Austin E Smith Office Managing Shareholder Ogletree Deakins Denver Office 2 TODAYS ROADMAP Alex Acosta Sec of Labor Former clerk to Justice Alito NLRB amp DOL Cheryl Stanton Administrator Wage amp Hour Division ID: 787710
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Navigating Complicated Wage Calculations
Austin E. SmithOffice Managing ShareholderOgletree Deakins’ Denver Office
Slide22
TODAY’S ROADMAP
Slide3Alex Acosta, Sec. of Labor
Former clerk to Justice AlitoNLRB & DOLCheryl Stanton, Administrator, Wage & Hour DivisionFormer clerk to Justice Alito
Ogletree Deakins
DEPARTMENT OF LABOR PERSONNEL
Slide4Withdrew the overtime regulation setting the higher salary minimum for exempt status (no more appeal)
Withdrew guidance on misclassification of independent contractors and joint employer standards
Launched reverse rulemaking procedures to rescind the persuader reporting rule
Delayed ERISA “fiduciary duty” rule to February 2019
THE GOOD
Slide5Rescinded Administrator’s Interpretations (AI)
Less frequent, less specific, and less helpful than employer requested opinion lettersSince 2010, eleven have been issued:7 regarding the FLSA
2 regarding the FMLA
2 regarding agricultural employment
Reinstated opinion letters process
Reinstated 17 opinion letters issued in the waning hours of the Bush administration, but that the Obama administration had subsequently withdrawn.
THE GOOD
Slide66
Overtime Regular Rate Calculations
Use of Independent Contractors
Low-Salary Exempt Workers
WHAT WOULD I FOCUS ON
?
Slide7Overtime Pay
Covered, non-exempt employees must receive one and one-half times the regular rate of pay for all hours worked over 40 in a workweek.
Slide8Fluctuating Workweek (FWW
)Belo ContractsRegular Rate of PayCommissionsComp Time
8
COMPLEX OVERTIME CALCULATIONS
Slide9COLORADO’S VIEW OF
FWWCDLE does not include FWW in the minimum wage orderCDLE’s
advisory bulletins acknowledge
FWW
appropriate if we follow FLSA rules
Still have to account for daily overtime if applicable
9
Slide1010
FWW Calculation in Action
Slide11Understanding the Fluctuating Workweek Methodology
29 C.F.R. 778.114(a):An employee employed on a salary basis may have hours of work that fluctuate from week to week and the salary may be paid him pursuant to an
understanding
. . . that he will receive such [
salary
]. . . as
straight time pay
for [all] hours. . . work[ed] in a workweek. . .
Slide12Understanding the Fluctuating Workweek Methodology
Section 778.114(a) (continued):…[S]uch a salary arrangement is permitted. . . if the. . . salary is sufficient to provide compensation. . . at a rate
not less than. . . minimum wage
for every hour worked. . . and if he receives
extra compensation
. . . for all
overtime
hours worked at a rate not less than one-half his regular rate of pay.
Slide13Advantages of the Fluctuating Workweek Methodology
Salaried Status for Non-Exempt EmployeesMorale boost for employees that do not meet a Part 541 exemptionEnables Non-Exempt Employees to Earn Additional CompensationSalaried Status May Influence Employee Participation in Benefit Plans
Slide14Requirements of the Fluctuating
Workweek MethodologyEmployee Hours of Work Fluctuate Week to Week:Variations in hours from workweek to workweekHours need not vary above and below 40 hours per workweekWHD Opinion Letter found schedule of alternating workweeks with 43 and 51 hours satisfied hours that fluctuate week to week
Fluctuation is not unpredictability
Slide15Requirements of the Fluctuating Workweek Methodology
Employee’s Salary Is a Fixed Amount, Regardless of Hours Worked:Fixed salary is due whether hours worked are “few or many”Compensation is only the fixed salaryDispute over whether the payment of a bonus, commission or other incentive invalidates the FWWSalary is Paid WeeklyOvertime compensation should be paid contemporaneously
(Cont’d)
Slide16Requirements of the Fluctuating Workweek Methodology
Salary Is a Fixed Amount, But:If employee performs no work during a workweek then employer is not required to pay employee working a fluctuating workweek scheduleDeductions not allowed for personal day absences or sickness as may be made for Part 541 exempt employeeDisciplinary deductions for willful absences or tardiness and which are not frequent and consistent
Slide17Requirements of the Fluctuating Workweek
Clear Mutual Understanding Between Employer and Employee:Salary is compensation for all hours workedUnderstanding can be implied or in writingGenerally employee not required to understand how overtime pay is calculated
Slide18Overtime Premium Under the Fluctuating Workweek
50% Overtime Premium Is ½ of Regular Rate:Minimum overtime premium; can pay a greater premiumIn addition to fixed salaryComputation = weekly salary ÷ all hours worked x .5
Slide1919
Slide20Another Option: Belo Contract
§ 7(f) of FLSA States: No employer shall be deemed to … [violate the overtime requirement of section 7] … by employing any employee.… if such employee is employed pursuant to a bona fide individual contract, or … to an agreement made as a result of
collective bargaining
…,
if
the duties of such employee necessitate
irregular hours
of work,
(Cont’d)
Slide21Another Option: Belo CONTRACT
§ 7(f) of FLSA (continued):and the contract or agreement (1) specifies a regular rate of pay of not less than … minimum [wage] … provided in … section 6 … and compensation at not less than one and one-half times such rate for all hours worked in excess of … [40 hours] … and (2) Provides a
weekly guaranty of pay
for not more than
sixty hours
…
Slide22Belo Plan Requirements
Irregular or variable hours of work (sections 778.405, 778.406)Bona fide individual or collective bargaining agreement (section 778.407)Overtime compensation at 1.5 times the regular rate (sections 778.408, 778.409)Weekly pay guarantee (section 778.410)Weekly guarantee can not be for more than 60 hours (section 778.411)
Slide23Regular Rate (RR)
Is determined by dividing total earnings in the workweek by the total number of hours worked in the workweekMay not be less than the applicable minimum wageFederal minimum wage is $7.25
Slide24Step 1: Total Straight Time Earnings (Minus
Statutory Exclusions) Divided By Total Hours Worked = Regular RateStep 2: Regular Rate x .5 = Half Time PremiumStep 3: Half Time Premium x Overtime Hours
= Total Overtime Premium Due
Regular Rate (RR)
Slide25Overtime must be at one and one-half times the regular rate
.The “regular rate” consists of “all remuneration for employment.”All remuneration for “time worked and effort expended that relates to the employee’s quantity or quality of work.”
“Regular Rate” and Overtime
Slide26Hourly rateShift differentialAttendance bonus
Production bonusQuality bonusCommission paymentsRetention bonusOn-call payInstallment-paid sign-on bonus
Longevity bonus
“Quantity- or quality-” related contest prizes
Usually
Included
in the Regular Rate
Slide27Usually
Excluded From Regular RateGiftsDiscretionary bonusSuggestion awardsPay for time off
Show-up pay
Bonus as percent of total wages
Profit sharing/ insurance/retirement plans
“Premium” pay (can credit against O.T.)
Holidays
Sundays
“Traditional” benefitsSign-on bonus “paid up front”
Slide28Incentive Hypothetical
Since Wayne and Garth are two of Mr. Froman’s best employees, they always package at least 10,000 sausages a day. As a result, they always receive a $100 bonus for meeting this production goal. Does the $100 daily bonus need to be include in the regular rate?
Yes, it is a payment pursuant to a policy
Slide29Cash prize for best suggestion. No
Cash prize for best attendance. YesSports tickets? No.
Awards & Prizes and THE
Regular Rate of Pay
Slide30Shift Premiums Under the FLSA
Non-overtime premiums include nightshift differentials (whether they take the form of a percent of the base rate or an addition of so many dollars/cents per hour) and premiums paid for hazardous, arduous, or dirty work. The FLSA also requires inclusion of any extra compensation which is paid as an incentive for the rapid performance of work.
Slide31Private Employers Cannot offer comp time as substitute for overtimePublic Employers
Can allow employees to accrue comp time at the rate of 1.5 hours for every overtime hour workedComp Time
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DISCUSSION
Slide33Employment Practices
Training WorkshopAustin E. SmithOffice Managing Shareholder
Ogletree Deakins’ Denver Office