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Aug23

Overtime for Salaried Employee

I have an employee who works as a General Manager at one of our restaurant/retail locations in one of the Colorado airports. She is salaried at $615 per week. Does she qualify as an employee who is entitled to overtime?

The federal Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.

Under the FLSA, employees are classified as either non-exempt or exempt.

Hourly and salary paid are compensation terms.

Non-exempt employees must be paid for all hours worked and are subject to overtime and minimum wage requirements prescribed by the FLSA. Most employees are considered non-exempt.

Conversely, exempt employees receive a fixed predetermined salary for any week during which work is performed regardless of the quantity or quality of such work. Exempt employees are excluded from overtime pay provisions.

It’s up to employers to determine an employee’s classification based on FLSA guidelines.

To be exempt, an employee must pass all three “tests”, salary level, salary basis, and duties, as outlined by the FLSA.

The salary level test: Employees who are paid less than $455 per week ($913 per week as of December 1, 2016) are non-exempt.

The salary basis test: An exempt employee must receive a regular, predetermined amount of compensation each pay period on a weekly, or less frequent, basis. Aside from a few exceptions, an employee must receive the full salary for any workweek during which the employee performs any work, regardless of the number of days or hours worked.

The duties test: An employee who meets the salary level and salary basis tests is exempt only if he/she also performs exempt job duties. The actual tasks of the job are to be evaluated, not the job title. There are three typical categories of exempt job duties titled executive, professional, and administrative.

Job duties are exempt “executive” job duties if the employee regularly supervises two or more other employees, has management as the primary duty of the position, and has some genuine input into the job status of other employees (such as hiring, firing, promotions, or assignments).

“Professionally” exempt work is predominantly intellectual, requires specialized education, and involves the exercise of discretion and judgment. Advanced degrees are the most common measure of this but are not absolutely necessary if an employee has attained a similar level of advanced education through other means and performs essentially the same kind of work as similar employees who do have advanced degrees.

“Administratively” exempt employees provide support to the operational or production employees and have a major impact on the overall business. An administratively exempt employee has the authority to create or interpret company policies, has responsibilities that directly relate to the overall business operation, has the decision making ability to make significant financial impacts, and has the authority to deviate from company policy without prior approval.

An employee who doesn’t pass all three tests is considered non-exempt under the FLSA.

Since the General Manager is paid $615 per week on a salary basis and assuming she performs exempt job duties as previously mentioned then she qualifies for exempt status. Exempt employees are not required to receive overtime pay. Remember, come December 1st she will have to earn at least $913 per week to meet the salary level requirement. Otherwise, her classification must change to non-exempt and she will be eligible for overtime pay.

HTH!

August 23rd, 2016, 11:48 AM |  Posted in: Compensation |
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Aug19

Intermittent FMLA for Exempt Employee

An exempt employee is certified for 2-3 days per month and these days are usually consecutive do to “flare-ups”. If he normally works 45-50 hours per week, how do we determine time to deduct for absence? If he works 38 hours Monday-Thursday but is absent on Friday, do we still deduct a full days’ pay or only 2 hours based on a “40-hour” week? If he works 9 hours a day for 18 days and is absent the last 2 days of the moth, do we deduct for those 2 days?

Deductions from exempt employees’ salary is limited to certain circumstances, including for intermittent or reduced schedule leave under the federal Family & Medical Leave Act (FMLA). There are two options for determining compensation for exempt employees on intermittent or reduced schedule leave.

1. Convert the employee to hourly status for the duration of FMLA leave.
2. Keep the exempt employee as salaried and make appropriate deductions from his salary.

Converting the employee to hourly while on intermittent or reduced schedule leave ensures the employee won’t be paid for the time on leave; however, the employee will be paid for additional time worked. The employee’s exempt status will not be in jeopardy as long as the reason for the conversion is clearly documented as FMLA leave.

The often more preferable option is to keep the employee as salaried and make the appropriate deductions from the salary based on the employee’s regular workweek and hourly rate.

Determining an hourly rate for an exempt employee can be difficult. If your payroll system issues an hourly rate then this is step is easy. However, usually it comes down to determining a normal workweek by calculating the average of hours worked in the 12 workweeks preceding the start of the leave. Then, divide the employee’s weekly salary by the average hours worked in a workweek to determine the hourly rate. Some employers don’t record the hours worked by exempt employees at all. In this case, the average hours worked must be based on conversations with the employee and his immediate supervisor.

Remember to document the rationale behind the determination of the hourly rate. Use the hourly rate to reduce the employee’s salary as appropriate for his FMLA leave usage. Again, remember to document the salary adjustments as being due to FMLA leave.

It’s best to count the number of hours an employee actually uses for leave against their leave entitlement and for determining the appropriate salary deduction. So, an employee who works 38 hours Monday thru Thursday and takes Friday off as leave should still have 8 hours deducted from his leave entitlement and his salary be appropriately reduced. This allows the employer to clearly document which hours have been used for leave.

Just to be clear, an employer wouldn’t be in violation of the FMLA or FLSA by allowing employees to “make-up” leave time in a workweek. However, such a practice must be consistently and uniformly allowed of all employees to avoid costly discrimination claims. Also, allowing employees to “make-up” leave time essentially provides more time off than the 12-week leave entitlement under the FMLA. The added time may not seem like a lot at first but it easily and quickly adds up. This is another reason employers avoid this practice.

HTH!

August 19th, 2016, 9:01 PM |  Posted in: Compensation, Labor Laws |
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Aug19

Pro-Rating Vacation Days

Please show me how to prorate vacation days based on the following: Our vacation policy is *0-1 year employment 0 vacation days *1 year to 2 years employment 5 vacation days *2 years to 3 years employment 10 vacation days *3 years or more employment 15 vacation days. *NOTE: calculated on your anniversary date only. What is the correct way to prorate vacation days from 2-12-2016 to 12-31-2016?

Pro-rating vacation time is a common question. The calculation is fairly simple.

Let’s say an employee works 8 hours a day/40 hours a week and currently earns 5 days (or 40 hours) of vacation time a year.

Divide the total number of vacation hours (40) by number of weeks in a year (52) = 0.769 hours of vacation earned per week.

There are 46 weeks from February 12, 2016 to December 31, 2016. Thus, the employee would be entitled to 46 weeks worth of accrued vacation time.

Hours of vacation earned per week (0.769) x weeks of vacation entitlement (46) = 35.374hours of vacation.

So, the employee would earn 35.374 vacation hours from February 12, 2016 to December 31, 2016.

Make sure to set a standard rounding practice.

HTH!

August 19th, 2016, 7:46 PM |  Posted in: Benefits |
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Aug19

Wage Deductions for Lost Equipment

Our company is headquartered in Virginia. We conduct business and have employees in MD, AL, FL, GA, WA, and Washington D.C. We would like to add a wage deduction section (which the employee will sign) to our equipment requisition form so that in the event that any loaned equipment (laptop, printer, etc.) is not returned, we can then deduct the cost out of the employee’s paycheck. Do we have to follow the guidelines and or laws for each state in which the employee lives? Is there a requirement to account for depreciation?

Employers are required to follow both federal and state wage and hour laws. When federal and state laws address the same matter, whichever law offers the most protection to the employee must be followed. Further, when an employer has employees who work out of state, the state laws in which the employee performs the majority of his/her work prevails.

The federal Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.

Under the FLSA, employees are classified as either non-exempt or exempt.

Non-exempt employees must be paid for all hours worked and are subject to overtime and minimum wage requirements prescribed by the FLSA.

Conversely, exempt employees receive a fixed predetermined salary for any week during which work is performed regardless of the quantity or quality of such work. Exempt employees are excluded from overtime pay provisions.

The FLSA allows employers to make deductions from a non-exempt employee’s paycheck to recoup the cost of lost or unreturned equipment as long as the employee consents to the deduction beforehand and the deduction doesn’t reduce the employee’s hourly rate below the applicable minimum wage. Also, the deductions cannot affect an employee’s overtime pay.

Exempt employees are different. The FLSA prohibits deductions from an exempt employee’s paycheck to recoup the cost of lost or unreturned equipment. The DOL has opined that such deductions clearly violate the salary basis rule for exempt status.

Some states have adopted legislation that imposes more restrictions on wage deductions, Washington State and Washington D.C. included.

In Washington State, deductions from an employee’s paycheck to recoup the cost of lost or damaged equipment are only permissible if it can be shown to have been caused by the employee’s willful or dishonest act. Also, the incident causing the need for the deduction must have occurred in the final pay period, such a deduction is only allowed from the employee’s final paycheck, and the employer is burdened with proving the employee knew of the policy permitting the deduction (a written acknowledgement is recommended).

D.C. simply prohibits any wage deductions not required by law.

Some states adopt laws that mirror the FLSA, like Maryland.

Other states just don’t have any laws on wage deductions including Alabama, Florida and Georgia.

It’s not common for state laws to address depreciation when it comes to wage deductions. Still, it’s a fair and common practice to charge the employee the value of the equipment at the time it was lost or damaged. It’s just not good business practice to expect an employee to reimburse you the cost of a brand new product when the one he/she was using was well used.

HTH!

 

 

 

August 19th, 2016, 7:33 PM |  Posted in: Compensation, Labor Laws |
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Aug18

Water Bottles in the Workplace

Is there an OSHA approved water bottle for workers to keep at their station?

The federal Occupational Safety and Health Administration (OSHA) ensures safe and healthful working conditions in the workplace through training and regulations.

OSHA requires potable water to be provided in all places of employment in amounts that are adequate to meet the health and personal needs of each employee. Potable water means water that is safe from toxins and meets the standard for drinking purposes set forth by state and/or municipality regulations.

There is no requirement for water to be bottled or even from a water fountain. Tap water from a sink, as long as it meets the standards for drinking, meets OSHA’s requirement.

Portable containers that carry water are also permitted. Containers must be clearly marked, tightly closed, have a tap for dispensing the water, and may not be used for any other purpose. Water is not to be dipped from containers. Shared drinking cups or bottles are not permitted.

There is no standard water bottle approved by OSHA. However, employers may impose restrictions on the type of water bottle permitted in the workplace depending upon the type of work being performed and the work environment.

August 18th, 2016, 2:23 PM |  Posted in: Workplace Health & Safety |
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