Developing Great Staff Employment Updates FLSA Rule Changes Gender Identity Reoccurring Issues Sheryl Brandt Chief Risk Officer Rafaela Ortiz Chief Operations Officer

Fair Labor Standards Act (FLSA) What is the Fair Labor Standards Act? The Fair Labor Standards Act (FLSA) is a federal law which establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments. Who determines if a position is overtime eligible? Each agency’s Human Resource Office determines the overtime eligibility status for all positions (Work Period Designation-WPD) based upon criteria established by the US Department of Labor. For more information, see WAC 357-28-240.  Note: WA also has a Wage Act; employees are entitled to law most favorable. Please see at http://www.lni.wa.gov/workplacerights/wages/.

FLSA Overtime Exemption Rule The FLSA Overtime Exemption Rule focuses primarily on updating the salary and compensation levels needed for exempt employees. (FLSA regulations have not changed since 2004.) Specifically, it: sets the standard salary level at the 40th percentile of weekly earnings of full-time salaried workers in the lowest wage Census region, the South ($921 per week, or $47,892 annually) increases the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers nationally ($134,004 annually);

FLSA Overtime Exemption Rule The FLSA Overtime Exemption Rule focuses primarily on updating the salary and compensation levels needed for exempt employees. (FLSA regulations have not changed since 2004.) Specifically, it: establishes a mechanism for automatically updating the salary and compensation levels (every 3 years to keep up with inflation beginning January 1, 2020) going forward to ensure that they will continue to provide a useful and effective test for exemption, and amends the salary basis test to allow employers t use nondiscretionary bonuses and incentive payments including commissions to satisfy up to 10% of the new standard salary level.

Employee Classifications Non-exempt—an employee who is entitled to time and one half regular rate of pay for hours worked in excess of 40 in a work week Exempt—an employee who falls within specific categories defined by FLSA and/or state law who are not subject to overtime Presumption of non-exempt unless the employee fits into an exemption: must meet minimum salary threshold and be paid on a salary basis (salary test) must perform exempt duties (duties test)

Salary Test

Salary Test Compensation is on a rate of not less than $913 per week or $47,476 a year. Employee receives a predetermined amount each pay period Pay is not subject to a reduction because of quality or quantity of work performed The general rule is an employee must receive full salary for any week in which s/he performs any work regardless of number of days or hours worked Common pay practices for exempt employees: Recording time Converting salary to hourly rate for recordkeeping Deductions from leave banks for partial day absences Deductions from pay for partial day absences

Duties Test

Types of Exemptions Executive Professional Administrative Outside Sales Computer Professionals Highly Compensated Employee

Executive Exemption Primary duty is management: interviewing and hiring employees, setting schedules, directing work, evaluating performance, handling complaints, disciplining At least 50% of time is in management Regularly supervises 2 or more employees Has authority to hire and fire, promote or otherwise change status, or make recommendations of “particular weight”

Professional Exemption Primary duty is performance of work requiring knowledge of an advanced type acquired by a prolonged course Learned: law, medicine, accounting Creative: actor, musician, writer Teachers Work requires consistent exercise of discretion and judgment

Administrative Exemption Primary duty is office or non-manual work related to the management of business operations General rule is at least 50% of the time Must regularly exercise judgment regarding matter of significance Categories of exemptions: Executive assistants Human resources personnel

Highly Compensated Employee Individuals who earn at least $134,004 and regularly perform any kind of exempt duty or responsibility. Not available in Washington State.

Adjustments to Duties Test No changes were made to the duties test.

Impact to the District Rising salaries increase the number of non-exempt employees and raise payrolls for overtime Changing to non exempt will increase time-keeping Time tracking for non exempt Task tracking for exempt Less flexibility in work schedules-employer must respond to off the clock work

Impact on Staff Morale-reclassification perceived as demotion Less flexibility in work hours Potential loss of fringe benefits

Preparing for Implementation Review and evaluate: Current workforce composition Current workforce classification (job descriptions) Current time/task-keeping capabilities Assess potential impact of rule change Increased payroll costs Increased administrative costs Need for reclassification

Legal Risks If you discover employees were not classified correctly before the new rule, consult with an attorney regarding appropriate classification Employees converted to non-exempt because they were improperly classified may be entitled to back wages including overtime if they: Were not paid overtime for hours worked over 40 Were not paid minimum wage for all hours worked Were not given the required rest breaks and meal periods

Legal Risks-continued Employees have a right to report a suspected wage and hour violation to the DOL Reporting a wage and hour violation is a protected activity and employees are protected from retaliation Overtime may not be waived in settlement without court or DOL approval Notice of violation exposes employer to liquidated damages Statute of limitations is 3 years

Steps to Take Now Identify exempt positions where employees earn less than $47,476. Decide whether you will increase salaries above the new salary level For those employees likely to be reclassified: What task do they perform and how many hours do they usually work What job duties can be redistributed or eliminated? Will benefits change for workers moving from exempt to non-exempt?

Steps to Take Soon Implementation date is December 1, 2016 (much longer time to comply than the minimum 60 days required of final rules) Review handbooks and written policies that distinguish between exempt and non exempt employees and be prepared to address loss of fringe benefits Write an off the clock policy Communicate early any decisions to reclassify Work on script and be consistent Communicate changes to staff One on one? Small groups or large groups? Memos? Combination of above?

Steps to Take Soon (continued) Train supervisors on managing non exempt staff Train new non exempt staff on time tracking Manage morale Manage overtime Write a policy for limiting overtime Require authorization for overtime Must record time Working overtime without authorization results in discipline Discipline but pay employees who work unauthorized overtime

Gender Identity

New Rules Human Rights Commission Rules adopted in November 2015 (WAC 162-32) 0.3% or 700,000 Americans are transgender according to a 2011 study by the Williams Institute Must not discriminate on basis of gender identity of employee or spouse in: Leave policies Accommodation Employment benefits including health insurance and parental leave

Rules-continued Prohibits harassment based on gender identity Includes asking unwelcome questions, making disclosures about gender identity against employees wishes, slurs, deliberate misuse of name, form of address or pronoun Must allow use of gender-segregated facilities consistent with an individual’s gender identity; cannot request or require use of gender-neutral facility If another person expresses discomfort, direct that person to separate or gender neutral facility, if available

Reoccurring Employment Issues Important to have policies that support at-will employment throughout the handbook. Probationary period and Progressive discipline Performance Reviews Apply policies consistently Have an “interactive process” between employer and employee. EEOC: Employer-Provided Leave and the American’s Disability Act (ADA); May 2016

Reoccurring Issues Train the staff and supervisors: 1. Public Records Act (especially emails, texts, use of personal devices for public communications.) 2. Open Public Meetings (especially on Executive Sessions) Train Supervisors/Board of Directors on their duties as a supervisor/director. The cost of getting it wrong: Financial, Emotional, Reputational

Thank you!