Overview of the Fair Labor Standards Act, including how to differentiate between exempt and non-exempt employees, reporting requirements, overtime and minimum wage, and more.

1. [Webinar] “Exempt vs. Non-Exempt”
Presented
By
Jason
Zaun
of
BeyondPay

2. About the Host
Jason is certified SPHR from the Human
Resources Certification Institute and has
over 20 years of Human Resources
experience.
He brings with him a unique perspective on the
ever evolving world of Human Resources and
looks to educate companies on the latest
trends in HR.
Through the consultative approach, Jason aims
to bring solutions to all workforce management
needs to help businesses exceed their goals.
jz@beyondpay.com
800.277.9904 ext 1120
Contact Jason

3. 3
What We Will Cover Today
1
Introduc3on
to
the
Fair
Labor
Standards
Act
2
3
4
Exempt
Employees
Non-­‐Exempt
Employees
Next
steps

4. FLSA Training for Managers

5. 5
Introduction to the FLSA
• The
Fair
Labor
Standards
Act
(FLSA)
was
signed
in
to
law
by
President
Roosevelt
in
1938.
• It
set
standards
for
child
labor,
minimum
wage
and
over3me
pay.
• It
also
prohibits
gender-­‐based
wage
discrimina3on
(added
in
1963
under
the
Equal
Pay
Act)

6. 6
What are the basic provisions of the FLSA?
Child
Labor
Minimum
Wage
and
Over3me
Pay
Equal
Pay
◦ Restricts
the
hours
that
children
under
age
16
can
work
and
forbids
the
employment
of
children
under
age
18
in
certain
jobs
deemed
too
dangerous
for
nonagricultural
opera3ons.
◦ Prohibits
the
employment
of
children
under
age
16
during
school
hours
and
in
certain
jobs
deemed
too
dangerous.
◦ Under
the
FLSA,
all
employees
are
considered
non-­‐exempt
(not
exempt
from
coverage)
unless
the
employee’s
posi3on
meets
specific
exemp3on
criteria
or
unless
the
regula3ons
specifically
allow
an
exemp3on,
and
the
employer
has
opted
to
use
this
exemp3on.
◦ The
Equal
Pay
Act
under
the
FLSA
prohibits
gender-­‐based
wage
discrimina3on.

7. 7
Penalties for FLSA Violations
Wage
and
Hour
Viola3ons
Inves3gators
may
recommend
changes
in
employment
prac3ces
to
bring
about
compliance.
Employers
who
willfully
or
repeatedly
violate
the
minimum
wage
or
over3me
pay
requirements
are
subject
to
a
civil
money
penalty
of
up
to
$1,100
for
each
viola3on.

8. 8
Penalties for FLSA Violations
The
Equal
Employment
Opportunity
Commission
(EEOC)
administers
and
enforces
the
Equal
Pay
Act.
Penal=es
for
viola=ons
are:
◦ Recovery
of
compensatory
damages
for
inten3onal
discrimina3on
and
puni3ve
damages
for
discrimina3on
that's
inten3onal
and
engaged
in
with
malice
or
reckless
indifference
to
the
federally
protected
rights
of
the
employee.
◦ Caps
on
the
amount
of
compensatory
and
puni3ve
damages
are
determined
by
the
size
of
the
employer.

9. 9
FLSA Violations
◦ Employees
ordinarily
bear
the
burden
of
proof
under
the
FLSA
◦ If
the
employer
has
not
adequately
maintained
records,
the
court
may
accept
the
employee’s
claim
and
give
the
employer
the
burden
of
disproving
allega3ons.
◦ Employers
automa3cally
bear
the
burden
of
proving
any
exemp3on
under
the
Act.

10. 10
FLSA: Statute of Limitations
◦ An
ac3on
for
back
wages
or
over3me
should
typically
go
back
2
years
from
the
date
the
error
was
found.
◦ A
3-­‐year
statute
of
limita3ons
applies
in
cases
where
back
wages
are
due
to
employees
because
of
willful
viola3on.

11. 11
1
3
2
Common Employer FLSA Mistakes
Considering
any
employee
who
is
paid
a
salary
as
an
exempt
employee
who
is
not
eligible
for
over3me
pay
without
qualifying
the
employee
for
a
specific
job-­‐related
FLSA
exemp3on.
Not
paying
for
unauthorized
over3me
–
working
unauthorized
over3me
is
a
disciplinary
issue
not
a
compensa3on
one.
Making
automa3c
pay
deduc3ons
for
meal
breaks
without
making
sure
that
an
employee
has
actually
taken
the
unpaid
break
3me.

12. 12
Defining Exempt & Non-Exempt Employees
Exempt
Employees
Employees
who
meet
one
of
the
FLSA
exemp3on
tests
and
who
are
paid
on
a
fixed
salary
basis
and
not
en3tled
to
over3me.
Non-­‐Exempt
Employees
Employees
who
do
not
meet
any
one
of
the
Fair
Labor
Standards
Act
exemp3on
tests
and
are
paid
on
an
hourly
basis
and
covered
by
wage
and
hour
laws
regarding
minimum
wage,
over3me
pay,
and
hours
worked.

13. 13
Salary Basis Requirements
To
be
paid
on
a
salary
basis
means
that
the
employee
“regularly
receives
a
predetermined
amount
cons3tu3ng
all
or
part
of
the
employee’s
salary,
which
amount
is
not
subject
to
reduc3on
because
of
varia3ons
in
the
quality
or
quan3ty
of
work
performed.”

14. 14
Specific Prohibited Deductions From Salary
(Exempt Employees)
◦ Par3al
day
absences
◦ Jury
duty
and
military
leave
◦ When
no
work
is
available

15. 15
2
1
3
4
6
5
Exemptions From FLSA Minimum Wage
& Overtime Pay Requirements
Execu3ve
Administra3ve
Professional
Computer-­‐Related
Outside
Sales
Highly
Compensated
Employee

16. 16
◦ Must
be
paid
at
least
$455
weekly
($23,660
annually)
on
a
salary
basis.
◦ Primary
duty
must
consist
of
managing
the
company
or
a
customarily
recognized
department
of
the
company.
◦ Customarily
and
regularly
direct
the
work
of
two
or
more
full-­‐3me
employees
or
equivalents.
Executive Exemption
Examples:
Execu3ve
officer,
controller,
vice
president,
director.

17. 17
◦ Must
be
paid
at
least
$455
weekly
($23,660
annually)
on
a
salary
basis.
◦ Primary
duty
consists
of
performing
office
or
non-­‐
manual
work
directly
related
to
the
management
or
general
business
opera3ons
of
the
company.
◦ Work
includes
the
exercise
of
discre3on
and
independent
judgment
with
respect
to
majers
of
significance.
Examples:
manager,
supervisor,
administrator.
Administrative Exemption

18. 18
◦ Must
be
paid
at
least
$455
weekly
($23,660
annually)
on
a
salary
basis.
◦ Primary
duty
consists
of
the
performance
of
work
that
requires
advanced
knowledge
(beyond
high
school)
and
that
is
primarily
intellectual
in
character
and
includes
the
exercise
of
discre3on
and
independent
judgment.
◦ The
advanced
knowledge
is
in
a
field
of
science
or
learning.
Examples:
accountant,
nurse,
engineer.
Professional (Learned) Exemption
◦ The
advanced
knowledge
was
acquired
by
a
prolonged
course
of
specialized
intellectual
instruc3on
(appropriate
academic
degree
or
combina3on
of
degree
and
experience).
Learned
Professional

19. 19
◦ Must
be
paid
at
least
$455
weekly
($23,660
annually)
on
a
salary
basis.
◦ Primary
duty
consists
of
the
performance
of
work
requiring
inven3on,
imagina3on,
originality
or
talent
in
a
recognized
field
of
ar3s3c
or
crea3ve
endeavor
as
opposed
to
rou3ne
mental,
manual,
or
physical
work.
Examples:
composer,
singer,
graphic
designer.
Professional (Creative) Exemption
Crea=ve
Professional

20. 20
◦ Must
be
paid
at
least
$455
weekly
($23,660
annually
OR
at
least
$27.63/hour;
does
not
have
to
be
paid
on
a
salary
basis).
Primary
duty
consists
of
◦ The
applica3on
of
system-­‐
analyst
techniques
and
procedures,
including
consul3ng
with
users
to
determine
hardware,
sonware,
or
systems
specifica3ons
OR…
◦ The
design,
development,
documenta3on,
analysis,
crea3on,
tes3ng
or
modifica3on
of
computer
systems
or
programs,
OR…
◦ The
design,
documenta3on,
tes3ng,
crea3on
or
modifica3on
of
computer
programs
related
to
machine-­‐opera3ng
systems,
OR…
◦ A
combina3on
of
these
du3es
which
requires
the
same
level
of
skills.
Examples:
network
analyst,
developer,
sonware
engineer.
Computer-Related Exemption

21. 21
◦ Does
NOT
have
to
be
paid
on
a
salary
basis.
◦ Primary
duty
consists
of
making
sales
or
obtaining
orders
for
contracts
for
services
or
for
the
use
of
facili3es
for
which
considera3on
is
paid
by
a
client
or
customer.
◦ Customarily
and
regularly
is
engaged
away
from
the
employer’s
place
of
business.
Examples:
traveling
salespersons,
contract
nego3ators.
Outside Sales Exemption

22. 22
◦ Must
be
paid
a
total
compensa3on
of
$100,000
or
more
annually
which
includes
at
least
$455
per
week
paid
on
a
salary
basis.
The
$100,000
annually
may
consist
of
commissions,
nondiscre3onary
bonuses
and
other
nondiscre3onary
compensa3on.
◦ Customarily
and
regularly
performs
at
least
one
of
the
exempt
du3es
or
responsibili3es
of
the
Execu3ve,
Administra3ve,
or
Professional
Exemp3on.
◦ Primary
duty
consists
of
performing
office,
non-­‐
manual
work
Examples:
real
estate
broker,
stock
broker.
Highly-Compensated Exemption
Highly
compensated
employees
performing
execu3ve,
professional
or
administra3ve
du3es:

23. 23
Definition of Non-Exempt Employee
All
employees
are
considered
non-­‐exempt
unless
the
employer
establishes
that
the
employee’s
posi3on
meets
specific
exemp3on
criteria.
Accordingly,
the
defini3on
of
a
non-­‐exempt
employee
is
an
employee
who
does
not
meet
any
one
of
the
Fair
Labor
Standards
Act’s
exemp3on
tests
and
is
paid
on
an
hourly
basis
and
covered
by
wage
and
hour
laws
regarding
minimum
wage,
over3me
pay,
and
hours
worked.

24. 24
Time Worked Records
The
FLSA
requires
the
following
informa=on
regarding
=me
worked
by
non-­‐exempt
employees:
◦ Time
and
day
of
week
when
workweek
begins
◦ Hours
worked
each
day
◦ Total
hours
worked
each
workweek
◦ Basis
on
which
wages
are
paid
(i.e.,
per
hour,
piecework)
◦ Regular
hourly
pay
rate
◦ Total
daily
or
weekly
straight-­‐3me
earnings
◦ Total
over3me
earnings
◦ Addi3ons
to
or
deduc3ons
from
wages
◦ Total
wages
paid
each
pay
period
◦ Date
of
payment
and
pay
period
covered
by
payment

25. 25
Time Worked Records
◦ Employers
may
use
any
3mekeeping
method
they
choose—3me
clocks,
manual
3mesheets,
electronic
3mesheets,
etc.
◦ Under
the
FLSA,
payroll
records
must
be
retained
for
at
least
three
years.
◦ Records
on
which
wages
are
based
(3me
cards,
3mesheets,
computer
records)
must
be
retained
for
at
least
two
years.
◦ Employers
may
record
employees’
star3ng
and
stopping
3mes
to
the
nearest
5
minutes
or
nearest
1/10th
or
quarter
of
an
hour,
provided
that
amounts
rounded
off
average
out
over
3me
and
do
not
fail
to
properly
compensate
the
employee.

26. 26
Overtime Pay Requirements
◦ For
covered,
non-­‐exempt
employees,
the
Fair
Labor
Standards
Act
(FLSA)
requires
over3me
pay
at
a
rate
of
not
less
than
one
and
one-­‐half
3mes
an
employee's
regular
rate
of
pay
aner
40
hours
of
work
in
a
workweek.
◦ Over3me
pay
is
calculated
on
actual
3me
worked.
◦ The
FLSA
does
not
require
over3me
pay
for
work
on
Saturdays,
Sundays,
or
holidays.
◦ The
FLSA
does
not
require
over3me
pay
for
work
on
nights
or
weekends,
simply
for
working
at
those
3mes.

27. 27
Overtime Pay Requirements
◦ Some
excep3ons
to
the
40
hours
per
week
standard
apply
under
special
circumstances:
◦ Compensatory
3me
off
◦ In
many
companies,
over3me
must
be
authorized
in
advance
by
an
employee’s
supervisor.

28. 28
Compensable Time: Travel Time
Whether
travel
3me
is
compensable
3me
depends
on
the
kind
of
travel
involved:
◦ Home-­‐to-­‐work
travel
is
not
work
3me
and
not
compensable.
◦ Time
spent
in
travel
as
part
of
the
employee’s
principal
ac3vity,
such
as
travel
from
one
job
site
to
another
during
the
workday,
is
work
3me
and
must
be
paid.
◦ When
the
non-­‐exempt
employee
travels
on
a
one-­‐day
assignment
to
another
city,
the
3me
spent
traveling
is
work
3me
and
must
be
paid.
◦ Time
spent
traveling
to
an
airport
terminal
or
train
sta3on
is
not
treated
as
hours
worked.
By
contrast,
all
the
3me
spent
wai3ng
at
the
terminal
un3l
arrival
at
the
des3na3on
is
compensable.
(other
than
3me
spent
on
principal
work
ac3vi3es)

29. 29
Compensable Time: Meetings & Trainings
Time
spent
ajending
lectures,
mee3ngs,
and
training
programs
is
counted
as
hours
worked
unless
ALL
of
the
following
condi3ons
are
met:
◦ The
mee3ngs
are
held
outside
regular
working
hours.
◦ Ajendance
is
voluntary.
◦ The
course,
lecture,
or
mee3ng
is
not
directly
related
to
the
employee's
job.
◦ The
employee
does
no
produc3ve
work
during
the
mee3ng
or
training.
Trade
school
or
college
courses

30. 30
Compensable Time: Rest & Meal Periods
The
FLSA
does
not
require
rest
or
meal
periods.
However,
when
employers
offer
these
short
breaks
(usually
las3ng
about
5
to
20
minutes),
they
are
paid
3me.
Bona
fide
meal
periods
(typically
las3ng
at
least
30
minutes)
serve
a
different
purpose
than
rest
breaks
and
are
not
work
3me
and
are
not
compensable.

31. 31
Compensable Time: On-Call Duty
◦ Whether
on-­‐call
or
wai3ng
3me
is
to
be
treated
as
working
3me
depends
on
whether
“the
3me
is
spent
predominantly
for
the
employer's
benefit
or
for
the
employee's.”
◦ An
employee
who
is
required
to
remain
on
call
on
the
employer's
premises
is
working
while
"on
call"
and
the
3me
is
compensable.
◦ An
employee
who
is
required
to
remain
on
call
at
home,
or
who
is
allowed
to
leave
a
message
where
he/she
can
be
reached,
is
not
working
(in
most
cases)
while
on
call
and
the
3me
is
not
compensable.

32. 32
Managing Overtime
Scheduling
and
Working
Over=me
Before
over3me
is
worked,
an
employee
must
have
approval
from
his
or
her
manager.
Over3me
is
considered
a
condi3on
of
employment,
and
refusal
to
accept
it
when
reasonable
no3ce
has
been
given
is
cause
for
discipline,
up
to
and
including
termina3on.
At
the
managers'
discre3on,
an
employee’s
work
schedule
may
be
adjusted
during
a
workweek
to
avoid
over3me.
Time
Worked
Approved
paid
absences,
including
sick
leave,
vaca3on
leave,
holiday
leave,
Family
and
Medical
Leave
Act
(FMLA)
leave,
military
leave,
jury
and
witness
duty,
funeral/bereavement
leave,
and
vo3ng
3me
off
are
paid
at
an
employee’s
regular
rate
of
pay,
but
are
not
counted
as
3me
worked
for
the
purposes
of
compu3ng
over3me.

33. Next Steps

34. Thanks For Watching!
Ques3ons?
Get
in
touch
with
us.
Email:
sales@beyondpay.com
Phone:
800.277.9904