Vision Payroll

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-26. 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). Because the letter was apparently never mailed after it was signed, the DOL under new Secretary Hilda L. Solis has decided to withdraw the letter for further consideration. Therefore, this letter may not be relied upon as a statement of agency policy. It is possible that a different conclusion may be reached when the Opinion Letter is reissued.

In this Opinion Letter, the DOL had stated that client service managers (CSMs) at an insurance agency were exempt administrative employees. The general qualifications for an exempt administrative employee are an employee:

1. Compensated on a salary or fee basis at a rate of not less than $455 per week . . . ;
2. Whose primary duty is 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; and
3. Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

It was assumed for the purposes of this opinion letter that the first qualification was met. Since the work the CSMs performed was similar to work performed by employees “ordinarily considered to meet the duties requirements for the administrative exemption” and since “the CSMs primary duty includes the exercise of discretion and independent judgment with respect to matters of significance”, the CSMs were considered to have met the “requirements of the administrative exemption and are accordingly exempt from the minimum wage and overtime requirements of the FLSA.”

State laws may provide rules that are more beneficial to the employee and must be followed. The DOL may come to a different conclusion when it reissues the Opinion Letter after further consideration. Contact Vision Payroll if you have questions about this Opinion Letter.

The Division of Labor & Worker Safety of the Ohio Department of Commerce announced recently that, effective January 1, 2010, the minimum wage for the state of Ohio will remain at $7.30 per hour for non-tipped employees and $3.65 for tipped employees. The minimum wage will apply to employers who gross more than $267,000 per year. As a result of a constitutional amendment that passed in 2006 an adjustment to the minimum wage must be applied on January 1 of each year. The adjustment is tied to the Consumer Price Index (CPI) for urban wage earners and clerical workers for the 12-month period prior to September. The 0.2% decrease in the CPI will result in no change for 2010. Contact Vision Payroll if you have any questions on the Ohio minimum wage increase or visit our Minimum Wage Chart.

The Division of Labor of the Colorado Department of Labor and Employment recently promulgated Colorado Minimum Wage Order 26, which decreases, effective January 1, 2010, the minimum wage for the state of Colorado from $7.28 to $7.24 per hour. Pursuant to the inflation adjustment requirement of Section 15, Article XVIII of the Colorado Constitution, the minimum wage must be adjusted each year effective January 1. Contact Vision Payroll if you have any questions on the Colorado minimum wage increase or visit our Minimum Wage Chart.

The Washington Department of Labor and Industries announced recently that pursuant to Revised Code of Washington §49.46.020, the minimum wage for the state of Washington will remain at $8.55 per hour for 2010. The law requires an adjustment to the minimum wage be calculated each year. The adjustment is tied to the change in the federal Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the 12 months ending in August. Since there is no provision in the law to decrease the minimum wage when the CPI declines, the wage will remain unchanged. Contact Vision Payroll if you have any questions on the Washington minimum wage or visit our Minimum Wage Chart.

The Montana Department of Labor and Industry announced recently that pursuant to Montana Code Annotated 39-3-409, the minimum wage for the state of Montana will remain at $7.25 per hour. The law requires an adjustment to the minimum wage that must be calculated no later than September 30 of each year. The adjustment is tied to the US City Average Consumer Price Index (CPI) for All Urban Consumers for All Items for the 12 months ending in August. Since there is no provision in the law to decrease the minimum wage when the CPI declines, the wage will remain unchanged. Contact Vision Payroll if you have any questions on the Montana minimum wage or visit our Minimum Wage Chart.

Brad Avakian, Commissioner of the Oregon Bureau of Labor and Industries announced recently that, effective January 1, 2010, the minimum wage for the state of Oregon will remain at $8.40 per hour. As a result of Measure 25, which passed in 2002, an adjustment to the minimum wage must be calculated no later than September 30 of each year. The adjustment is based on any increase in the US City Average Consumer Price Index for All Urban Consumers for All Items (CPI). The 1.48% decrease in the CPI will result in no change since there is no provision to decrease the minimum wage. Contact Vision Payroll if you have any questions on the Oregon minimum wage or visit our Minimum Wage Chart.

Under Title 26, Chapter 7, Subchapter 3, §664, of the Maine Revised Statutes, the minimum wage for the state of Maine will increase to $7.50 per hour effective October 1, 2009. Tip credits and occupational exemptions may apply so that a lower wage may be paid in certain circumstances. Contact Vision Payroll if you have any questions on the Maine minimum wage increase or visit our Minimum Wage Chart.

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-18. 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).

In this Opinion Letter, the DOL addressed two questions regarding an employer’s accrued paid time-off (PTO) plan.

Are exempt employees who are required to take PTO during periods of “low patient census” in danger of losing their exempt status?

If an exempt employee’s accrued PTO is exhausted and the periods of low patient census continues, could [the employer] schedule the exempt employee for less than forty hours and reduce pay accordingly?

In response to the first question, the DOL stated “[a]n employee will not be considered to be paid “on a salary basis,” however, if any deductions from the salary are made for full or partial day absences occasioned by the employer or by the operating requirements of the business.” Therefore, those employees could lose their exempt status if such deductions are made.

As for the second question, the DOL concluded, [u]nlike a salary reduction that reflects reduction in the normal scheduled workweek and is not designed to circumvent the salary basis, deductions from salary due to day-to-day or week-to-week determinations of the operating requirements of the business are precisely the circumstances the salary basis test is intended to preclude. Such a plan is, therefore, inconsistent with the guaranteed salary basis of payment required by the regulations.”

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.

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-14. 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).

In this Opinion Letter, the DOL ruled that reducing a salaried employee’s pay due to a reduction in hours mandated by the employer may violate the salary basis requirement and jeopardize the employee’s exempt status.

In certain cases in which there is a low patient census, the employer offers voluntary time off (VTO). VTO allows the employees to take time off and “use paid annual, personal, or vacation leave, but continue to accrue employment benefits.” An insufficient number of volunteers under this system results in the implementation of an MTO (mandatory time off) system. Employees may then use accrued leave or take unpaid MTO. If an employee does not have sufficient time to allow payment under the leave policy or elects not to use accrued leave the employer deducts the VTO or MTO from the employee’s salary for that week. If the leave lasts the entire week, no salary is paid.

Under the FLSA, deductions from salary are not allowed when work is not available if the salaried employee “is ready, willing and able to work.” A reduction may be allowed “if it is a bona fide reduction not designed to circumvent the salary basis requirement, and does not bring the salary below the applicable minimum salary” (currently $455 per week). Deductions are allowed when exempt employees “voluntarily take time off for personal reasons, other than sickness or disability, for one or more full days.” The employee must truly volunteer, however, and it must not be “occasioned by the employer or the operating requirements of the business.”

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.

This week’s question comes from Hillary, a restaurant manager. I know the federal minimum wage increased to $7.25 last week. How does the increase in the minimum wage affect the tip credit? Answer: Under §45B of the Internal Revenue Code of 1986 (IRC), employers are allowed a credit for the employer portion of social security taxes (sometimes known as FICA tax or OASDI or Medicare) to the extent the tips claimed plus the cash wages paid exceeds the federal minimum wage. The credit is currently 7.65% of the excess amount and is claimed on Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips. Pursuant to IRC §45B(b)(1)(B), the minimum wage to be used in calculating the credit is the minimum wage in effect as of January 1, 2007 ($5.15). Therefore, the recent increase in the minimum wage does not affect the credit calculation. Vision Payroll can assist restaurants and other eligible employers in calculating the amount of tips eligible for the credit. Contact Vision Payroll if you need further information on the tip credit.