Vision Payroll

November 18, 2008

US Department of Labor Issues Opinion Letter on Substitute Teachers and the Professional Exemption

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2008-7. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA). This Opinion Letter states that a substitute teacher may qualify for the Professional exemption of the FLSA if the substitute teacher’s primary duty is teaching. Generally, the Professional exemption requires a “knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction.” Under the state law at issue, substitute teachers do not need a college degree or teaching certificate if they have a state-issued substitute teaching permit. The DOL concluded that it was not the degree requirements that qualified teachers as learned professionals; indeed the requirements vary widely by state and even school, with no standard minimum qualifications. Since discretion and judgment is required for teaching, substitute teachers whose primary duty is teaching qualify for the exemption. Conversely, substitute teachers whose primary duty is not related to teaching do not qualify for the exemption. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

November 17, 2008

US Department of Labor Issues Opinion Letter on Overtime, On-call Hours

The US Department of Labor recently issued Administrator signed Opinion Letter FLSA2008-6. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA). This Opinion Letter discusses whether a city that employs workers in a Water Treatment Plant may include on-call compensation received in a two-week pay period with other pay received in a two-week pay period for purposes of computing the overtime rate of pay to be applied to that period. An employee is paid $2.50 per hour for on-call time that is not considered hours worked under the FLSA. The employee may work overtime during only one week of two-week period. The city proposed including the on-call compensation with all other compensation received in the two-week pay period and dividing by the number of hours worked in that pay period to arrive at a regular rate of pay. For example, an employee earns $10 per hour, works forty hours in the first week and forty-five hours in the second week of a two-week pay period and also receives $100 of on-call compensation. The city proposed paying overtime based on a regular rate of $11.18 per hour. (40 hours X $10/hour) + (45 hours X $10/hour) + $100 = $950 total compensation. $950/85 hours = $11.18 per hour regular rate of pay for overtime purposes. The overtime premium under this method would be $27.95 or $11.18/hour X 5 hours X0.5 premium. If a one-week pay period were used, a regular rate of $12.22 would be used for the overtime calculation (45 hours X $10/hour) + $100 = $550 total compensation and $550/45 hours = $12.22 per hour. The overtime premium under this method would be $30.55 or $12.22/hour X 5 hours X0.5 premium. The FLSA uses a standard of a single workweek for calculating the regular rate of pay and does not allow averaging over two weeks even if the employee’s pay period is normally two weeks. Since “the specific hours for which on-call pay was earned are identifiable, the payment for on-call time must be attributed to the workweek in which the on-call hours occurred.” Therefore, the city must use the latter method to calculate the employee’s regular rate of pay and may not use a two-week period. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

November 2, 2008

Administrative Exemption Examples Under the Fair Labor Standards Act

Filed under: News — Tags: , , , , , , , — Vision @ 10:50 am

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. Earlier posts discussed the definition of an administrative employee. The following are examples of specific jobs that generally either qualify or don’t qualify the employee under the administrative exemption:

  • Insurance claims adjusters qualify whether they work for an insurance or other type company.
  • Financial services employees who analyze information, advise customers, market, service or promote the products qualify, but not those whose primary duty is selling.
  • Employees who lead a team of employees “assigned to complete major projects for the employer”, even those without direct supervisory authority should qualify.
  • Executive assistant or administrative assistant to a business owner or senior executive will qualify if the assistant has been delegated authority over significant matters.
  • Human resources mangers who “formulate, interpret or implement employment policies” do qualify. Personnel clerks who screen applicants for minimum acceptable standards as set by others generally do not qualify.
  • Management consultants who propose changes in a business’s operation qualify.
  • Purchasing agents with authority to make significant purchases qualify even if the agents need consultation for unusually large commitments.
  • Inspectors “along standardized lines involving well-established techniques and procedures” and those doing other ordinary inspection work do not qualify.
  • Examiners or graders do not qualify, even if the employee has progressed to a point that reference to written standards is unnecessary because of acquired knowledge.
  • Comparison shoppers who report prices to a retail stores buyer do not qualify, but the buyer who evaluates the information to set the prices does qualify.
  • Inspectors and investigators in the public sector, including those involved in “fire prevention or safety, building or construction, health or sanitation, environmental or soils specialists” among others do not qualify.

Note that merely giving someone a title does not qualify the employee as exempt unless the duties and responsibilities that the job encumbers are also designated. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

August 26, 2008

Discretion and Independent Judgment Under the Fair Labor Standards Act

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. An earlier post discussed that to qualify for the administrative exemption, an employee must “exercise…discretion and independent judgment” in significant matters. Discretion and independent judgment involve “the comparison and the evaluation of possible courses of conduct, and acting or making a decision after” considering various possibilities. Some factors are “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 performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment 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; whether the employee has authority to negotiate and bind the company on significant matters; whether the employee provides consultation or expert advice to management; whether the employee is involved in planning long- or short-term business objectives; whether the employee investigates and resolves matters of significance on behalf of management; and whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances.” The regulations specifically state that other factors may also be considered in making the determination. Discretion and independent judgment generally require an employee to make decisions “free from immediate direction or supervision.” The decisions may, however, be reviewed by upper-level personnel or not followed at all. Neither means that the employee did not exercise discretion and independent judgment. The fact that several employees may perform similar work or work of the same level of importance is not necessarily enough to disqualify the work from requiring discretion and independent judgment. Types of work that do not require discretion and independent judgment “include clerical or secretarial work, recording or tabulating data, or performing other mechanical, repetitive, recurrent or routine work.” The fact that an employer may suffer “financial losses” if an employee fails to properly perform a job does not necessarily mean that an employee who performs that job exercises discretion and independent judgment. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

August 25, 2008

Directly Related to Management or General Business Operations Under the Fair Labor Standards Act

Filed under: News — Tags: , , , , , , , — Vision @ 12:08 pm

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. An earlier post discussed that to qualify for the administrative exemption, an employee’ s primary duty must be “the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.” Therefore “working on a manufacturing production line or selling a product in a retail or service establishment” does not qualify as an exempt administrative function. Examples of work that does qualify include work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; [and] legal and regulatory compliance.” The regulations specifically state that other duties not listed above may also be included in the duties of an administrative employee and that such duties may also be performed by employees who qualify under other FLSA exemptions. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

August 24, 2008

Administrative Exemption Under the Fair Labor Standards Act

Filed under: News — Tags: , , , , , , , — Vision @ 8:35 pm

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. Only employees “employed in a bona fide administrative capacity” qualify for the exemption. Any employee who meets all the following tests shall be considered an “administrative employee” for this purpose: 1) The employee must receive a salary of at least $455 per week, not including board, lodging, or other facilities. 2) The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.” 3) The employee must “exercise…discretion and independent judgment” in significant matters. Future posts will provide further clarification of certain terms in the administrative exemption as well as provide other tests that may qualify an employee as an administrative employee. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

August 23, 2008

Concurrent Duties Under the Fair Labor Standards Act

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The executive exemption allows employees who qualify as “executives” to be exempted from both minimum wage and overtime requirements. The fact that employee may perform both exempt and non-exempt duties does not necessarily disqualify the employee from executive classification under the FLSA. The determining factor is generally whether the employee directs other non-exempt employees and remains “responsible for the success or failure of business operations” or is merely directed by another to perform the exempt function or performs it for a certain period. “An employee whose primary duty is ordinary production work or routine, recurrent or repetitive tasks cannot qualify for exemption as an executive.” Generally, the ultimate deciding factor, based on the facts and circumstances of each case, is whether or not the employee’s primary duty is management. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the executive exemption.

August 21, 2008

Particular Weight Under the Fair Labor Standards Act

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The executive exemption allows employees who qualify as “executives” to be exempted from both minimum wage and overtime requirements. One of the tests to be met is that an executive must be able to make “suggestions and recommendation [that] are given ‘particular weight.’” Among other factors to be considered are, “whether it is part of the employee’s job duties to make such suggestions and recommendations; the frequency with which such suggestions and recommendations are made or requested; and the frequency with which the employee’s suggestions and recommendations are relied upon.” The “suggestions and recommendations” should pertain to employees whom the executive manages. Occasional suggestions about co-workers are not sufficient to meet this standard. The “suggestions and recommendations” need not be the ultimate deciding factor or even the most important determinative factor to qualify as being given particular weight. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the executive exemption.

August 19, 2008

Two or More Other Employees Under the Fair Labor Standards Act

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The executive exemption allows employees who qualify as “executives” to be exempted from both minimum wage and overtime requirements. One of the tests to be met is that an executive must “customarily and regularly” direct the work of at least two other employees. The two or more employees test is an equivalency test. Four half-time employees are equal to two full-time employees. Supervision may be split among two or more employees, but each must supervise two or more full-time equivalents. A department with five non-exempt employees, for example, may not have more than two exempt supervisors under this test. Assistance in the actual manager’s absence is not sufficient to meet the requirements of this section. An employee’s work can only be credited to one supervisor; an employee who works eight hours can be credited four hours each to two different supervisors, but not eight hours to each supervisor. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the executive exemption.

August 18, 2008

Department or Subdivision Under the Fair Labor Standards Act

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The executive exemption allows employees who qualify as “executives” to be exempted from both minimum wage and overtime requirements. One of the tests to be met is that an executive must manage an enterprise or department or subdivision thereof. The department or subdivision must be permanent and continuing. The regulations explain that a human resources department might have subdivisions for labor relations, pensions and other benefits, equal employment opportunity, and personnel management.” Enterprises with more than one establishment may consider each establishment a subdivision for this purpose. There is however, no physical presence test for a department or subdivision. Likewise, the fact that the employees that the executive manages may change from time-to-time is irrelevant. Neither the physical presence nor the static employee test is determinative; instead the facts and circumstances surrounding the employee’s management activities are what are critical to classifying the employee as an executive. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the executive exemption.

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