For a law that has been around for so long, you would think that we would know what the Fair Labor Standards Act means by now. Ever changing regulations and the multitude of suits being filed demonstrate otherwise. In this webinar, guest speaker Susan Desmond, shareholder of Jackson Lewis P.C., will walk through the nuances of the FLSA and highlight the most frequent and costly mistakes employers are making. She will also discuss the employer/employee relationship under the FLSA, exemptions, what time is compensable and ways to decrease your overtime liability and much more. Jim Manfield, Solution Consultant at Kronos, will touch on how organizations can decrease overtime liability and reduce costs with modern cloud-based workforce management solutions.

1. #WFwebinar
The presentation will begin at the top of the hour.
A dial in number will not be provided.
Listen to today’s webinar using your computer’s
speakers or headphones.
Calculating Overtime Correctly under the Fair
Labor Standards Act (FLSA)

2. #WFwebinar
Speaker: Susan Fahey Desmond
Shareholder
Jackson Lewis P.C.
Moderator: Jim Manfield
Solution Consultant
Kronos Incorporated
Calculating Overtime Correctly under
the Fair Labor Standards Act (FLSA)

3. #WFwebinar
Tools You Can Use
Audio Control
– A dial in number will not be provided.
– Adjust the volume by sliding the
indicator in the Media Player box to the
left.
– Also check your computer’s volume for
external speakers or headsets.

4. #WFwebinar
Tools You Can Use
Speaker Bios
Resources
Media Player
Q&A
Slides
Twitter
Help
Post Event
EvaluationShare This
Group Chat
HRCI
WF Webinars

5. #WFwebinar
Tools You Can Use
Q&A and Live Group Chat
– Enter your first name and initial
and join the live discussion with
other webinar attendees
– Enter technical or content-
related questions into the Q&A
box
– Type your question in the space
at the bottom.
– Click “Submit.”
Q&A
Group Chat

6. #WFwebinar
Tools You Can Use
Twitter
- Click “Post” in the Twitter widget.
#WFwebinar
@WorkforceNews

7. #WFwebinar
1. May I receive a copy of the slides?
YES! Click on the resource list located on the top left
portion of your screen.
2. May I review the webinar recording at a later date?
YES! You may log in again using today’s link to review the
presentation on-demand.
3. Is this webinar HRCI certified?
YES! The HRCI certification code will appear in the box to
the right of the slides after the required watch-time has
elapsed.
Frequently Asked Questions

8. #WFwebinar
Jim Manfield
Solution Consultant
Kronos Incorporated
Calculating Overtime Correctly under the
Fair Labor Standards Act (FLSA)

9. #WFwebinar
Susan Fahey Desmond
Shareholder
Jackson Lewis P.C.
Calculating Overtime Correctly under the
Fair Labor Standards Act (FLSA)

10. 10© KRONOS INCORPORATED February 2, 2015© KRONOS INCORPORATED February 2, 2015
Calculating Overtime Correctly
Under the Fair Standards Labor Act
(FLSA)
Jim Manfield,
Product Marketing Manager
Kronos Incorporated
Susan Fahey Desmond,
Shareholder,
Jackson Lewis P.C.

11. 11© KRONOS INCORPORATED February 2, 2015
About Your Speaker
• Susan Fahey Desmond is a shareholder in the New Orleans office of
Jackson Lewis P.C. Jackson Lewis is a labor and employment law
boutique firm with offices in over 54 cities across the country. In
addition to being a frequent speaker and author, Ms. Desmond is
listed in Best Lawyers in America and has been named by Chambers
USA as one of America’s leading business lawyers. The National
Association of Professional Women recently named her as a VIP
Woman of the Year.

12. Calculating Overtime Correctly
Presented by:
Susan Fahey Desmond
Jackson Lewis PC
650 Poydras, Suite 1900
New Orleans, LA 70410
(504) 208-1755
© Jackson Lewis LLP 2011

13. Disclaimer
• This presentation and its accompanying materials are
for informational purposes only and should not be used
as a substitute for legal advice on a particular. Ms.
Desmond specifically does not intend to create an
attorney-client relationship by presenting this material
and/or answering questions from attendees.

14. What is Working Time?
• Time spent for the employer's benefit;
• Time controlled by the employer;
• Work time that is “suffered or permitted” by the
employer; or
• Time spent doing an activity requested by the employer.

15. Unauthorized Overtime
• Employers must compensate employees for
unauthorized work when an employer "suffers or
permits" employee to work;
• An employer suffers or permits an employee to work
where the employer knew or had reason to believe the
employee was performing work.
• Note: Employers are free to discipline employees for
unauthorized work.

16. Rest or Meal Periods
• A rest period of more than twenty minutes will not be
considered compensable if:
• The employee is free to leave the job site;
• The rest period is long enough to allow the employee
freedom to do as he pleases; and
• There is no attempt to evade the FLSA.

17. Breastfeeding Breaks
• Under the Affordable Care Act, all employers must
provide reasonable breaks to female employees who
need to express milk until her child is one year old.
• Breaks for the purposes of expressing milk is not
compensable working time – even if it is under 20
minutes.
• Only applies to non-exempt employees.

18. Sleeping Time
• Two general FLSA policies regarding the compensability
of sleeping time. Sleeping time is considered to be
compensable working time for employees who work
shifts of less than 24 hours.
• Time spent sleeping is not considered compensable
time for employees whose shifts last 24 hours or longer
if:
• An express or implied agreement excluding sleep
time exists;
• Adequate sleeping facilities are furnished; and
• At least five hours of sleep is possible during the
scheduled sleeping periods.

19. Medical Examinations
• Time spent by an employee waiting for and receiving
medical attention on the premises or at the direction of
the employer during the employee's normal working
hours constitutes hours worked.

20. Training and Meeting Time
• Included in working time unless:
• Attendance is outside the employee's regular work
hours;
• Attendance is voluntary;
• The training or meeting is not directly related to the
employee's job; and
• The employee does not perform any productive work
during such attendance.

21. On Call Time
• An employee who is required to remain on-call on the
employer’s premises or so close thereto that he/she
cannot use the time effectively for his/her own purposes
is working while “on-call.”
• An employee who is not required to remain on the
premises but is merely required to leave word at his/her
home or with company officials where he/she may be
reached is not working while on-call.

22. Overnight Travel
• Travel time during employee's normal working hours is
compensable.
• Travel time on Saturdays, Sundays and holidays which
corresponds to an employee's normal working hours is
compensable.

23. Off the Clock Work
• Starting work before clocking in.
• Clocking out but continuing to work.
• Working during meal periods.
• Unauthorized overtime "off the clock."
• Working at home.
• "Make-up" time.

24. Donning and Doffing Principles
• Preparatory activities are generally not compensable
unless:
• The work being performed is an integral and
indispensable part of an employee’s
principal duties or required by the employer,
CBA, industry, or laws.

25. Donning and Doffing Principles
• Franklin v. Kellogg Co. (6th Cir. 2010) -- "[B]ecause the
uniform and equipment ensures sanitary working
conditions and untainted products," donning and doffing
primarily benefited the employer.
• Helmert v. Butterball (E.D. Ark. 2011) -- “No reasonable
jury could find that an activity essential to prevent food
contamination in a poultry processing plant primarily
benefits the employees of the plant rather than the
employer.”

26. Collective Bargaining Agreements
• Exclusion from “hours worked” – CBA agreement or
practice can exclude time spent “changing clothes and
washing” at “beginning and end of workday”
• Issues:
• Define “clothes” – Sandifer v. U.S. Steel (2014) (broad)
• Define “washing” (just the person, or other items too?)
• Define “workday” – Mitchell v. JCG (7th Cir. 2014) (split)
• Does excluded D&D time still render the walking
compensable?
• Franklin v. Kellogg (6th Cir. 2010) (yes)
• Adair v. ConAgra (8th Cir. 2013) (no)

27. Sandifer v. U.S. Steel (Supreme Court 2014)
• Defined “clothes” broadly – the fact that an item has a
protective purpose does not exclude it from “clothing.”
• Announced new way of assessing excluded time, when
employees don both clothing and non-clothing items: is
“vast majority” of the D&D time spent donning clothes?
• Requires review of existing assumptions under CBAs.

28. Telecommuting
• The FLSA contemplates remote work arrangements
where recordkeeping is a problem.
• Since remote employees can often engage in “private
pursuits” such as eating, sleeping and other non-work
related activities, the DOL will allow the employer and
employee to negotiate “any reasonable agreement” of
working hours in light of all relevant facts.

29. Determining the Workweek
• “Workday” is a consecutive 24
hour period beginning at the same
time each calendar day. It must
be defined and POSTED
• “Workweek” is a fixed and
regularly recurring period of 168
consecutive hours (seven 24 hour
periods). It must be defined and
POSTED.

30. 7(k) Agreements
• Public employers may pay police officers and fire detail
employees by a 7(k) arrangement.
• Under the 7(k) exemption, the public entity looks at a 28
day period rather than the traditional seven day period.
• Police officers: 171/28
• Fire detail employees: 212/28

31. Hospitals 8/80
• Hospitals may compensate employees based on an
8/80 plan.
• Under an 8/80 plan, the employer must pay overtime for
any hours worked over 8 in a day or over 80 in a
fourteen day period.
• Advantage is that the hospital looks at a fourteen day
period rather than a seven day period.

32. What is Included in the Regular Rate of Pay?
• Includes:
• Hourly earnings
• Salary
• Value of meals (unless exception)
• Commissions
• Non-discretionary bonuses (i.e., production bonus,
mandatory service charge)
• Controlled standby pay
• Piecework earnings
• Shift differentials

33. What is NOT Included in the Regular Rate of Pay?
• Discretionary bonuses
• Paid Time Off
• Holiday Pay
• Benefits

34. Hourly Employee (No Guaranteed Overtime)
• Regular Rate: Hourly rate
• Overtime Compensation: 1.5 x regular rate for the hours
worked past 40 hours per week
• Thus, if employee works 45 hours at an hourly rate of
$10.00/hr, he is entitled to $10/hr for all 45 hours plus
an extra $5/hr for the five ot hrs for a total of $475 for
the week.

35. Hourly Employee with a Bonus Example
• Regular rate includes the promised hourly rate plus any
non-discretionary payments.
• Example: Employee has an hourly rate of $10/hr. He
works 50 hrs during the workweek and also receives a
$100 production bonus.
• Calculation of Amount Owed: Ee’s total includable
compensation if 50 hrs x $10/hr, or $500 in straight
time pay, plus the $100 non-discretionary bonus for a
total of $600.
• Regular rate for this week is $600/50 hrs worked or
$12/hr. Ee is entitled to premium overtime pay of an
addtl $6 per overtime worked: 1.5 x $12/hour x 10
hours, equaling $60.00. Total amount owed: $660.00.

36. Employees Paid at Two or More Rates
• Example: $10.00/hour for Task A and $12.00/hour for
Task B
• 15 hours at Task A ($10.00/hr) = $150
• 35 hours at Task B ($12.00/hr) = $420
• Regular Rate: Total wages ÷ number of hours worked in
that workweek = $570 ÷ 50 = $11.40
• Overtime compensation: 1.5 x regular rate for hours
worked past 40 per workweek

37. “Salaried” Employees
• Salaried Employee (Weekly Salary)
• Regular Rate: (Salary) ÷ number of hours which the salary
is intended to compensate
• Overtime Compensation: 1.5 x regular rate for hours
worked past 40 hours per week
• Salaried Employee (paid semi-monthly for 40 hours of
work per week)
• Regular Rate: [(Salary) x 24) ÷ 52] ÷ 40
• Overtime Compensation: 1.5 x regular rate for hours
worked past 40 per week

38. Fluctuating Workweek
• Salaried Employee-Fluctuating Hours (paid monthly for
all hours worked)
• Regular Rate: [(Salary) x 12) ÷ 52] ÷ number of hours
worked in the workweek
• Overtime Compensation: ½ x regular rate for hours
worked past 40 per week
• Example: Ee works for a guaranteed weekly salary of
$600 which the Er and Ee understand agree covers
straight-time for all hours worked, whether the workweek
is shorter of longer than 40 hrs. Ee works 60 hrs in the
workweek. The regular rate is $600/60 or $10/hr. Ee is
entitled to premium overtime pay of .5 x $10/hr x 20 hrs
or $100.00 for a total weekly compensation of $700.

39. Piecework
• Piecework
• Regular Rate: Total earnings ÷ hours worked in a
particular workweek
• Overtime Compensation: 1.5 x regular rate for hours
worked in excess of 40
• Piecework Rate with Hourly Guarantee
• Regular Rate: Minimum hourly rate
• Overtime Compensation: ½ x regular rate for hours
worked past 40 per week

40. Day Rate
• Day Rates and Job Rates
• Regular Rate: (All sums received at day rate or job
rate in the workweek) ÷ total hours actually worked
• Overtime Compensation: 1.5 x regular rate for the
hours worked past 40 hours per week

41. Calculating Overtime with Bonuses/Commissions
• The regular bonus rate is found by dividing the bonus by
the total hours worked during the period to which the
bonus applies. The total hours worked for this purpose
will be all hours, including overtime hours.
• First, find the overtime due on the straight time rate.
Then, separately, compute overtime due on the
bonus/commission: find the regular bonus rate by
dividing the bonus by the total hours worked
throughout the period in which the
bonus/commission was earned.
• The employee will be entitled to an additional half of
the regular bonus rate for each time and one-half
hour worked and to an additional full amount of the
bonus rate for each double time hour, if any.

42. Commission Payments
• Commissioned Employees
• Paid on a workweek basis
• Regular Rate: (Commission + other earnings for that workweek) ÷
total number of hours worked in the workweek
• Overtime Compensation: 1.5 x regular rate for all hours worked in
excess of 40
• Deferred Payments
• Amount of Commission Allocated to Each Week: Commission ÷
(number of weeks it is intended to compensate)
• Adjusted Regular Rate: Wage (including commissions) ÷ number
of hours worked during the week.
• Overtime Compensation: Commissions allocated to each week x
(overtime hours ÷ (total hours x 2)) = additional half time owed on
the overtime hours.

43. Tipped Employees
• Regular Rate: Total weekly earnings ÷ number of hours
actually worked. Includes the amount of tip credit taken
by the employer; however, any tips received by the
employee in excess of the allowable tip credit are not
included in the regular rate. An employer may not take
a higher tip credit for an overtime hour than for a
straight time hour.
• Overtime Compensation: (Regular rate x 1.5) – tip credit

44. Regular Rate Minus Meals
• Rate per hour that excludes the cost of a meal if the
employer customarily furnishes not more than a single
meal per day. Employer omits from the employee’s
regular rate the cost of that meal. If the employer
customarily furnishes more than one meal a day, the
cost of all meals that the employer supplies must be
factored into the regular rate of pay and the overtime
compensation owed.
• If the employer supplies a free meal every day and also
occasionally pays “supper money” when the employee
works overtime, the cost of both the meal and the
supper money may be omitted from the overtime
compensation.

45. Fluctuating Workweek and Bonuses
• In April 2011, the DOL rejected a proposed amendment
to the FLSA regulations that allowed the payment of
bonuses and incentives under the fluctuating workweek
method.
• Subsequently, courts have held that an employer
violates the FLSA when it pays an additional bonus or
incentive but continues to use the fluctuating workweek
method for calculating overtime.

46. Most Common Overtime Violations
• Assuming that all employees paid a salary are not due
overtime
• Limiting the number of hours employees are allowed to
record
• Failing to include all pay required to be included in
calculating the regular rate for overtime
• Failing to add all hours worked in separate
establishments for the same employer when calculating
overtime due
• Making improper deductions from wages that cut into
the required minimum wage or overtime.
• Failure to pay overtime on non discretionary bonuses
• Failure to pay for tasks done before or after work

47. 47© KRONOS INCORPORATED February 2, 2015© KRONOS INCORPORATED February 2, 2015
Workforce Management
Controlling Overtime and More
Jim Manfield
Product Marketing Manager
Kronos

48. 48© KRONOS INCORPORATED February 2, 2015
Workforce Management Addresses
“Necessary Business Processes”
• Poor communication
• Redundant data entry
• Manual/paper-based
processes
• Create silos of critical data
and information
• Higher risks of noncompliance
• Fines and penalties
• Increased resources and costs
• Unguided decisions
• Unpredictable results
• Slow down organization
• Impacts business performance
• Increased payroll errors
Tracking Labor Costs Converting Hours to Paychecks Regulatory Compliance
Federal
versus State
Skills &
Certifications
I9, W4 Onboarding
FLSA
FMLA
Union
AgreementsCompany
Policies
EEOC
OSHA
?

49. 49© KRONOS INCORPORATED February 2, 2015
Kronos Customers See Real Value
• Reduced labor costs and 40% reduction in
overtime costs
• Improved FLSA compliance by capturing
actual time worked and consistently
applying rounding rules
• Mitigated leave liability by accurately
tracking time off
40% Reduction in
Overtime Costs
Clemson University
• $7.2M annual savings
• $2.5M in overtime reduction
• Compliance with FLSA & federal labor laws
• Improved accuracy of payroll calculations,
overtime management & leave inflation
$2M in Overtime
Savings
City of Houston

50. 50© KRONOS INCORPORATED February 2, 2015
Solving 3 Critical Business Issues
Minimize Compliance RiskControl Labor Cost Improve Workforce Productivity
Time and
Attendance
Forecasting
and Scheduling
Absence
Management
Analytics
Data
Collection
Hiring
HR and
Payroll
Activities

51. 51© KRONOS INCORPORATED February 2, 2015
Managing Overtime: More than Just Cost Control
• Overtime is more than an issue of compensation
• Effective employee relations strategies can alleviate common
confusion and dilemmas surrounding overtime
– Preventing OT creates an environment that can be bad for morale
and productivity
• Overtime impact on employee satisfaction
– Ensure that employees are consistently scheduled fairly, including
an equitable distribution of overtime
– Are overtime policies and procedures consistently/fairly applied?
• Managing OT involves
– Policy – communicating expectations and enforcing fairly
– Planning – Forecasting, Budgeting, Scheduling
– Visibility – management awareness of pending OT, planned or
unplanned
– Auditability

52. 52© KRONOS INCORPORATED February 2, 2015
Managing Overtime: More than Just Cost Control
• Workforce management systems allow organizations to
strategically control – not eliminate – overtime.
– Not all overtime is bad
– OT or Agency/Supplemental staff
• Automated scheduling improves employee
communication, expectations and productivity

53. 53© KRONOS INCORPORATED February 2, 2015
Questions?
Thank you for attending!

54. 54© KRONOS INCORPORATED February 2, 2015
About Kronos
With tens of thousands of customers around the globe, Kronos is the
leader in workforce management solutions. We deliver industry-focused
time and attendance, scheduling, absence management, HR and payroll,
hiring, and labor analytics solutions and services — in our cloud and on
the go. Kronos: Workforce Innovation That Works™.
For more information contact your Kronos representative, call
(800) 225-1561 or visit www.kronos.com.

55. #WFwebinar
Join our next Webinar!
Think Fast! Imporov Skills to
Accelerate Productivity
Wednesday, February 25, 2015
Webinars start at 2 p.m. Eastern / 11 a.m. Pacific
Register for all upcoming Workforce Webinars at
www.workforce.com/webinars
OR click the icon on the widget bar!