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FLSA: Fearing Law Suits Always
or Fair Labor Standards Act ?
Avoiding Compensation Claims Under the FLSA
June 13, 2014
Presented by
Lerch, Early & Brewer’s
Employment & Labor Attorneys
www.lerchearly.com
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June 13, 2014
Employment & Labor
Lerch, Early & Brewer, Chtd.
www.lerchearly.com
A Seminar for Business Owners, C Level
Officers, HR Managers, Directors, and
Vice Presidents
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Overview
3
 Introduction
 Who to Pay
 How & What to Pay
 Takeaways
 Q&A
Rick Vernon
Michael Neary
Julie Reddig
Marc Engel
Lauri Cleary
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June 13, 2014
Michael J. Neary
Lerch, Early & Brewer, Chtd.
www.lerchearly.com
WHO IS SUBJECT TO THE FLSA?
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
FLSA Traps for the Unwary
5
 Employee vs. non-employee
 Exempt vs. non-exempt
 Deductions
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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FLSA Requirements
6
Minimum
wage
Overtime
above 40
hours
Record-
keeping
obligations
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What’s so hard about that?
7
 Unhappy current and former
employees
 Government enforcement
 Plaintiffs’ attorneys
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Trap 1: Incorrectly Identifying Employees
as Not Subject to FLSA
8
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Workers Not Subject to FLSA
9
Independent Contractors
Volunteers
Interns
Trainees
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Independent Contractors
10
Common mistake…
Confusing casual or
irregular workers with
ICs
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Independent Contractors
11
The Tests:
IRS
Common law
Economic realities
Hybrid
State
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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12
More
control and
oversight
Less likely
worker is an
IC
Independent Contractors
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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13
Independent Contractors
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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14
Independent Contractors
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Exposure
 Back wages
 Unpaid employment taxes
 Unpaid unemployment
and workers’ comp
insurance premiums
 Participation rights in
employee benefits plans
15
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Best Practices for Avoiding IC
Problems
16
If concerned, engage counsel
or conduct internal audit
Train managers
Always use IC contracts and
tailor to mirror IC tests
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Are They Volunteers?
17
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Interns
18
in·tern
noun
A student or recent graduate seeking practical
hands-on experience; improved resume and job
prospects; networking with a particular employer or
in a particular field
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Do You Have to Pay Them?
19
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Six Factors for Paying Interns
20
Environment allows for observation or school credit
Benefit for intern: skills are transferrable
Interns don’t replace employees
No immediate advantages for employer
No job entitlement
No compensation: all parties understand this
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What Is a Trainee?
21
Pre-employment vs. after-employment
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Best Practice: Avoid Volunteer/
Intern/Trainee Problems
22
Create a plan for these
programs
Put plan into writing
Monitor the program
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Trap 2: Incorrectly Identifying
Exempt vs. Non- Exempt Employees
23
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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The Exemptions
24
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Six Main Exemptions
25
Administrative
Executive
Professional
Computer professional
Outside sales
Highly compensated
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Administrative Exemption
26
 Office/non-manual work directly
related to management/general
business operations
 Exercises discretion and independent
judgment
 Has decision-making responsibilities
Duties
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Administrative Exemption
When in doubt, classify as non-exempt
27
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Watch Out For!
Production workers
outside scope of
exemption
Routine/structured
tasks outside scope
28
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Executive Exemption
Primary duty is management of
enterprise or dept./subdivision
Directs 2+ employees (not ICs)
Hiring/firing authority
29
Duties
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Watch Out For: Rules Re Supervising
DOL takes the position that
supervising independent
contracts or other
employer’s workers doesn’t
satisfy the requirement of
directing the work of two
or more other employees.
30
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Professional Exemption
Advanced
knowledge in a
field of science or
learning
Invention,
imagination,
originality, talent
31
Work requires
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Computer Professional Exemption
 Systems analysis
 Design, development,
documentation, testing, creation,
modification of:
Computer systems or programs
Operating systems
 Combo of above
32
Duties
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Watch Out For!
Help desk or tech workers
likely not exempt
33
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Outside Sales Exemption
34
Duties
 Makes sales and is
regularly away
from employer’s
place(s) of business
to perform this
duty
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Watch Out For!
They are called outside sales
men or women because they
sell outside the office, but they
spend a lot of time in the
office and have duties other
than just selling. Be careful to
focus on responsibilities, not
labels.
35
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Highly Compensated Exemption
Performs office or
non-manual work as
an executive,
administrative, or
professional
employee with at
least $100,000+
salary36
Duties
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Best Practice: Job Descriptions
Review and revise to track exemption
 Clarify and list actual duties
 Emphasize exempt duties
 Describe discretion and independent
judgment
 Give authority to hire and fire or state
recommendation
37
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Best Practice: Job Descriptions
con’t
Use responsibilities, not labels
 Monitor tasks
Document why exempt
Consult counsel
38
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
Trap 3: Taking Improper Deductions
39
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Salary Basis
40
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Improper Deductions
41
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Improper Deductions:
Important Factors
Number
Time period
Number and geographic location of employees
Number and geographic locations of managers
Whether the employer has a clearly
communicated policy permitting or
prohibiting improper deductions
42
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Proper Deductions
43
Full-day absences for personal
reasons (not sickness/disability)
Full-day absences in accordance with an
employer’s bona fide plan, policy or
practice providing compensation for
absences (for sickness/disability)
Offset jury duty leave, witness leave, or
military leave pay
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Proper Deductions Continued
Penalties imposed in good faith
for infractions of safety rules
Unpaid disciplinary suspensions of one or
more full days
Pro rata payment of salary in the 1st
and last week of employment
Full-day or partial-day absence covered
by FMLA
44
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Safe Harbor
45
Allows employers to keep the exemption
if improper deductions were made.
Employers must have:
1. Communicated policy prohibiting
improper salary deductions
2. Provided complaint mechanism
3. Reimbursed employees
4. Made good faith commitment
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Best Practices for Avoiding
Improper Deductions
Train managers
Create a clear policy
Include policy in handbook
If someone complains about
improper deduction, take it
seriously and fix it
promptly
46
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HOW AND WHAT TO PAY
UNDER THE FLSA
June 13, 2014
Julie A. Reddig
Lerch, Early & Brewer, Chtd.
www.lerchearly.com
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
 What is compensable time?
 How to calculate overtime?
Overview
48
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What is Work?
 Time in which an
employee either
“suffers or is
permitted” to
work
 Key element =
control
49
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What is Work? Working “Off the Clock”
 Working longer than
scheduled shift
 Working
unauthorized
overtime
 Working from
home/mobile device
50
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Best Practice: Prevent Working “Off
the Clock”
51
Timesheet disclaimer
Update policy
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What is Work? Travel Time?
 Ride programs
 Different worksites
 Overnight travel
 Travel for call back
time
52
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What is Work? Donning and
Doffing Protective Equipment?
53
 One of the most
litigated issues
under the FLSA in
the last decade.
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What is Work? Walking Time?
54
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What is Work? Meals & Rest Breaks?
55
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What is Work? On Call Time?
56
 Is the employee
engaged to wait
or waiting to be
engaged?
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What is Work? Training Time
57
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What is Work? Comp Time
58
Essentially
does
not
exist
in private sector.
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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What is Work? Comp Time
59
1 • Same work week
2
• Same payroll period: 2nd
week provide time off at
time and ½ for each hour
>40 in 1st work week
Only two ways to allow comp time under FLSA:
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com60
Pitfalls in Calculating Overtime
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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OT: Based on the Regular Rate
 Overtime is time and ½ the
employee’s Regular Rate of Pay
 Regular Rate is an hourly rate
 Regular Rate can be DIFFERENT from
the employee’s regular hourly rate
 Regular Rate must be calculated
weekly
61
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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OT: The Regular Rate Calculation
62
Divide ALL payments
made by the
employer to or on
behalf of the
employee in the work
week by the number
of hours the
employee worked in
the work week.
$ paid
_______
# of
hours
worked
Regular
Rate
=
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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OT: The Regular Rate Includes
63
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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OT: Regular Rate Excludes
64
HOLIDAY
Premiums
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Speakers
 Michael Neary is an employment and
litigation attorney at Lerch, Early & Brewer
who represents management in
employment and labor matters. He advises
clients on how to save money, time and
energy by avoiding litigation and also
counsels employers on compliance with
federal, state and local employment
statutes and regulations.
65
(301) 657-0740
mjneary@
lerchearly.com
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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Speakers
 Julie Reddig is an employment attorney at
Lerch, Early & Brewer who counsels and
defends management in a broad range of
matters and disputes involving employment
and the workplace, including wage and
hour investigations by state and federal
officials, discrimination, harassment, and
overtime claims made by current and
former employees.
66
(301) 960-6099
jareddig@
lerchearly.com
© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com
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For more information
Lerch, Early & Brewer, Chtd.
3 Bethesda Metro Center, Suite 460
Bethesda, MD 20814
(301) 986-1300
Thank you for your participation
This content is for your information only and is not intended to
constitute legal advice. Please consult your attorney before acting
on any information contained here.
67

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Lerch early flsa avoiding compensation claims under the fair labor standards act 2014 06-30

  • 1. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ FLSA: Fearing Law Suits Always or Fair Labor Standards Act ? Avoiding Compensation Claims Under the FLSA June 13, 2014 Presented by Lerch, Early & Brewer’s Employment & Labor Attorneys www.lerchearly.com
  • 2. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ June 13, 2014 Employment & Labor Lerch, Early & Brewer, Chtd. www.lerchearly.com A Seminar for Business Owners, C Level Officers, HR Managers, Directors, and Vice Presidents
  • 3. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com Overview 3  Introduction  Who to Pay  How & What to Pay  Takeaways  Q&A Rick Vernon Michael Neary Julie Reddig Marc Engel Lauri Cleary
  • 4. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ June 13, 2014 Michael J. Neary Lerch, Early & Brewer, Chtd. www.lerchearly.com WHO IS SUBJECT TO THE FLSA?
  • 5. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com FLSA Traps for the Unwary 5  Employee vs. non-employee  Exempt vs. non-exempt  Deductions
  • 6. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ FLSA Requirements 6 Minimum wage Overtime above 40 hours Record- keeping obligations
  • 7. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What’s so hard about that? 7  Unhappy current and former employees  Government enforcement  Plaintiffs’ attorneys
  • 8. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com Trap 1: Incorrectly Identifying Employees as Not Subject to FLSA 8
  • 9. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Workers Not Subject to FLSA 9 Independent Contractors Volunteers Interns Trainees
  • 10. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Independent Contractors 10 Common mistake… Confusing casual or irregular workers with ICs
  • 11. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Independent Contractors 11 The Tests: IRS Common law Economic realities Hybrid State
  • 12. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 12 More control and oversight Less likely worker is an IC Independent Contractors
  • 13. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 13 Independent Contractors
  • 14. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 14 Independent Contractors
  • 15. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Exposure  Back wages  Unpaid employment taxes  Unpaid unemployment and workers’ comp insurance premiums  Participation rights in employee benefits plans 15
  • 16. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Best Practices for Avoiding IC Problems 16 If concerned, engage counsel or conduct internal audit Train managers Always use IC contracts and tailor to mirror IC tests
  • 17. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Are They Volunteers? 17
  • 18. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Interns 18 in·tern noun A student or recent graduate seeking practical hands-on experience; improved resume and job prospects; networking with a particular employer or in a particular field
  • 19. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Do You Have to Pay Them? 19
  • 20. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Six Factors for Paying Interns 20 Environment allows for observation or school credit Benefit for intern: skills are transferrable Interns don’t replace employees No immediate advantages for employer No job entitlement No compensation: all parties understand this
  • 21. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What Is a Trainee? 21 Pre-employment vs. after-employment
  • 22. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Best Practice: Avoid Volunteer/ Intern/Trainee Problems 22 Create a plan for these programs Put plan into writing Monitor the program
  • 23. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com Trap 2: Incorrectly Identifying Exempt vs. Non- Exempt Employees 23
  • 24. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ The Exemptions 24
  • 25. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Six Main Exemptions 25 Administrative Executive Professional Computer professional Outside sales Highly compensated
  • 26. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Administrative Exemption 26  Office/non-manual work directly related to management/general business operations  Exercises discretion and independent judgment  Has decision-making responsibilities Duties
  • 27. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Administrative Exemption When in doubt, classify as non-exempt 27
  • 28. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Watch Out For! Production workers outside scope of exemption Routine/structured tasks outside scope 28
  • 29. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Executive Exemption Primary duty is management of enterprise or dept./subdivision Directs 2+ employees (not ICs) Hiring/firing authority 29 Duties
  • 30. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Watch Out For: Rules Re Supervising DOL takes the position that supervising independent contracts or other employer’s workers doesn’t satisfy the requirement of directing the work of two or more other employees. 30
  • 31. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Professional Exemption Advanced knowledge in a field of science or learning Invention, imagination, originality, talent 31 Work requires
  • 32. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Computer Professional Exemption  Systems analysis  Design, development, documentation, testing, creation, modification of: Computer systems or programs Operating systems  Combo of above 32 Duties
  • 33. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Watch Out For! Help desk or tech workers likely not exempt 33
  • 34. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Outside Sales Exemption 34 Duties  Makes sales and is regularly away from employer’s place(s) of business to perform this duty
  • 35. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Watch Out For! They are called outside sales men or women because they sell outside the office, but they spend a lot of time in the office and have duties other than just selling. Be careful to focus on responsibilities, not labels. 35
  • 36. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Highly Compensated Exemption Performs office or non-manual work as an executive, administrative, or professional employee with at least $100,000+ salary36 Duties
  • 37. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Best Practice: Job Descriptions Review and revise to track exemption  Clarify and list actual duties  Emphasize exempt duties  Describe discretion and independent judgment  Give authority to hire and fire or state recommendation 37
  • 38. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Best Practice: Job Descriptions con’t Use responsibilities, not labels  Monitor tasks Document why exempt Consult counsel 38
  • 39. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com Trap 3: Taking Improper Deductions 39
  • 40. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Salary Basis 40
  • 41. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Improper Deductions 41
  • 42. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Improper Deductions: Important Factors Number Time period Number and geographic location of employees Number and geographic locations of managers Whether the employer has a clearly communicated policy permitting or prohibiting improper deductions 42
  • 43. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Proper Deductions 43 Full-day absences for personal reasons (not sickness/disability) Full-day absences in accordance with an employer’s bona fide plan, policy or practice providing compensation for absences (for sickness/disability) Offset jury duty leave, witness leave, or military leave pay
  • 44. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Proper Deductions Continued Penalties imposed in good faith for infractions of safety rules Unpaid disciplinary suspensions of one or more full days Pro rata payment of salary in the 1st and last week of employment Full-day or partial-day absence covered by FMLA 44
  • 45. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Safe Harbor 45 Allows employers to keep the exemption if improper deductions were made. Employers must have: 1. Communicated policy prohibiting improper salary deductions 2. Provided complaint mechanism 3. Reimbursed employees 4. Made good faith commitment
  • 46. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Best Practices for Avoiding Improper Deductions Train managers Create a clear policy Include policy in handbook If someone complains about improper deduction, take it seriously and fix it promptly 46
  • 47. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ HOW AND WHAT TO PAY UNDER THE FLSA June 13, 2014 Julie A. Reddig Lerch, Early & Brewer, Chtd. www.lerchearly.com
  • 48. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com  What is compensable time?  How to calculate overtime? Overview 48
  • 49. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What is Work?  Time in which an employee either “suffers or is permitted” to work  Key element = control 49
  • 50. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What is Work? Working “Off the Clock”  Working longer than scheduled shift  Working unauthorized overtime  Working from home/mobile device 50
  • 51. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Best Practice: Prevent Working “Off the Clock” 51 Timesheet disclaimer Update policy
  • 52. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What is Work? Travel Time?  Ride programs  Different worksites  Overnight travel  Travel for call back time 52
  • 53. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What is Work? Donning and Doffing Protective Equipment? 53  One of the most litigated issues under the FLSA in the last decade.
  • 54. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What is Work? Walking Time? 54
  • 55. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What is Work? Meals & Rest Breaks? 55
  • 56. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What is Work? On Call Time? 56  Is the employee engaged to wait or waiting to be engaged?
  • 57. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What is Work? Training Time 57
  • 58. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What is Work? Comp Time 58 Essentially does not exist in private sector.
  • 59. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ What is Work? Comp Time 59 1 • Same work week 2 • Same payroll period: 2nd week provide time off at time and ½ for each hour >40 in 1st work week Only two ways to allow comp time under FLSA:
  • 60. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com60 Pitfalls in Calculating Overtime
  • 61. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ OT: Based on the Regular Rate  Overtime is time and ½ the employee’s Regular Rate of Pay  Regular Rate is an hourly rate  Regular Rate can be DIFFERENT from the employee’s regular hourly rate  Regular Rate must be calculated weekly 61
  • 62. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ OT: The Regular Rate Calculation 62 Divide ALL payments made by the employer to or on behalf of the employee in the work week by the number of hours the employee worked in the work week. $ paid _______ # of hours worked Regular Rate =
  • 63. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ OT: The Regular Rate Includes 63
  • 64. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ OT: Regular Rate Excludes 64 HOLIDAY Premiums
  • 65. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Speakers  Michael Neary is an employment and litigation attorney at Lerch, Early & Brewer who represents management in employment and labor matters. He advises clients on how to save money, time and energy by avoiding litigation and also counsels employers on compliance with federal, state and local employment statutes and regulations. 65 (301) 657-0740 mjneary@ lerchearly.com
  • 66. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Speakers  Julie Reddig is an employment attorney at Lerch, Early & Brewer who counsels and defends management in a broad range of matters and disputes involving employment and the workplace, including wage and hour investigations by state and federal officials, discrimination, harassment, and overtime claims made by current and former employees. 66 (301) 960-6099 jareddig@ lerchearly.com
  • 67. © Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ For more information Lerch, Early & Brewer, Chtd. 3 Bethesda Metro Center, Suite 460 Bethesda, MD 20814 (301) 986-1300 Thank you for your participation This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here. 67