FAIR LABOR STANDARDS ACT
BASICS
Objective
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Background
Requirements
Exempt v. Non-Exempt
Compensable Time
Violations
Penalties
Background
• The Fair Labor Standards Act (FLSA) was enacted
in 1938.
• Establishes standards affecting employees in
private and public sector
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Minimum Wage
Overtime Pay
Recordkeeping
Youth Employment
Why You Need to Know
• Wage and hour issues are critical to the
operations of our organization
• FLSA affects employee compensation
• YOU play an important role in COMPLIANCE
FLSA Does Not Require
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Vacation, Holiday, Severance or Sick Pay
Meals or Rest Periods
Premium Pay for Weekend or Holiday Work
Pay Raises
Immediate Payment if Separated
Minimum Wage Requirement
• Covered, Non-Exempt Employees must be
paid at least the minimum wage for all hours
worked
• Effective July 24, 2009, the minimum wage
was established at $7.25
What is a Work Week?
• A work week is 7 consecutive 24 hours
periods.
• USC’s work week begins at 12:01 am Sunday
and ends at midnight the following Saturday.
• Each work week stands by itself in
determining overtime compensation for NonExempt employees.
Exception to the Work Week
• USC’s Law Enforcement employees may work
a variable schedule 28-day work period (171
hours) that begins at 12:01 am Sunday and
ends 28 day later at midnight.
Who is Covered?
• Most Employees in the United States are
“Covered” by the FLSA
• Examples of Employees Not Covered
– Prisoners
– Elected Officials
– Political Appointees
– Bona Fide Volunteers
Under FLSA, Employees are considered
• Non-Exempt
• Exempt
NonExempt
Exempt
Minimum Wage
Do not Earn
Overtime
Overtime
(Compensatory
Time)
Paid “to get the
job done” no
matter how many
hours worked in a
work week
Recordkeeping
Paid for the hours
worked
What Determines if a Position is Exempt
or Non-Exempt?
• Currently, employees paid less than $23,660 per year
($455 per week) are non-exempt
Salary Test
• New rule effective December 1, 2016 for $47,476 per
year ($913 per week)
• Permits positions to be considered Exempt by performing high
level of work
Duties Test
• Falls into Executive, Professional or Administrative, Computer
Professional or Highly Compensated Categories
• Job Titles do not determine Exempt Status
Who at USC determines the
exemption status of positions?
• The Classification and Compensation Area of
the Division of Human Resources determines
exemption status of positions system wide for
USC.
Executive Duties Test
• Regularly supervises two or more full-time
employees, and
• Management is the primary duty of the
position, and
• Genuine input into the hiring, firing,
promotions, discipline or assignments of other
employees.
Professional Duties Test
• May be learned or creative professional
• Learned professional:
• Requires advanced knowledge in a field of
science or learning
• Predominantly intellectual
• Acquired by a prolonged course of specialized
instruction
Professional Duties Test
• Creative Professional:
• Primary duty must be the performance of
work requiring invention, imagination,
originality, or talent
• Performs work in a recognized field of artistic
or creative endeavor
Administrative Duties Test
• Primary duty must be office or non-manual
work; and
• Directly related to management policies or
general business operations; and
• Customarily and regularly requires the
exercise of discretion and independent
judgment
Computer Professional Test
• Employed as a computer systems analyst,
programmer or software engineer or similar skilled
worker
• Primary duties consist of:
– Applications of systems analysis techniques;
– Design, development, documentation, analysis, creation,
testing, or modification of computer systems or programs;
– Design, documentation, testing, creation,
or modification of computer programs
related to machine operating systems; or
– Combination of the above, which requires same skill level.
Highly Compensated Employee
Test
• Must perform non-manual work and
• Paid more than $100,000 per year and
• Perform at least one of the duties of an
executive, administrative or professional
employee
Note: New salary threshold of $134,004 per year will
be effective December 1, 2016.
Non-Exempt Employees
• Do not meet the Salary Test of $455/week or
the Duties Test of Executive, Professional,
Administrative, Computer Professional or
Highly Compensated Employee
Note: New rule has the salary test changing to
$913/week or $47,476/year.
Non-Exempt Employees (cont.)
• Must receive 1 1/2 times their regular rate
for all hours worked in excess of 40 in a work
week (unless Law Enforcement)
• Hours worked included only those hours
actually worked.
– Example: Sue records 45 hours worked in a work
week but 8 of those hours are due to a holiday, so
no overtime is paid.
Non-Exempt Employees (cont.)
• FLSA allows State Government to use
compensatory time in lieu of overtime pay.
• Compensatory time gives the employee leave
that can be used in the future.
• Compensatory time must be accumulated at
1-1/2 times overtime hours.
Non-Exempt Employees (cont.)
• USC has a policy where all unused
compensatory time is paid out at the end of
the fiscal year.
• Non-Exempt employees are paid out unused
compensatory time at the time of separation
from USC.
• Non-Exempt employees must use or be paid
out their compensatory time if they move to
an Exempt position.
What is Compensable Time for
Non-Exempt Employees?
• All time employees are required to be on duty
or at a prescribed workplace and permitted to
work.
• Includes work performed on or away from
premises if supervisor knows or has reason to
believe work is being performed.
What is Compensable Time for
Non-Exempt Employees? (Cont.)
• Unauthorized work
• Employees who arrive to work early and start
working.
• Employees who work through lunch.
• Required to attend training, lectures,
meetings, etc.
What is Compensable Time for
Non-Exempt Employees? (Cont.)
• Travel time during regular working hours as
well as during corresponding hours of nonworking days.
• Required to remain on premises or prescribed
workplace, or must remain accessible to the
point the employee may not use his/her time
for own purposes.
Violations to FLSA
• U.S. Department of Labor enforces FLSA
• Burden of proof is on the employers
• Employees can sue their employers for the
recovery of back wages & liquidated damages
for up to 3 years if violation is found to be
willful
• Employers cannot retaliate
against employees for “whistle
blowing”
Penalties from DOL
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Unpaid wages (2 - 3 years of back wages)
Fines ($10,000)
Imprisonment (6 months)
Liquidated damages (2x)
Attorney’s fees and costs
Individual liability
Contacts
Belinda Ogorek
777-3259
[email protected]
Rontreal Tyler
777-1188
[email protected]