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Salary Exempt Absenteeism

Employers should be careful how they deal with absenteeism by exempt employees.

Don’t dock an exempt employee’s paycheck for missing less than one full day of work because it could destroy their exemption and entitle them to time-and-a-half for all overtime they have worked in the past or work in the future. However, the FLSA does allow for partial day absences to be paid through an employee’s accrual bank of PTO, Vacation, or Sick hours. The only exception for docking a salary exempt employees pay for a partial day absence is if the absence is covered by the FMLA, and the employee has exhausted their accrual bank hours.

Full Day deductions of pay from a salary exempt employee are allowed only under the following circumstances:

  • dilemmaDuring the initial or final week of employment the employees pay may be reduced to reflect the actual hours worked.
  • Full-day absences for personal reasons.
  • Full day absences for disciplinary suspension for safety violations.
  • Full day absences in which an employee has exhausted their entitled Paid Leave plan balances.
  • FMLA Absences.

Two other attendance issues protected by law are employees called to jury duty and employees who request time off for religious reasons. State and federal laws generally require employers to give workers leave when called to serve on a jury. And employers may have to bend their attendance rules to accommodate a worker’s religious practices or beliefs.

A key to curbing abuse is to have an absenteeism policy that clearly sets forth which absences are allowed, and what behavior will subject the employee to discipline.

Are You Prepared for the New Overtime Rules?

One of the biggest HR topics last year was the Notice of Proposed Rulemaking in regards to the FLSA Overtime Exemption.  While the final rule has not been published, and therefore the standards and amounts are not set in stone, the NPRM has slated that the minimum annual salary threshold for executive, administrative, and professional overtime exemptions will in essence double by increasing from $23,660 to $50,440.

The Department of Labor is planning on issuing a final rule during the spring of 2016, and the effective date of the final rule would be 60 to 120 days after publication; but this is just speculation; thus now is the time to make sure you are prepared.

dilemma

Below is a check list to get you started on making sure you are ready for the proposed changes. Please keep in mind that every business and industry is different, so this is not a comprehensive list, but rather a good starting point.

 

  • Review employees job descriptions. Are they still accurate? Do the actual job duties fall within the exempt status?
  • Identify exempt salaried employees with a salary below $50,440 or $970 per week.
  • Identify the true hours worked per salaried exempt employee who makes less than $50,440 yearly. Start having salaried employees, which are below the $50,440 threshold, track their actual time worked if they are not already.
  • Determine if it is better to raise the employee’s salary to 50,440 based on the average number of hours they are working, or if it is better to classify them as non-exempt from overtime.
  • If reclassifying to non-exempt, determine if you will take their current annual salary and divide it by 2080 (40 hours per 52 weeks a year) to achieve what their new hourly rate may be.
  • If employees, who will be reclassified as non-exempt, are consistently working over 40 hours per week, consider if overtime will be allowed or if it will be discouraged, and if so how much will be allowed.
  • If you will implement a policy discouraging overtime for employees newly classified as Non-exempt, determine if certain tasks and jobs will need to be reassigned to another employee.
  • Determine if additional employees need to be hired as a result of job duty changes, rather than possibly incurring additional overtime.
  • Take a look at “remote work” for salaried employees. If employees who are currently exempt will be reclassified as non-exempt, now is the time to look at your policies regarding after work hours business phone calls and emails that are being read and/or responded to.
  • Prepare a plan of how to explain the classification changes to employees, and what the changes will mean to them and their paychecks.

Summing it up, look at job descriptions, pay rates near the threshold, and especially at hours worked. If you are unsure of just how many hours those exempt employees are working, now is the time to start tracking them.

For further questions regarding the proposed changes, please contact our HR/Client Services Department at 770-339-0000 or ClientServices@hr-startegies.com.  If you are in need of a Time & Attendance solution to track your employees hours, Please contact us at 770-339-0000 or TimeTracker@hr-strategies.com

Tuesday Tip: Salary Exempt Absenteeism

Employers should be careful how they deal with absenteeism by exempt employees.

Don’t dock an exempt employee’s paycheck for missing less than one full day of work because it could destroy their exemption and entitle them to time-and-a-half for all overtime they have worked in the past or work in the future. However, the FLSA does allow for partial day absences to be paid through an employee’s accrual bank of PTO, Vacation, or Sick hours. The only exception for docking a salary exempt employees pay for a partial day absence is if the absence is covered by the FMLA, and the employee has exhausted their accrual bank hours.

Full Day deductions of pay from a salary exempt employee are allowed only under the following circumstances:

  • dilemmaDuring the initial or final week of employment the employees pay may be reduced to reflect the actual hours worked.
  • Full-day absences for personal reasons.
  • Full day absences for disciplinary suspension for safety violations.
  • Full day absences in which an employee has exhausted their entitled Paid Leave plan balances.
  • FMLA Absences.

Two other attendance issues protected by law are employees called to jury duty and employees who request time off for religious reasons. State and federal laws generally require employers to give workers leave when called to serve on a jury. And employers may have to bend their attendance rules to accommodate a worker’s religious practices or beliefs.

A key to curbing abuse is to have an absenteeism policy that clearly sets forth which absences are allowed, and what behavior will subject the employee to discipline.

Tuesday Tip: Rounding Hours

time-for-work-clock

Do you round employees’ hours worked? If you choose to round, do so cautiously to reduce the risk of a wage and hour claim. Employee time must be rounded up and down uniformly (e.g. don’t always round down). Structure rounding to ensure employees are paid fully for all hours actually worked and overtime is calculated properly.

Tuesday Tip: Documenting Behavior and Performance

Generating and managing fair, accurate, and non-biased documentation of employee behavior and performance is one of the most important skills all supervisors need to develop. Good documentation by supervisors and managers can mean the difference between a company winning and losing an employment-related lawsuit.

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  • Document all instances when employee fails to do his/her job.
  • Probationary period is not an excuse for terminations. You must document failed or substandard performance.
  • Employment-at-will does not preclude an employee from unemployment benefits or suing – it is in fact an “admission” by the employer that they may have not had a reason to terminate or that the employer failed to do their job!

Documentation Must Be A Habit, Be Done Early, Done On All Employees, and Be Balanced; At the End of The Day, It’s What the Courts Analyze for Unemployment Insurance (UI) Claims.

Tuesday Tip: Breaks & Lunches

Lunch.


Employers often have questions regarding paying or not paying for Breaks & Lunches. 

Rule of thumb: 20 minutes or less = Paid & more than 20 minutes = UnPaid.

According to the US DOL Wage and Hour Division Fact Sheet #22: “Rest periods of short duration, usually 20 minutes or less are customarily paid for as working time. These short periods must be counted as hours worked. Bona fide meal periods (typically 30 minutes or more) generally need not be compensated as work time. The employee must be completely relieved from duty for the purpose of eating regular meals. The employee is not relieved if he/she is required to perform any duties, whether active or inactive, while eating.”

If you have questions or concerns regarding time for breaks and meals, please contact your HR/Client Services Representative.

Employee or Independent Contractor? Enforcement Coming.

On June 30, 2015, after more than 15 months of waiting, the 295 page Notice of Proposed Rulemaking (“NPRM”) on overtime and administrative exemptions was released.  Though this does not cover the identification and classification of Independent Contractors versus Employees, Wage and Hour Division Administrator David Weil issued an Administrator’s Interpretation letter regarding the status of Independent Contractors versus Employees on July 15th, 2015.

It should not come as a surprise that the WHD has put out Administrator’s Interpretation No. 2015-1, Subject: ‘The Application of the Fair Labor Standards Act’s “Suffer or Permit” Standard in the Identification of Employees Who Are Misclassified as Independent Contractors’, at the same time that NPRM on overtime exemptions has been opened for comment. Both are congruent on each other to make sure that everyone performing duties for an employer are correctly classified.  It is also a reminder that there are very specific “rules” to 1099- independent contractors, and that it is not an option to classify as such to possibly avoid the upcoming changes to overtime exempt status. The Interpretation Letter clearly narrows the definition of “Independent Contractor”, and states “in sum, most workers are employees under the FLSA’s broad definitions… The very broad definition of employment under the FLSA as ‘to suffer or permit to work’ and the act’s intended expansive coverage for workers must be considered when applying the economic realities factors to determine whether a worker is an employee or an independent contractor.” Be warned that the economic realities test regarding Independent Contractors is the main determinative for Employee vs. Independent Contractor, but that no single factor is weighed heavier than another. Rather the qualitative result of all 6 factors determine the outcome of Independent Contractor or Employee.

  1. The extent to which the work performed is an integral part of the employer’s business.
  2. The worker’s opportunity for profit or loss depending on his or managerial skill.
  3. The extent of the relative investments of the employer and the worker.
  4. Whether the work performed requires special skills and initiative.
  5. The permanency of the relationship.
  6. The degree of control exercised or retained by the employer.

As a business you should take this letter as indication for the need to review any arrangements and agreements regarding anyone paid as an independent contractor, to make sure that they do comply with the rules regarding 1099 Independent Contractor status.  Though the letter does not state any new legislation or compliance obligations, it may be seen as a foresight that there will be more enforcement to come on the Contractor vs. Employee front.

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