Is Y our Business or Organization Prepared for the New Overtime - - PowerPoint PPT Presentation

Is Y

• ur Business or Organization Prepared

for the New Overtime Rules?

T uesday, August 30, 2016 Woodlake Country Club

Presented by

Monmouth-Ocean Development Council

&

Greater T

• ms River Chamber of Commerce

IS Y OUR BUSINESS PREPARED FOR THE NEW OVERTIME RULES?

Kathleen M. Connelly, Esq.

Lindabury, McCormick, Estabrook & Cooper 53 Cardinal Drive Westfield, NJ 07091

kconnelly@lindabury.com

FLSA OVERTIME BASICS

Employers must pay OT to eligible employees for all hours worked in excess of 40 hours in a given workweek No obligation to pay OT for work in excess of 8 hours in a workday Workweek and workday must be regularly scheduled and maintained

Who is Eligible for OT?

All employees (FT/ PT) unless they qualify for a statutory exemption under the FLSA/NJWHL

Executive, administrative, professional and “highly compensated” employees (the “White Collar” exemptions)

Outside sales employees Commissioned sales employees in retail Computer professionals Drivers, driver's helpers, loaders and mechanics Farmworkers Salesmen, parts-men and mechanics in automobile dealerships Seasonal and recreational establishments

not operate for more than seven months in any calendar year, OR during preceding calendar year, average receipts for any 6 mos. were not more than 33.3% of avg. receipts for the other 6 mos.

THE DOL ’S CHANGES TO THE WHITE COLLAR EXEMPTIONS

THE WHITE COLLAR EXEMPTIONS

The “white collar” exemptions

Executive

Administrative Learned Professional Highly compensated employee

12/ 1/ 16: New USDOL rules substantially

• verhauling the WC

exemptions Estimated to increase the ranks of OT-eligible employees by 5 million

EXECUTIVE EXEMPTION

Duties test (unchanged)

Management of the business (or department/ subdivision) Customarily directs the work of 2 or more FT’s (or equivalent) Authority to hire/ fire (or recommendations given significant weight) Exercises discretionary power in the performance of the job

Salary basis test (doubling)

from $455pw/ $23,660 to $913pw/ $47,476 automatic updates so threshold stays at 40% of weekly earnings for FT salaried workers

PROFESSIONAL EXEMPTION

Duties test (unchanged)

Learned Professional

Work requiring advanced knowledge in science/learning; predominantly intellectual; Consistent exercise of discretion and judgment; Advanced knowledge acquired by a prolonged course of specialized instruction;

Creative Professional

Work requiring invention, imagination, originality or talent in artistic or creative endeavor;

Salary basis test (doubling)

from $455pw/ $23,660 to $913pw/ $47,476 automatic updates so threshold stays at 40% of weekly earnings for FT salaried workers

ADMINISTRATIVE EXEMPTION

Duties test (unchanged)

Office/non-manual work directly related to policies or

business operations; Assists executive or performs work under generalized supervision along specialized or technical lines; and

Salary basis test (doubling)

from $455pw/ $23,660 to $913pw/ $47,476 automatic updates so threshold stays at 40% of weekly earnings for FT salaried workers

HIGHLY COMPENSATED EMPLO YEE EXCEPTION

Duties test (unchanged)

Performance of office or non-manual work Customarily performs at least one of the duties of an

executive, administrative or professional employee

Increased salary basis

from $100,000 to $134,004 automatic updates so threshold stays at 40% of weekly

earnings for FT salaried workers

POTENTIAL CONSEQUENCES OF RULE CHANGE

Significant number of employees will lose exempt status Employer must immediately begin hourly record keeping on reclassified employees Employer must vigilantly monitor new, non-exempt employee’s work

Before/after scheduled hours During breaks Weekends Via smartphone

STEPS TO T AKE NOW

Identify exempt positions that will fall below new salary thresholds ($47,476/ $134,004) Understand how many hours these employees are working

p/w

Determine whether the salary of these employees should be bumped up to preserve exemption

Establish a zone for those close to threshold who will be bumped up? Target certain positions for increase (e.g., those where OT is necessary and will be significant? Reclassify all as non-exempt?

STEPS TO T AKE NOW

Determine the hourly rate of pay for those employees who will be reclassified as non-exempt

Current salary ÷ 40? Lower hourly rate to account for predicted OT in an effort to maintain current compensation?

For highly compensated employees that will not meet $134,004, determine if the duties of position meet the executive, administrative or professional exemptions rather than this relaxed standard

STEPS TO T AKE NOW

Review ALL positions to assess whether they are properly classified

Violations rampant Increased enforcement efforts/lawsuits

Back pay liability for 2 or 3 years Attorney fees There has never been a better time!

STEPS TO T AKE NOW

Consider changing job duties for positions that may lose exemptions (so long as salary test met) T ransfer duties that trigger OT to employees who will retain the exemption to minimize OT liability Eliminate duties that trigger OT Consider additional FT/ PT staff to offset OT for those positions where significant OT may be expected

STEPS TO T AKE NOW

Implement and enforce adequate time-keeping mechanisms

33% not required to input hours employers will now have to track hours of reclassified employees manual timesheets are unreliable; electronic timekeeping should be the norm

Require prior approval before working OT

prohibit “working through” lunch prohibit clocking in early/or out late to make up time or catch-up on work regularly check time records and discipline offenders

STEPS TO T AKE NOW

Develop a communication strategy now

Loss of status

“Watching the clock” requirements Loss of freedom Loss of income

VOLUNTEERS

For profit: not permitted Nonprofit Non-employee

Nature of the entity receiving services No “compensation” of any sort (except reimbursements, etc. ) No expectations of benefits Whether the activity is less than FT Whether regular employees are displaced Whether services are offered freely without coercion, and Whether services are of the kind typically associated with volunteer work.

VOLUNTEERS

Nonprofit Employees:

may not volunteer to provide services that are similar to regular job duties. cannot direct employee to perform volunteer work during the employee's normal working hours, even if duties are different

BUT , if individual volunteers in a part of a nonprofit which is commercial and serves the public (stores/ restaurants), the DOL does not recognize them as volunteers

UNPAID INTERNS

For Profit

training is similar to that which would be given in a vocational/academic school; training is for the benefit of the intern (credits, etc.) intern does not displace employees, but works under their close observation; employer derives no immediate advantages from the intern and, on occasion, its

• perations may be impeded;

intern is not entitled to a job at the conclusion of the internship; and, employer and the intern understand that the intern is not entitled to wages.

Nonprofit: more latitude because can work as volunteer, but don’t have intern

displace employees or perform work that would otherwise be performed by employees work in a commercial operation (e.g., store) of organization no compensation of any kind

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Lindabury, McCormick, Estabrook & Cooper is a mid-sized general practice law firm located in Central New Jersey. The Firm provides litigation and transactional counsel to a broad spectrum of clients, including global private and public corporations, national commercial insurance firms, health care institutions, trade associations, employee benefit funds, banks and financial institutions, nonprofit organizations, privately held businesses, professional corporations, and individuals in the New Jersey and Mid-Atlantic region.