investment in
Facilities &
Equipment
Uses company
computers and
workspace
Integral Part of
Business
Job is a key aspect of
the business
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Unauthorized Work
25
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Scenario
Cindy’s Coffee Shop has a
policy requiring employees to
get authorization to work
overtime. Linda repeatedly
works unauthorized overtime.
Can Cindy withhold overtime
pay?
26
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Solution
Even though Linda violated the policy, she’s still entitled to
overtime pay. In no case can an employer withhold pay.
27
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Scenario
Joan noticed that several
non-exempt administrative
assistants are replying to her
emails after they have
punched out. Do these
employees need to be paid
for this time?
28
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Solution
Yes, non-exempt employees must be paid for all hours
worked. Make sure employees are aware that that they are
responsible for reporting after-hours work.
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Working Interviews & Training
30
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Scenario
Jaime wants to use “working
interviews” to assess
candidates’ skills before
hiring them. Is she required
to pay candidates for the time
spent working?
31
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Solution
Yes. Jaime should pay them at least the minimum wage
per hour, withhold taxes, and comply with all applicable
employment laws.
32
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Scenario
Michael requires all staff to
participate in sexual
harassment training. The
training is scheduled to take
place before the restaurant
opens. Does Michael have to
pay employees for this time?
33
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Solution
Yes. Employees must be paid for the time since it is a
mandatory training. According to the FLSA, training time
must be paid unless it meets very specific criteria.
34
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
DOL Training Criteria
Attendance is voluntary and outside of the employee’s
regular working hours;
It’s not directly related to the employee’s job; and
The employee does not perform any productive work
during the training.
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Meal & Rest Periods
36
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Overview
Rest breaks lasting 20 minutes or less must be paid
Bona fide meal periods can be unpaid as long as
certain criteria are met
37
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Scenario
Violet gives employees a 10-
minute break 2x per day. Two
employees consistently
extend those breaks to 20
minutes without permission.
Does Violet have to pay them
for the extra time?
38
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Solution
Yes. Generally, when employees take unauthorized
extensions of rest breaks, the time must be paid if the rest
period lasts 20 minutes or less and employees weren’t
previously informed that such extensions are prohibited.
39
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Scenario
Josh offers employees a 30-
minute lunch period. One of
his employees was on her
lunch break when Josh
asked her to help a client.
Does Josh have to pay her
for the full meal period?
40
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Solution
Meal periods must be at least 30 minutes without
interruption and the employee must be fully relieved of all
duties. A meal period is subject to pay if it’s interrupted
for the company’s benefit, or the employee is not free to
use the time as they wish.
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Reporting & Waiting Time
42
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Scenario
Because of inclement
weather, Melanie sent her
roofing crew home before
they started their shift. Does
Melanie have to pay them a
certain number of hours
since they showed up for
work?
43
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Solution
There is no federal report-in pay requirement. However,
those employees that report to work and must wait until a
decision is made must be paid for the time spent
waiting.
44
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Scenario
Roger owns a welding
company. Jim’s welding tool
breaks and he is unable to
work while waiting for the
repairs. Does Roger have to
pay Jim for the time he spent
waiting?
45
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Solution
Yes. Jim is entitled to pay. Time spent waiting can be unpaid
only if the employee:
• Is completely relieved from duty
• Can use the time for their own purposes
• Is told in advance that they can leave
• Is told what time to report back
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Travel Time
47
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Scenario
Elizabeth asks two
employees to attend a
seminar two hours away by
car. The travel will take place
during their normal work
hours. Does she have to pay
the employees for their travel
time?
48
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Solution
Yes. If an employee regularly works at a fixed location in
one city but is given a special one-day assignment in
another city, the time spent traveling must be paid.
49
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Scenario
Abby asks Karen to take an
overnight business trip.
Karen’s normal work hours
are 8AM-5PM Mon.-Fri. Her
flight is scheduled for a
Sunday. Does Abby have to
pay Karen for the time spent
on the flight?
50
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Solution
Pay is required for the time that cuts across the
employee's regular working hours. Travel to and from the
hotel and airport must also be paid if it falls during the
employee’s normal work hours.
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Key Takeaways | Q&A
52
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Takeaways
Ensure workers are properly classified
Prepare now for DOL final rules
Pay non-exempt employees for all hours worked
Establish an accurate and reliable timekeeping process
Maintain records of all hours worked
53
Copyright © 2016 ADP, LLC. This content provides practical information concerning the subject matter covered and is
provided with the understanding that ADP is not rendering legal advice or other professional services.
Thank you for attending! Visit ADP
Booth 409 ADP’s New Overtime Rules eBook
http://sbshrs.adpinfo.com/flsa
DOL Fact Sheets - www.dol.gov/whd/overtime/fact_sheets.htm
ADP® Time & Attendance – www.adp.com/smallbusiness