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

2. 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   Note: WA also has a Wage Act; employees are entitled to law most favorable. Please see at

3. 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);

4. 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.

5. 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)

6. Salary Test

7. 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

8. Duties Test

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

10. 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”

11. 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

12. 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

13. 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.

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

15. 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

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

17. 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

18. 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

19. 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

20. 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?

21. 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?

22. 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

23. Gender Identity

24. New Rules
Human Rights Commission Rules adopted in November (WAC )
0.3% or 700,000 Americans are transgender according to a 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

25. 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

26. 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

27. Reoccurring Issues Train the staff and supervisors:
1. Public Records Act (especially s, 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

28. Thank you!