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:
- During 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.
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.
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.
- 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.
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.
- The extent to which the work performed is an integral part of the employer’s business.
- The worker’s opportunity for profit or loss depending on his or managerial skill.
- The extent of the relative investments of the employer and the worker.
- Whether the work performed requires special skills and initiative.
- The permanency of the relationship.
- 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.
Notice of Proposed Rulemaking for new Overtime Requirements
On March 13th, 2014 the White House’s Office of the Press Secretary released the Fact Sheet: Opportunity for All: Rewarding Hard Work by Strengthening Overtime Protections. As an excerpt from the fact sheet states, “The overtime and minimum wage rules are set in the Fair Labor Standards Act, originally passed by Congress in 1938, and apply broadly to private-sector workers. However, there are some exceptions to these rules, which the Department of Labor has the authority to define through regulation. One of the most commonly used exemptions is for “executive, administrative and professional” employees, the so-called “white collar” exemption.” A Presidential Memorandum was signed in 2014 instructing the Secretary of Labor to update regulations regarding who qualifies for overtime protection.
After more than 15 months of waiting, the 295 page Notice of Proposed Rulemaking (“NPRM”) was released on June 30, 2015. The NPRM is just the proposed regulations and are subject to a 60 day public comment period that will end on September 4th, 2015. This public comment period allows for all to comment with any dissatisfactions or concerns that they may have. The results of this comment period are then to be taken into consideration before the final rule is published. The comment period and subsequent review is expected to take between 6-8 months; thus, a final rule is not expected until 2016. To voice your opinions and concerns you may go to: http://www.regulations.gov/#!docketDetail;D=WHD-2015-0001.
The Proposed Changes
The NPRM as stated is 295 pages long, so here is a brief summary of what you need to know:
- The current salary threshold for the executive, administrative, and professional exemptions is $455 a week ($23,660 a year). The DOL proposes to establish the minimum qualifying weekly salary commensurate with the 40th percentile of weekly earnings for all full-time salaried employees in the United States. This would mean that the minimum weekly salary for the executive, administrative and professional exemptions will increase to $921 per week, or $47,892 annually. However, if the rule is not in effect until 2016, those numbers based on the 40th percentile will be $970 a week, or $50,440 annually.
- The proposed Rule also increases the minimum annual compensation for the highly-compensated employee exemption from $100,000 to $122,148, which is based on the 90th percentile of salaried workers’ weekly earnings.
- For the first time since the Fair Labor Standards Act was passed in 1938, the DOL proposes to automatically increase the minimum weekly salary requirement each year based on data from the Bureau of Labor Statistics. The Department, however, has not chosen between the two different indexing methods that it has studied.
- Keeping the levels chained to the 40th and 90th percentiles of earnings.
- Adjusting the amounts based on changes in inflation by tying them to the Consumer Price Index.
- There had been talk of changing the “duties test” for the executive, administrative, and professional exemptions; however, at this time there is nothing proposed regarding the duties test in the NPRM. Rather the DOL is only seeking public comments on the issue, which means that there may be revisions in the future.
Why the Change?
The last time the rule for the weekly salary that must be paid to an employee in order for the employee to be eligible for the executive, administrative and professional FLSA overtime exemptions were updated was in 2004. The minimum annual salary level for these exempt classifications under the 2004 regulations is $23,660, which is now below the poverty line for a family of four. By changing the exemption qualifications there will be a dramatic increase in the number of salaried employees who are entitled to overtime pay. It is estimated that these proposed changes will qualify approximately 4.6 million more employees nationally for overtime if the proposed rule is adopted.
What Comes Next?
By possibly changing the rules as to who qualifies as exempt vs. non-exempt from overtime, in regards to the income threshold for salary exempt status being raised; many employers are sure to be exposed to further FLSA cases. Now is the time to review your employee’s exemption classifications and to prepare to look into your compensation plans for your exempt employees, especially those who are salaried exempt making less than $970 a week.
We urge you to review the following:
DOL Press Release on the NPRM at http://www.dol.gov/whd/overtime/NPRM2015/
The Wage and Hour Fact Sheet at http://www.dol.gov/whd/overtime/NPRM2015/factsheet.htm
The FAQ’s regarding the Overtime NPRM at http://www.dol.gov/whd/overtime/NPRM2015/faq.htm
As always, HR Strategies is here to answer any questions or concerns that you have regarding the NPRM or other aspects of the FLSA and Wage & Hour. You may contact us at 770-339-0000.
Have questions about seasonal employees? Want to know more about Georgia’s Child Labor Laws? Here are a few Frequently Asked Questions from the Georgia DOL website.
Q: Can I obtain a list from the Child Labor Section of employers who are currently hiring minors?
A: The Child Labor Section does not assist in obtaining employment for minors but rather ensures the safety of minors in the work place. The following industries are major employers of minors: grocery stores, amusement parks, recreation centers, day care centers, restaurants, bowling alleys, movie theatres, and retail stores. You can visit any GDOL Career Center to get help in finding a job.
Q: What are the requirements for reporting new hires?
A: Both Georgia statute 19-11-9.2 and the Federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 require all Georgia employers to report all newly hired employees, including rehires, to the “State New Hire Reporting System”. No employers are exempt.
Q: If an area school session ends prior to June 1, can a minor under the age of 16 work 8 hours per day and 40 hours per week or does the minor have to wait until June 1 to begin full time employment?
A: Once the school session ends, a minor can work up to 8 hours per day but no more than 40 hours per week. However, according to federal law, the minor cannot work past 7:00 p.m. until June 1. For the period of June 1 through Labor Day the work hours are extended to 9:00 p.m.
Q: Can a minor who is visiting and working in Georgia use an out-of-state work permit?
A: No. Any minor working in the state of Georgia must obtain a Georgia Employment Certificate issued by an authorized Georgia Issuing Officer. A work permit can be obtained from the local board of education where the minor is temporarily residing.
Q: If school is not in session one day during a school week, what are the maximum hours a minor under age 16 can work on that day?
A: If school is not in session on any particular day during a school week, according to state law, a minor can work 8 hours on that non-school day. However, if the employer is subject to the FLSA, the minor cannot work more than 18 hours during that particular school week.
These are only a few answers, check out the Georgia DOL site or call HR Strategies with your questions!
This month, as 2014 comes to a close, we took a look back at some of the most important blog topics we have covered in order to help you prepare for 2015!
Some of the topics of greatest interest and importance covered the rise in regulatory compliance and employment laws, and the crack down of various government agencies to make sure your company is in compliance. Beyond that we have also provided you with insight into taxable and non-taxable income, employee relations, and employer policies. We want to thank all of our loyal blog followers and more importantly our clients for the opportunity to keep you informed of what has been happening in 2014 in the world of HR and here at HR Strategies. We look forward to 2015!