In this webinar you will be able to understand purpose and definition of Fair Labor Standards Act. We will cover minimum wage and overtime requirements and exemptions. Ways to properly determine overtime eligibility as well as understanding the employer responsibilities under FLSA and learn best practices on defending against FLSA claims or lawsuits.

1. Navigating FLSA Compliance
Presented by: Deanna Bretado, SPHR
G&A Partners HR Client Advisor

2. Before we get started….
• I am not an attorney.
• This material is not legal advice.
• This presentation is not a substitute for
experienced legal counsel.

3. Agenda
• Define FLSA
• Address the major provisions
• Discuss who enforces FLSA
• Penalties for violating FLSA
• Common employer mistakes
• How to avoid claims
• How to be prepared for audits

4. The FLSA
• Fair Labor Standards Act
• Major Provisions
• Minimum Wage
• Overtime Pay
• Recordkeeping
• Youth Employment

5. What the FLSA Requires
• Payment of the minimum wage
• Overtime pay for time worked over 40 hours
in a workweek
• Restrictions on the employment of children
• Recordkeeping

6. What the FLSA Does Not Require
• Vacation, holiday, severance or sick pay
• Meal or rest periods, holidays off or
vacations
• Premium pay for weekend or holiday work
• Pay raises or fringe benefits

7. Coverage
• More than 130 million workers in more than
7 million workplaces are protected or
“covered” by the FLSA, which is enforced by
the Wage and Hour Division of the U.S.
Department of Labor

8. Coverage
• Enterprise Coverage
• At least two (2) employees
• At least $500,000 a year in business
• Individual coverage
• Workers who are engaged in interstate commerce
or in the production of goods for commerce
• Domestic service workers such as housekeepers
and full time babysitters are covered by the act

9. Minimum Wage & Overtime
• Non-exempt employees must be paid no less
than the federal minimum wage for all hours
worked
• $7.25 per hour effective July 24th, 2009
• States may have higher minimum wage
• Hours worked refers to all time employees
are “suffered and/or permitted” to work

10. Minimum Wage & Overtime (cont)
• All employees are considered non-exempt
(not exempt from coverage), unless:
• The employee’s position meets specific
exemption criteria
• The regulations specifically allow an exemption
and the employer has opted to use this
exemption

11. Minimum Wage & Overtime (cont)
• Non-exempt employees must receive one
and one-half times the regular rate of pay for
all hours worked over 40 in a workweek
• Workweek: defined as a fixed and regularly
recurring period of 168 hours, or 7
consecutive 24-hour periods

12. Poll Question
• If an employee works unauthorized
overtime, are you required to pay them for
that time?

13. Exempt vs. Non-Exempt
• Who is exempt?
• How do you determine exemptions?

14. Exempt vs. Non-Exempt
Exempt
Employees
Non-exempt
Employees
Paid on a fixed salary basis Paid an hourly rate for all
hours worked
Paid at least $455 per week Paid overtime for hours
worked above 40
Job duties meet one of the
FLSA exemption tests
Job duties do not meet any of
the exemption tests

15. Three Tests for Exemptions
• Salary Level
• Salary Basis
• Job Duties

16. Three Tests for Exemptions
• Salary level (at least $455 per week)
• Salary basis (paid a fixed weekly amount, no
reductions based on number of hours
worked)
• Job duties (must perform certain executive,
administrative, professional, outside sales or
computer professional duties set forth in the
regulation)

17. “White Collar” Exemptions
• The most common FLSA minimum wage and
overtime exemption -- often called “white
collar” exemptions -- applies to certain:
• Executive Employees
• Administrative Employees
• Professional Employees
• Outside Sales Employees
• Computer Employees

18. Executive Exemption
• Salary of at least $455 per week ($23,660
annually)
• Primary Duty – management of the enterprise
or of a customarily recognized department or
subdivision
• Customarily and regularly directs work of 2 or
more other employees
• Authority to hire and fire other employees or
make recommendations as to the hiring, firing,
advancement, promotion or other change of
status

19. Administrative Exemption
• Salary level - $455 per week
• Primary duty – performance of office or
other non-manual work
• Also includes the exercise of discretion and
independent judgment regarding matters of
significance

20. Administrative Exemption
• Discretion and independent judgment with respect to
matters of significance:
• Whether the employee has authority to formulate, affect,
interpret or implement management policies or operating
practices
• Whether the employee carries out major assignments in
conducting the operations of the business
• Whether the employee has authority to commit the
employer in matters that have significant financial impact
• Whether the employee has authority to waive or deviate
from established policies and procedures without prior
approval

21. Professional Exemption
• Learned and creative exemptions
• Salary level - $455 per week for both
• Learned primary duty – the performance of
work requiring knowledge of an advanced
type in a field of science or learning
• Creative primary duty – performance of work
requiring invention, imagination, originality,
or talent in a recognized field of artistic or
creative endeavor

22. Computer Exemption
• Salary level – guaranteed salary or fee of at
least $455 per week, or an hourly rate of not
less than $27.63 per hour
• Must be employed as a computer system
analyst, computer programmer, or other
similarly skilled position working in the
computer field

23. Outside Sales
• Does NOT have to be paid on a salary basis
• Contracts for services or for the use of
facilities for which consideration is paid by a
client or customer
• Customarily and regularly is engaged away
from the employer’s place of business

24. Other Exemptions
• Highly compensated employees
• Retail commissioned sales employees
• Business owners
• Some transportation positions

25. Poll Question
• What should you do if you find out you have
misclassified an employee as exempt when
they should be classified as non-exempt?

26. Youth Employment
• Federal youth employment rules set both
hours and occupational standards for youth

27. Youth Employment
Age Requirement
16-17 Sixteen- and 17-year-olds may be employed for
unlimited hours in any occupation other than those
declared hazardous by the Secretary of Labor
14-15 Fourteen-and 15-year-olds may be employed
outside school hours in a variety of non-
manufacturing and non-hazardous jobs for limited
periods of time and under specified conditions
<14 Children under 14 years of age may not be employed
in non-agricultural occupations covered by the FLSA

28. Youth Employment – Hours of Work
• Children aged 14 and 15 may work only:
• Outside of school hours
• For 18 hours during any week when school is in
session
• For 40 hours during a week when school is not in
session
• For 3 hours during any day when school is in session
(including Fridays)
• For 8 hours on a day when school is not is session
• From 7 a.m. to 7 p.m. on any day, except from June 1
through Labor Day when the child may work from 7
a.m. to 9 p.m.

29. Recordkeeping
• Employers must keep certain records for
each non-exempt employee
• No particular form for the records is
required, but certain identifying information
about the employee, the hours worked and
the wages earned is required to be
maintained

30. Recordkeeping
• Payroll records must be kept for 3 years
• Time worked records, such as time cards,
work & time schedules, record of deductions
from wages, etc. must be kept for 2 years
• It is the employer’s responsibility to keep
accurate records and make them available
for inspection by the division’s
representatives

31. Common Employer FLSA Mistakes
• Assuming that all employees paid a salary
are not due overtime
• Improperly applying an exemption
• Failing to pay for all hours an employee is
“suffered or permitted” to work
• Paying incorrectly for travel time

32. Common Employer FLSA Mistakes
• Making improper deductions from wages
that cut into the required minimum wage or
overtime
• Treating an employee as an independent
contractor
• Making automatic pay deductions for meal
breaks
• Not paying for “unauthorized” overtime

33. Enforcement
• FLSA enforcement is carried out by Wage
and Hour staff throughout the U.S.
• Two-year statute of limitations generally
applies to the recovery of back pay
• Three-year statute of limitations may apply
in the case of a willful violation

34. Enforcement
• In the event there is not a voluntary
agreement to comply and/or pay back
wages, the Wage & Hour Division may:
• Bring suit to obtain injunction to restrain the
employer from violating the FLSA
• Bring suit for back wages and an equal amount as
liquidated damages

35. Enforcement
• National public awareness campaigns inform
employees of their rights and how to seek
assistance
• Smartphone app to help employees identify
wage and hour compliance violations
available at www.dol.gov/whd/

36. Employee Has Private Rights
• An employee may file a private suit for
• Back pay
• Equal amount as liquidated damages
• Attorney’s fees and court costs

37. Penalties
• Employers who willfully violate the Act may be
prosecuted criminally and fined up to $11,000
• Employers who violate the youth employment provisions
are subject to a civil money penalty of up to $11,000 for
each employee who was the subject of a violation
• Employers who willfully or repeatedly violate the
minimum wage or overtime pay requirements are subject
to a civil money penalty of up to $1,100 for each such
violation

38. Examples
• Rite Aid – January 2013, $20.9 million
• Agreed to pay out a class of around 6,100 assistant
store managers who had been classified as exempt
for overtime.
• Bank of America – December of 2013, $73 million
• Settled multijurisdictional lawsuits from
approximately 185,000 of its former and current call
center employees for allegations that it required
them work when they were technically off the clock.

39. Examples
• LinkedIn – August 2014
• Agreed to pay about $6 million dollars in back
overtime and damages to 359 current and former
employees for failing to record and compensate
workers for all hours worked.

40. How To Avoid a Claim
• Correctly classifying employees
• Creating job descriptions
• Keeping accurate records
• Creating and communicating clear policies
• Conducting internal wage and hour audits
• Addressing problems immediately
• Staying up-to-date

41. What To Do If You Are Audited
• Request time to gather records
• Contact auditor to find out specific information
about the audit
• Gather the records in accordance with guidance
provided by the auditor
• Designate one or two company representatives
to work with the auditor
• Be courteous and cooperative
• Ask for a summary of the results at the end of
the investigation

42. HRCI Certification Credits:
"This webinar has been pre-certified for 1 hour of general recertification credit
toward PHR, SPHR and GPHR recertification through the HR Certification Institute.
We will send out a confirmation e-mail to all those that are confirmed as
attended with the program ID code to note on your HRCI recertification
application form.
The use of this seal is not an endorsement by the HR Certification Institute of the quality of the
program. It means that this program has met the HR Certification Institute's criteria to be pre-
approved for recertification credit."
QUESTIONS?
G&A Partners
info@gnapartners.com
(800) 253-8562
*This webinar has been recorded and will be posted on the G&A website by Friday