Dealerships and the New Overtime Rule: Are Your Pay Practices - PowerPoint PPT Presentation

Dealerships and the New “Overtime Rule”: Are Your Pay Practices Compliant? Presented by: Tillman Coffey Matthew R. Simpson Phone: (404) 231-1400 Email: tcoffey@fisherphillips.com msimpson@fisherphillips.com fisherphillips.com

Introduction • The Fair Labor Standards Act (“FLSA”) governs how most employers must pay their employees. • Employers must also check state laws. • Arizona, Alaska, California, Colorado, Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Minnesota, Missouri, Montana, Nevada, New Jersey, New York, North Dakota, and Vermont fisherphillips.com

FLSA Requirements • Minimum wage • Overtime premium pay of 1.5 times the regular rate for all hours worked over 40 in a workweek • Certain recordkeeping requirements • Child labor restrictions fisherphillips.com

Minimum Wage • Federal minimum wage is $7.25 per hour for all hours worked. • Some dealership employees may be nonexempt from minimum wage and recordkeeping but exempt from overtime. • Potential problems: • Deductions for cash shortages, damage to property, uniforms, etc. • Off the clock work • Training fisherphillips.com

Overtime • Overtime premium pay of 1.5 times the regular rate for all hours worked over 40 in a workweek. • Regular rate includes all forms of compensation based on quality or quantity of work performance. • Bonuses • Commissions • Spiffs • Potential problems: • Failure to pay overtime on bonuses and commissions • Misclassification fisherphillips.com

Timekeeping • Dealership must keep accurate records of all hours worked. • This includes all time the employer knows or has reason to know the employee worked. • Finance managers, salespersons, parts counterpersons, service advisors, and mechanics must all keep accurate time records. • Potential problems: Missed breaks or meal periods • Training/meetings • Late/early/remote work • fisherphillips.com

What Are “Exemptions”? • Exempt = not subject to one or more wage-hour requirements • Some apply to overtime requirements, some apply to minimum wage and overtime requirements • Default rule: everyone is non-exempt unless the employer can prove otherwise fisherphillips.com

Dealership Exemptions Minimum Wage/Overtime Overtime Only Executive Salesman Administrative Partsman Professional Mechanic Commission-Paid Motor Carrier fisherphillips.com

“Overtime Rule” Change • DOL increased the minimum salary requirement to satisfy the “white collar” exemptions to $684 per week ($35,568 per year) • Commissions and incentive bonuses may be used as a credit for up to 10% of the minimum salary requirement • Does not affect the exempt status of or pay requirements for salesmen, partsmen, mechanics, commission-paid, or motor carrier employees • Effective January 1, 2020 fisherphillips.com

Executive Exemption • The employee is in charge of a department or sub- department; and • The employee supervises the work of two or more full-time employees; and • The employee is paid a salary of at least $684 per workweek. fisherphillips.com

Administrative Exemption • The employee’s primary duty is non-manual office work directly related to management policies or general business operations; and • The employee exercises discretion and independent judgment on matters of significance; and • The employee is paid a salary of at least $684 per workweek. fisherphillips.com

Professional Exemption • The employee’s work requires advanced knowledge, invention, imagination or talent; and • The employee exercises discretion and independent judgment on matters of significance; and • The employee is paid a salary of at least $684 per workweek. fisherphillips.com

Salesman Exemption • The employee is employed at an automotive dealership; and • The employee’s primary duty is to sell cars or trucks to customers. • This exemption is not affected by the DOL “Overtime Rule” change! fisherphillips.com

Partsman Exemption • The employee is employed at an automotive dealership; and • The employee’s primary duty is stocking, issuing, requisitioning, or selling parts. • This exemption is not affected by the DOL “Overtime Rule” change! fisherphillips.com

Mechanic Exemption • The employee is employed at an automotive dealership; and • The employee’s primary duty is performing mechanical or body repair work on a car or truck. • This exemption is not affected by the DOL “Overtime Rule” change! fisherphillips.com

Commission-Paid Exemption • The employee is employed at a “retail” establishment; and • The employee receives the majority of compensation in the form of “commissions;” and • The employee receives at least time and one-half the federal minimum wage for all hours worked. • This exemption is not affected by the DOL “Overtime Rule” change! fisherphillips.com

Motor Carrier Exemption • The employee is employed by a motor carrier; and • The employee works on or drives a vehicle that weighs 10,000 lbs. or more; and • The employee performs safety-affecting duties for the vehicle’s operation in interstate commerce. • This exemption is not affected by the DOL “Overtime Rule” change! fisherphillips.com

“Overtime Rule” Change (Again) • DOL increased the minimum salary requirement to satisfy the “white collar” exemptions to $684 per week ($35,568 per year) • Commissions and incentive bonuses may be used as a credit for up to 10% of the minimum salary requirement • Does not affect the exempt status of or pay requirements for salesmen, partsmen, mechanics, commission-paid, or motor carrier employees • Effective January 1, 2020 fisherphillips.com

FLSA Compliance • U.S. Department of Labor (“DOL”) Audits and Investigations • Employees can file complaints that initiate DOL investigations • DOL can independently initiate investigations • Civil Litigation • Class and collective action lawsuits allow entire groups of employees to join a single lawsuit fisherphillips.com

FLSA Penalties • Back Wages • Liquidated (Double) Damages • Attorneys’ Fees and Costs • Civil Monetary Penalties fisherphillips.com

Other Wage and Hour Issues • Breach of contract and wage theft claims for reducing commissionable gross profit through lots fees, packs, and other charges • Unlawful deductions for damage to customer or dealership property • Inaccurate timekeeping records and failure to pay minimum wage to salespersons and technicians • Equal pay claims for service, parts, and body shop employees fisherphillips.com

What Should You Do? • Wage-Hour Audits • Pay Plan Review • Update Employee Handbook • Utilize Arbitration Agreements • Manager Training fisherphillips.com

Stay Tuned More Human Resource offerings from GADA and Fisher Phillips on the way fisherphillips.com

Final Questions Presented by: Tillman Coffey Matthew R. Simpson Phone: (404) 231-1400 Email: tcoffey@fisherphillips.com msimpson@fisherphillips.com fisherphillips.com

Thank You Presented by: Tillman Coffey Matthew R. Simpson Phone: (404) 231-1400 Email: tcoffey@fisherphillips.com msimpson@fisherphillips.com fisherphillips.com