Fair Labor Standards Act: Understanding Overtime Ashleigh O’Connell Whitfield & Eddy, PLC th Avenue, Suite 1200 Des Moines, IA

Goals of the Presentation You will learn more about: Classifications of employees subject to and/or exempt from overtime under the Fair Labor Standards Act (the “FLSA”) Overtime obligations to covered and eligible employees Strategies for mitigating exposure to overtime costs

Fair Labor Standards Act (FLSA) The Fair Labor Standards Act, 29 U.S.C. § 201, et seq., was adopted in 1938 Purpose was to eliminate conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers without substantially curtailing employment or earning power

Fair Labor Standards Act (FLSA) The FLSA includes provisions concerning: ▫Minimum wages (29 U.S.C. § 206) ▫Record keeping (29 U.S.C. § 211(c)) ▫Maximum hours/overtime pay (29 U.S.C. § 207) ▫Child labor (29 U.S.C. § 212) ▫Equal pay (29 U.S.C. § 206(d)) ▫Anti-retaliation (29 U.S.C. § 215(a))

Who does FLSA apply to? FLSA is generally applicable to all employees of “covered enterprises” who are “engaged in commerce” or “engaged in the production of goods for commerce” Workers who are not covered: elected government officials, certain governmental staff members, volunteers, independent contractors, prisoners, and certain trainees

FLSA Overtime Provisions Employees who are covered by the FLSA and are not exempt must be paid at the rate of at least 1 ½ times their regular rate of pay for all hours worked over 40 hours during a work week

FLSA Overtime Provisions “Hours worked” may include time in which an employee is not actively working, including: ▫Time spent “on call” ▫Sleep time ▫Travel time ▫On duty but inactive or waiting for work Note: Whether this time is included may depend on the circumstances and is governed by specific administrative regulations and case law

FLSA Overtime Provisions “Hours worked” also includes work not requested but permitted by the employer ▫i.e., an employee voluntarily works through his or her lunch hour, or stays late/comes in early to work; or checks/responds to work s at home Although the employer did not schedule or request the employee to work additional hours, the employee must pay overtime if the employee’s weekly hours exceed 40

FLSA Exemptions Certain types of workers are “exempt” from FLSA’s overtime provisions Some exemptions apply to certain types of businesses or specific kinds of work ▫i.e., employees in a bona fide executive, administrative, or professional capacity; outside sales employees; employees in certain computer related occupations

FLSA Exemptions Overtime exemptions do not apply to “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy Overtime exemptions may apply to “white collar” workers who are paid on a salary basis

FLSA Exemptions A job title alone is insufficient to establish the exempt status of an employee Similarly, being paid a salary does not necessarily confer exempt status on an employee The exempt or nonexempt status of any particular employee must be determined on the basis of whether the employee’s salary and duties meet the requirements of the regulations in this part

FLSA Exemptions For example, an employee in “a bona fide executive capacity” is exempt if: ▫Salary: The executive is compensated at a rate of not less than $455 per week ▫Duties: The executive’s primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof; the executive customarily and regularly directs the work of two or more other employees; and the executive has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight

FLSA Exemptions Detailed administrative regulations govern whether an employee falls within a stated exemption It is the employers burden to prove the employee’s exempt status

Are you jeopardizing exempt status? If the employer treats the employee in a manner inconsistent with exempt status, the employee’s exempt status may be forfeited Certain payroll and employment practices are inconsistent with the required “salary basis” method of wage payment ▫Certain deductions for absences ▫Certain deductions for disciplinary reasons

Deductions for absences Whole day absences for illness may be deducted from an employee’s pay only if the employer has a bona fide sick leave policy and the employee has exhausted his or her leave There can be no deductions for partial day absences. Partial day absences may be charged against available leave, but if leave time is exhausted no deduction may be taken No deductions can be made for absences required for such things as jury duty, response to a subpoena, etc., but pay received by the employee for such service may be offset against wages

Deductions for disciplinary reasons An employee who is suspended for disciplinary reasons and whose pay is docked loses exempt status ▫Note: The regulations allow a “window of correction” for employers who inadvertently make an impermissible deduction to correct the situation and pay the employee ▫However, it may not be available if there are multiple impermissible deductions or if the employer has a policy permitting the deduction Even if no one’s pay is actually docked, an employer who has a policy allowing for suspension without pay or disciplinary wage deductions under clearly identified circumstances could lose exempt status

What is an employer to do? Ensure your exempt employees are truly exempt and remain exempt! Ensure your handbook is properly drafted and consistently applied ▫Require advance approval of a supervisor before overtime hours may be worked ▫Provide for disciplinary action for failure to obtain appropriate authorization and consistently apply the disciplinary policy

Thank You For more information or questions, feel free to contact me: Ashleigh E. O'Connell Attorney at Law Whitfield & Eddy, P.L.C. 317 Sixth Ave. Suite 1200, Des Moines, Iowa Main: (515) | Direct: (515)