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Total Articles: 101

WPI Wage Watch: Minimum Wage and Overtime Updates (September Edition)

September may mean saying goodbye to summer, but minimum wage and overtime developments across the country are still going strong. A nominee to lead federal wage and hour enforcement efforts has been put forward, labor agencies are beginning to announce their adjusted minimum wage rates for 2018, and state and local legislatures are looking to expand existing laws.

Does Paying Time and a Half For Certain Work Count Toward Overtime? [Wage & Hour FAQ]

Q. Our organization has a policy of paying employees who perform certain kinds of work outside of regular business hours at 1-1/2 times their regular hourly rates. Do we have to pay additional overtime pay for these hours?

Cutting Through The Half-Time Murk In "Failed Exemption" Cases

How does one calculate overtime pay due to plaintiffs who were erroneously treated as "white collar" employees exempt from the federal Fair Labor Standards Act's minimum-wage and overtime requirements? Court decisions continue to demonstrate much confusion and misunderstanding on this score.

Fifth Circuit Limits Use of Fluctuating Workweek

Employers who rely on the fluctuating workweek method to calculate overtime for employees should take a few minutes to review a new ruling from the Fifth Circuit Court of Appeals that draws some new lines around when the method may be used. Hills v. Entergy Operations, Inc. (5th Cir., Case No. 16-30924, Aug. 4, 2017).

DOL to Take Steps to Address Persuader, Overtime Rules

The same week the Department of Labor removed two guidance documents governing joint employment and independent contractors, it indicated it will soon reconsider two contentious rules that have been put on hold. The DOL is proposing to rescind the so-called "persuader" rule that would have expanded reporting requirements for employers that use labor-management consultants for certain purposes, and plans to seek public input on the salary thresholds set in the "white collar" overtime rule. Both of these rules were prevented from taking effect by court order.

Public Employers Beware: SCOTUS Refuses to Review City Employee Overtime Appeal

On May 15, 2017, the Supreme Court of the United States rejected the City of San Gabriel, California’s attempt to overturn the Ninth Circuit Court of Appeal’s expansive interpretation of what employers must include as “wages” when establishing the regular rate of pay to calculate overtime under the Fair Labor Standards Act (FLSA). The Third, Sixth, and Tenth Circuits all previously narrowly construed Section 207(e)(2) of the FLSA, which allows employers to make certain exclusions from the “regular rate” of pay, thereby taking those amounts out of the calculation for overtime pay.

Do School Employees Get Overtime For Occasional Extra Duty? [Wage & Hour FAQ]

Q. Our school district has hourly, non-exempt employees who occasionally perform extra work for the district – for example, chaperoning a school dance, or taking tickets at home games. Do we need to track the hours that employees perform on these tasks and pay them overtime if their total work hours go over 40 for a single week?

USDOL Should Retract Fluctuating-Workweek Commentary

Readers will recall that, in 2011, the U.S. Department of Labor undertook to discourage the use of fluctuating-workweek pay plans under the federal Fair Labor Standards Act.

Fluctuating-Workweek Plans: Don't Forget State Law!

Many employers have responded to the U.S. Department of Labor's ongoing efforts to increase the pay-related requirements for the federal Fair Labor Standards Act's "white collar" exemptions by making tough decisions about employees' compensation going-forward.

"Including" Overtime: Don't Be Misled By USDOL's Example

We have previously cautioned that (with one very limited exception) federal Fair Labor Standards Act regular-rate principles do not support paying a fixed salary that "includes" FLSA overtime premium for varying numbers of overtime hours worked up to some targeted worktime total. This is so even though an employer plans to pay more in FLSA overtime wages for overtime hours the employee works over such a threshold.

Straightening Out the Fluctuating Hour Workweek: Evaluating the Risks and Benefits of One Method of Overtime Payment

With the Department of Labor’s recent changes to the salary threshold for white-collar exemptions set to take effect on December 1, 2016, many employers are struggling to find the best option for how to comply with the new regulations without breaking the bank. One lesser-known alternative that is receiving increased attention from many companies is the fluctuating workweek method of payment for non-exempt employees.

Labor Department Settles Overtime Pay Dispute with Its Own Employees

Executive Summary: The Department of Labor (DOL) has agreed to pay $7 million to resolve claims that it failed to pay overtime to thousands of its own employees. The settlement reached with the American Federation of Government Employees Local 12 (AFGE), which represents approximately 3,000 federal employees in the Washington metro area, brings closure to longstanding allegations claiming the DOL failed to properly compensate employees.

Cash in Lieu of Benefits Must Be Included in Overtime Calculations, 9th Cir. Rules

Employers that provide cash payments to employees who have health care coverage through a spouse or other means may find themselves thinking of the old adage that "no good deed goes unpunished" in the wake of a new appeals court ruling.

DOL's Stance On Worker Misclassification Belies The Modern Business World

A short time ago, in a location not too far away (Washington, D.C.), the U.S. Department of Labor issued a new interpretation in an effort to further crack down on the perceived problem of employee misclassification. This was yet another example of the government being out of step with the realities of the modern business world. So much so, in fact, that the DOL would probably apply its predictable and out-of-date rules beyond the modern business world to worlds beyond our galaxy. In fact, the agency would likely find that a popular Star Wars character is an employee and not an independent contractor.

Converting Salary to an Hourly Rate

Since the U.S. DOL published its new overtime exemption rules, several people have asked me how one goes about converting a salary to an hourly rate that will give employees about the same amount of pay once overtime is factored in. There are really two parts to this calculation – one quite simple, the other a bit harder.

No Good Deed Goes Unpunished – Employer Liable for Not Including Cash-in-Lieu of Benefits Payments in Regular Rate

In a case of first impression, the Ninth Circuit held last week in Flores v. City of San Gabriel that an employer was liable to a class of employees for underpaid overtime compensation stemming from the employer’s failure to include cash-in-lieu of benefits payments in its calculation of the regular rate for overtime purposes. The City provided a Flexible Benefits Plan to its employees, whereby the City provided a designated monetary amount to employees each month for the employee to use to purchase and maintain medical, dental, and vision benefits. Employees were required to use a portion of the funds for dental and vision benefits, but could decline to use the remainder of the funds for medical insurance upon proof that the employee had alternate medical coverage (e.g. through a spouse). If an employee declined to use the funds to purchase medical benefits, the employee would receive the unused portion of the benefits allotment as a cash payment (of between $1,036 to $1,304 per month) added to his or her regular paycheck. For the four years relevant to the lawsuit, between 42%-46% of the City’s total plan contributions were paid to employees as cash for unused benefits. The City designated all of its plan payments as “benefits” that were excluded from its regular rate of pay calculations.

What Constitutes “Incentive Payments” Under the Final Overtime Regulations?

In order to qualify for one or more of the white collar exemptions to the overtime requirements under the Fair Labor Standards Act (FLSA), an employee must meet three tests: (1) the salary basis test (which asks how the employee is paid), (2) the salary level test (which establishes a minimum salary amount that employees must earn to be considered exempt), and (3) the primary duties test (which asks which kinds of job duties the employee performs). The new final regulations revising the minimum salary amount were published in the Federal Register on Monday, May 23, 2016. The new minimum salary level, which takes effect on December 1, 2016, is $913 a week or $47,476 annually. Under the regulations, an exempt executive, administrative, or professional employee must be paid at least the new minimum salary amount to meet the exemption test and the primary duties test.

Two Fluctuating-Workweek Variations

We have said for a while now that a "fluctuating workweek" pay plan might suit some employers' needs as to workers whom they will no longer treat as overtime-exempt in light of the U.S. Labor Department's coming federal Fair Labor Standards Act exemption changes.

New Salary Threshold May Be About $47,000

According to a report from Bloomberg BNA, unnamed DOL staffers have stated that the salary threshold in the hotly anticipated FLSA exemption rules will be about $47,000 per year, down slightly from the $50,440 level suggested by the proposed rules published last summer. This is not an official announcement, so while the statement may well be accurate, we suggest waiting until the rules are actually published before employers take any definite action based on the information.

A Salary "Credit" Is Already "Permitted"

The U.S. Labor Department's commentary regarding its proposed federal Fair Labor Standards Act Section 13(a)(1) exemption regulations said that it might "permit" employers to "count" or "credit" against the impending higher salary threshold unspecified "nondiscretionary bonuses and incentive payments" on some limited, to-be-identified basis. We summarized USDOL's statements in our prior post, including the agency's having said that it was disinclined to extend this "credit" to "commissions".

Minimum Salary Threshold for Overtime Exemption Likely to Be $50,544

In preparing for the soon-to-be published revisions to the federal overtime regulations under Part 541 of the Fair Labor Standards Act (FLSA), one of the significant challenges employers face is continuing uncertainty as to what the new minimum salary threshold will be for the executive, administrative, and professional exemptions. The most likely number is $972 per week, which annualizes to $50,544.

U.S. Department of Labor Poised to Issue Final Rule Expanding Overtime Eligibility

The U.S. Department of Labor’s Final Rule raising the salary threshold applicable to the so-called white collar exemptions under the Fair Labor Standards Act will likely take effect within the next few months. The Final Rule was submitted last week by the DOL to the White House Office of Management and Budget, a necessary first step before publication in the Federal Register. The new regulations are expected to expand by millions the number of employees eligible for overtime pay.

New Federal Overtime Regulations Expected to Be Published in Next Few Months

Last year, the Department of Labor (“DOL”) published proposed regulations overhauling the federal white collar overtime exemptions. In its proposed regulations, the DOL proposed increasing the minimum salary to qualify for exempt status (under the white collar exemptions for administrative, executive, and professional employees) from $23,660 per year to approximately $50,440 per year, and increasing the minimum salary to qualify for the highly compensated employee exemption from $100,000 per year to approximately $122,148 per year.

Bill Introduced To Stop FLSA Exemption Changes

Congressional Republicans have responded to the U.S. Labor Department's impending revisions of its much-discussed Fair Labor Standards Act Section 13(a)(1) exemption definitions by introducing legislation to nullify the proposals and/or any "Final Rule". As we have reported, USDOL's proposed changes were recently submitted to the federal Office of Information and Regulatory Affairs for a final, pre-release review.

DOL OT Exemption Rules DOA? Federal Wage Theft Legislation? Probably Not ...

In a move that should surprise precisely no onecapitol-hill-building who has been paying attention to current U.S. politics, GOP lawmakers in the U.S. House and Senate introduced legislation to block the U.S. DOL’s anticipated overtime exemption rules, just two days after the DOL sent the final rule to the Office of Management and Budget. OMB review is typically the final stage before publication of a new rule.

Legislation Introduced to Block Proposed Department of Labor Overtime Rule

The Protecting Workplace Advancement and Opportunity Act was introduced yesterday in the House and Senate. The legislation, sponsored by Senator Lamar Alexander and Representative John Kline, aims to restrict proposed rules defining and delimiting the Fair Labor Standards Act's (FLSA's) overtime exemptions for executive, administrative, professional, outside sales and computer employees, and calls for the Secretary of Labor to conduct a full and complete economic analysis with improved economic data on the ramifications of the overtime rule.

Republicans Introduce Bill to Nullify DOL Overtime Rule, While Democrats Introduce Legislation Addressing Wage Theft

Wage-related bills have been popular in Congress this week. While none of these measures are expected to be enacted during this election year, they provide clues to the battle that lies ahead for the Department of Labor's final overtime rule, and highlight the pay-related issues that might gain traction at the state and local levels.

Labor Secretary Testifies Before House Committee but Stays Silent on Overtime Proposal

In testimony before the House Education and Workforce Committee on Tuesday, March 16, 2016, U.S. Secretary of Labor Thomas E. Perez commented about several regulatory priorities and other U.S. Department of Labor (DOL) initiatives but did not provide any hint of what the proposed final Part 541 overtime regulations may contain. Despite comments about the impact of the DOL’s proposed significant salary increase and questions from several committee members, including Chairman John Kline (MN-2) and Congressman Tim Wahlberg (MI-7), who serves as Chair of the Workforce Protections Subcommittee, Secretary Perez noted that issuing a final rule is a top priority for the Department but that the ongoing rulemaking process prevented him from responding specifically. Submission by the DOL’s Wage and Hour Division of its proposed final revisions to the Fair Labor Standards Act’s (FLSA) Part 541 overtime regulations to the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget on Tuesday demonstrates just how high a priority the Department gives this initiative.

A 5-Point Action Plan for the New Overtime Rules From Someone Who Knows

The US Department of Labor’s new Fair Labor Standards Act regulations, which are expected to double the minimum salary for overtime-exempt employees, are coming out any day now and will probably take effect 60 days after their publication.

DOL Delivers Final Overtime Regulation Revisions to OIRA Ahead of Schedule

The U.S. Department of Labor’s (DOL) Wage and Hour Division just delivered its proposed final revisions to the Fair Labor Standards Act’s (FLSA) Part 541 overtime regulations to the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget. OIRA review of this proposed final rule is required under Executive Order 12866 since the Department’s proposal is “economically significant” in that its annual impact on the economy would be $100 million or more. OIRA review generally takes 30 days, but that time can be extended.

Final Exemption Regulations Sent To OIRA For Review

According to the federal Office of Information and Regulatory Affairs' website, the U.S. Labor Department has submitted for review the final revised regulatory definitions of the federal Fair Labor Standards Act's Section 13(a)(1) exemptions.

Possible Final New Overtime Rule Before July

Just a few weeks ago, we posted our latest update on the Department of Labor’s proposed new overtime rule, which calls for a more than doubling of the salary level threshold for white collar exempt positions. At that time, we reported on the House Education and Workforce Committee’s renewed inquiry into the DOL’s outreach efforts, which some saw as an attempt by Congress to somehow delay or affect the issuance and implementation of the final rule.

Reporting Indicates Accelerated Timetable for Proposed Overtime Rule

Multiple sources have reported that yesterday the USDOL sent the proposed final overtime rule to the Office of Management and Budget (OMB) for its mandatory review. If OMB’s review is completed on an expedited basis, DOL could disseminate the proposed final rule to the public by mid-April, with an effective date potentially as early as the beginning of June, subject to delay from that date based on Congressional review under the Congressional Review Act.

FLSA Overtime Regulations in the Home Stretch Now

The long-awaited Fair Labor Standards Act (FLSA) overtime regulations have cleared one more hurdle on their way to finally taking effect.

First Circuit Approves Use of FWW Method for Pay That Varies Due to Performance-Based Commissions

The First Circuit Court of Appeals recently affirmed a lower court’s decision that an employer may use the fluctuating workweek method to calculate overtime pay rates even when an employee’s weekly pay varies because of performance-based commissions. Lalli v. General Nutrition Centers, Inc., No. 15-1199 (February 12, 2016).

Union Agreement to Arbitrate "Sleep-In" Wage and Hour Claims Applies Even Though Agreement Was Signed After Lawsuit Began

Executive Summary: In Lai Chan et al. v. Chinese-American Planning Council Home Attendant Program, Inc., decided February 3, 2016, the Southern District of New York (covering New York, Bronx, Westchester, Rockland, Putnam, Orange, Dutchess, and Sullivan counties) deferred to arbitration the unpaid wage and overtime claims of sleep-in workers covered by a union agreement, even though the agreement to arbitrate was signed after the lawsuit alleging these claims against the home care agency was commenced. An earlier decision in this same case from the New York County Supreme Court had denied the agency's motion to dismiss the complaint, and volunteered that under New York Labor Law, sleep-in workers must receive wages for 24 hours of work. This question will now be decided in arbitration, not in a court action.

Employers Left Waiting For New OT Regs: Explaining The What, Why, And When

In July 2015, the U.S. Department of Labor (USDOL) published proposed regulations which would alter whether and how you classify your workers as exempt. Employers continue to sit on pins and needles awaiting finalization of these proposed new rules. Here is the what, why, and when of the anticipated regulations.

Preparing for the Upcoming Amendments to the FLSA Overtime Regulations: A Toolkit for Retail and Hospitality Employers

As we have previously reported, the U.S. Department of Labor’s (DOL) proposed amendments to the Fair Labor Standards Act (FLSA), specifically as to the criteria for the Part 541 “white collar” exemptions, are projected to have an enormous impact on retail and hospitality employers. If these amendments are made final without revision, they will result in: (1) a dramatic increase to the minimum salary required for most of the employees who qualify for white collar exemptions; (2) a substantial increase in the minimum compensation required for an employee to qualify for the Highly Compensated Employee exemption; and (3) annual adjustments to these minimums tied to changes in the Consumer Price Index.

Contract Attorney “Practiced Law,” Not Entitled To Overtime

In the latest chapter in the ongoing saga regarding contract attorneys claiming to be overtime eligible, Judge Ronnie Abrams of the Southern District of New York ruled that a contract attorney reviewing documents for litigation firm Quinn Emanuel was “practicing law” and thus exempt from overtime pursuant to 29 C.F.R. § 541.304(a)(1). Henig v. Quinn Emanuel Urquhart & Sullivan, LLP, S.D.N.Y., No. 1:13-cv-01432, 12/30/15.

When Will The DOL Issue Final Regulations Increasing The Salary Basis Threshold?

Since the United States Department of Labor announced its intention, in response to the President’s directive, to more than double the salary basis necessary to qualify for the “white collar” exemptions from overtime, the business community has swung into action. Employers and associations have both been lobbying for a more modest increase to the minimum required salary and simultaneously preparing to comply with the new rule should it take effect in its current proposed form. One key element of that compliance is of course budgeting for exactly when the new rule will be promulgated in final form and then effective.

Pushback Against USDOL's Exemption Proposals

The period for public comment on the U.S. Labor Department's proposed revisions in the regulations defining the federal Fair Labor Standards Act's Section 13(a)(1) exemptions ended on September 4. Nevertheless, efforts are being made to forestall the release of the proposed changes, or at least to influence the final form of the revised regulations.

Final Rules on Overtime, Crystalline Silica, and Persuader Agreements are Expected in the First Half of 2016

On Friday, federal agencies released their Fall 2015 Regulatory Plans and Unified Agendas. These semiannual reports detail all agency rulemaking efforts at their various stages of development and implementation. The regulatory plan, published along with the fall edition of the agenda, identifies agency priorities and provides information about the significant rulemaking actions the agencies expect to take in the year ahead.

New Exemption Rules May Be Delayed To Late 2016

Waiting is the hardest part. Ever since the Department of Labor issued its proposal to substantially increase the minimum salary level needed to classify an employee as an exempt executive, administrative or professional employee, employers have been asking when the new rules will take effect.

Winter Is Coming – But What About Those FLSA Exemption Changes?

You may be thinking we're the lawyers who cried wolf since we warned you not once, not twice, but three times that there were imminent changes coming to the requirements meet certain exemptions from minimum wage and overtime under the Fair Labor Standards Act ("FLSA"). We're not – those changes are still coming. But, now that the period during which the public could comment on the proposed rule has closed and the Department of Labor ("DOL") is faced with 270,000 comments, it now looks like the revisions won't go into effect until late 2016 (or possibly even 2017), and we're still uncertain about what those changes will actually look like.

UPDATE: When Will The Exemption Changes Occur?

Since our recent post on this topic, U.S. Solicitor of Labor M. Patricia Smith has appeared at the annual conference of the American Bar Association's Labor & Employment Law Section. Some of her remarks indicate that the U.S. Labor Department's final, revised regulations defining the Fair Labor Standards Act's Section 13(a)(1) exemptions might be forthcoming much later than many had thought.

DOH Reverses Position on Overtime Pay Under The Wage Parity Act

Executive Summary: On November 2, 2015, the NYS Department of Health ("DOH") issued important notices affecting the wage and overtime obligations of New York City and Nassau, Suffolk, and Westchester County home care agencies. In addition to setting Total Compensation under the Wage Parity Act for March 1, 2016 – February 28, 2017, the DOH reversed its existing position that overtime pay does not reduce the additional and supplemental wage package due on each episode of care hour worked under the Wage Parity Act. This reversal of position has major ramifications for the home care industry in downstate New York.

Per Diems and the Regular Rate of Pay: What to Know for Your Overtime Calculation

The United States District Court for the Northern District of Oklahoma in Sharp v. CGG Land (U.S.) Inc., No. 14-cv-0614 (October 19, 2015), recently ruled in favor of an employer that had excluded per diem payments from a regular rate calculation under the Fair Labor Standards Act (FLSA). The plaintiffs filed suit alleging that per diem payments for meal expenses provided to the plaintiff class were not properly included in their regular rate of pay.

Oklahoma Federal Court Finds Expense Reimbursement Need Not Be “Rolled In” To Overtime Calculation

Fixed payments made on other than an hourly basis to non-exempt (i.e., overtime eligible) workers often must be included in the regular rate of pay for purposes of calculating overtime. One type of payment that may be excluded from the regular rate calculation is payment for “reasonable payments for travel expenses, or other expenses, incurred by an employee in the furtherance of his employer’s interests and properly reimbursable by the employer,” a provision interpreted by Judge Claire V. Eagen of the Northern District of Oklahoma in a new decision. Sharp v. CGG Land (U.S.) Inc., 2015 U.S. Dist. LEXIS 141658 (N.D. Okla. Oct. 19, 2015).

When Transferring Employees to the U.S., Foreign Employers Should Consider Impact if Proposed Changes to Overtime Exemption Are Approved

On July 6, 2015, the Department of Labor (“DOL”) proposed a revision to the “white collar” overtime exemption rule. As explained by Littler when it testified before the House Subcommittee, “the proposed white collar exemptions are unprecedented in the [Federal Labor Standards Act’s] 77-year history.” Even after this week's hearing, it is unclear whether the rule will be implemented in its current version or whether additional changes will be made. The proposed rule has been published for more than 60 days and therefore DOL has authority to move forward to implement the rule. If implemented in 2016, the minimum salary for overtime exemption would jump from $23,660 a year to $50,440.

House Subcommittee Holds Hearing on Proposed Amendments to Overtime Rule

The Department of Labor's controversial proposed changes to the "white collar" overtime exemption regulations came under fire during a House Subcommittee on Investigations, Oversight and Regulations hearing on October 8, 2015. Among other changes, the proposal released on July 6 of this year sets the minimum salary required for overtime exemption at the 40th percentile of weekly earnings for full-time salaried workers, which by the year 2016 is predicted to be $50,440. The proposal also provides for automatic increases to the minimum salary level. While the proposal did not explicitly include amendments to the duties test, the DOL requested input on whether and to what extent changes are warranted.

FLSA Misclassifications Cost Halliburton $18 Million in Overtime

The services and construction company Halliburton has agreed to pay $18 million in overtime wages to about 1,000 employees after it misclassified them as exempt from the Fair Labor Standards Act (FLSA).

Overtime Warning: Don’t Forget About State-Specific Requirements

Most HR professionals know that federal law requires employers to pay nonexempt employees one and a half times their regular rate of pay for each hour over 40 in a workweek. But it’s all too easy to forget that many states have their own overtime laws, some of which go above and beyond the standard 40-hour threshold.

Comment Period Will Not Be Extended

There will be no extension of the original 60-day period for commenting on the U.S. Labor Department's proposals and requests relating to the federal Fair Labor Standards Act's Section 13(a)(1) exemptions. U.S. Wage and Hour Administrator David Weil has so notified members of the House of Representatives and the Senate (see below for a link to a copy of Dr. Weil's letter to the House Committee on Education and the Workforce).

DOL: Comment Period Closed For Proposed Final Rule

n a letter to Congress, Wage-and-Hour Administrator David Weil yesterday stated that the Department would not extend the 60-day comment period for providing feedback regarding the Department’s proposed rule, indicating that “a comment period of this length . . . will meet the goal . . . of ensuring Department has level of insight from the public needed.”

Large Employers Like MLB Can Claim Overtime Exemption at Distinct 'Establishments,' 2nd Cir. Rules

Employees of seasonal and recreational establishments that operate no more than seven months per year or take in most of their revenue during only half of the year - such as certain ski resorts, summer camps, swimming pools and amusement parks - are exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).

Should Employers Be Allowed to Count Nondiscretionary Bonuses Toward the FLSA’s Minimum Salary Threshold? The DOL Wants Your Comments

As we reported last week in “A Call to Action: The Comment Period on the new Proposed Overtime Regulations Begins,” employers have a limited window of opportunity to submit comments in response to the proposed revisions to the white collar overtime regulations that the U.S. Department of Labor (DOL) released on June 30 and that were published in the Federal Register on July 6. One of the topics on which the DOL is expressly seeking comments is whether employers should be allowed to use nondiscretionary bonuses to satisfy some portion of the minimum salary requirements for the executive, administrative, and professional (EAP) exemptions to the overtime requirements contained in the federal Fair Labor Standards Act (FLSA). This topic is of particular importance to the retail and restaurant industries.

Determining When a Commission is "Earned" When Calculating the Regular Rate

In our last post, we discussed the calculation of the “regular rate” and some of the complexities of determining what constitutes “remuneration” under the Fair Labor Standards Act (FLSA). Commission is one of the additional forms of compensation that you must include in a non-exempt employee’s regular rate. Such a calculation is relatively straightforward if all remuneration is paid in the same week as it was earned. What can make this calculation difficult, though, is when the employee earns cash or non-cash remuneration after the workweek ends. Often, employers do not pay commissions or bonuses in the same week as hours worked, but instead at some later date—at the end of a month, a quarter, or a year. Determining the impact of these later earnings on the regular rate may require a look-back calculation to apportion these earnings to their proper, earlier weeks. We’ve discussed how to do this calculation for bonuses before, but let’s take a look at commissions, which can and often do require a slightly different calculation, or at least some additional planning.

Even for Hourly Workers, Calculating the "Regular Rate" Can Be Complex

No matter if you are new to the wage and hour world and this blog, you still probably know that employers need to pay their non-exempt employees an overtime premium for all hours worked in a workweek beyond 40, pursuant to the Fair Labor Standards Act (FLSA) and applicable state law. Whatever overtime rate you implement—whether time-and-a-half or a half-time premium—the overtime rate is always based on the employee’s “regular rate.” In past posts, we have looked at special problems that calculating the regular rate raises for employers who pay non-exempt workers a salary, particularly if the employees also earn commissions or bonuses. Even if compensation paid does not fall into one of these “special” problem buckets, the regular rate calculations for non-exempt employees can prove tricky at times.

Some Additional Thoughts on "Half-Time" Overtime: The Fluctuating Workweek Method

Last week, we discussed the fluctuating workweek method and its possible benefits. Remember that the fluctuating workweek method is not a "save lots of overtime expenses method." Employers who use the fluctuating workweek to clamp down on overtime expenses often end up shifting those expenses from the payroll budget to the litigation budget.

"Half-Time" Overtime: The Fair Labor Standards Act's Fluctuating Workweek Method [Wage & Hour FAQs]

In the past, we have discussed how to calculate paying overtime to salaried, non-exempt employees, including those employees who also receive commissions. One area that we have not touched on is a potentially employer and employee friendly method of calculating overtime that is nonetheless fraught with some risk: the fluctuating workweek. As you know if you read us regularly, simply paying an employee a salary does not mean that the employee is automatically “exempt” from the Fair Labor Standards Act (FLSA) overtime requirements, or parallel requirements in state and (increasingly) local law. Paying an employee on a salary basis is just one part of the test for exemptions, as we have explained in our recurring Wage and Hour Basics series.

Decision Limits Defenses to FLSA Overtime Claims

You’ve heard it before, here and likely elsewhere, of the risks of FLSA overtime lawsuits. Yet, these suits continue to make headlines. Simply put, qualified employers must pay employees at least 1.5 times their regular wage for every hour worked in excess of 40 hours per week.

Wage and Hour Basics Series: The FLSA Overtime Exemptions

Last month, we debuted our series on wage and hour basics with a review of the white collar exemptions. As the Department of Labor gets ready to issue revised FLSA regulations, we will continue take a look at some of the more fundamental concepts of the FLSA. As always, remember that these are just the basics: the application of these rules to specific facts is where the rubber really meets the road for employers.

Supervisor’s knowledge of unreported overtime may lead to liability under the FLSA.

The Fair Labor Standards Act (FLSA) requires employers to pay to non-exempt employees at least one and one-half times the employees’ regular hourly wage for every hour worked in excess of 40 in a week. Courts regularly have held that the goal of the FLSA is to counteract the inequality of bargaining power between employees and employers.

Wage and Hour Basics Series: The FLSA Overtime Exemptions

While we regularly discuss many of the nuances of wage and hour law generally and the Fair Labor Standards Act in particular here on the blog— it is also important to focus on the basics. Periodically over the next several months, as the Department of Labor gets ready to issue revised FLSA regulations, we will take a look at some of the more fundamental concepts of the FLSA. Since we just covered the basics of when the FLSA and related state laws apply to employers, we will start our review with the white collar exemptions. Remember that these are just the basics: the application of these rules is where the rubber really meets the road for employers.

Court Vacates Imminent Bar To Third-Party Employer's Claiming Companionship/Live-In Domestic Exemptions

We have reported that the U.S. Labor Department's changes in its regulatory provisions affecting the federal Fair Labor Standard Act's Section 13(a)(15) "companionship" exemption and the FLSA's Section 13(b)(21) overtime exemption for "live-in domestics" are set to become effective on January 1, 2015. Perhaps the single most-significant aspect of the revisions set forth in the USDOL's "Final Rule" is the elimination of the exemptions as they relate to third-party employers, such as home-care agencies.

FLSA Insurance-Adjuster Overtime Exception Buried In Appropriations Bill

Section 111 of the recently-enacted "Department of Labor Appropriations Act, 2015" directs that the federal Fair Labor Standards Act "shall be applied as if" there is an overtime exclusion (link to reproduction below) for certain workers who are employed to adjust or evaluate claims resulting from or relating to a major disaster. A major disaster is defined as being "any disaster or catastrophe declared or designated by any State or Federal agency or department."

A Wolf in Sheep's Clothing is Still a Wolf: The FLSA Regular Rate and Breach of Contract

Recently, I read about a construction contractor in Los Angeles caught in the middle of litigation between its subcontractors and the city, on behalf of the subcontractor’s former employees. According to the employees, the subcontractors had allegedly promised to pay them the prevailing wage for that area of $49.00 per hour, but had only paid them $5.00 to $8.00 instead. Ultimately, the complaint focused on the subcontractors’ falsification of records and misclassification of employees, and related city and state law violations, rather than which rate was the real “regular rate” for FLSA purposes: the proper $49.00 per hour prevailing wage rate the subcontractors had promised, or the actual $5.00 to $8.00 rate they paid. But what if the employees had sought overtime based on the higher rate? Would dressing up a breach of contract claim as one for overtime under the FLSA have worked?

No FLSA Overtime Recovery For What Employer "Should Have" Paid

Overtime compensation under the federal Fair Labor Standards Act must be based upon an employee's "regular rate" of pay. More and more frequently nowadays, claimants allege that their FLSA overtime compensation should have been (or should be) based upon some rate that would generate more compensation than they really received.

Supposed Fluctuating-Workweek "Legal Prerequisites" Come From Where, Exactly?

"Fluctuating workweek" pay plans are provoking much litigation under the federal Fair Labor Standards Act. These arrangements call for a non-exempt employee to be paid a salary as straight-time compensation for all hours worked in a workweek, including those over 40. The salary represents the "one" of "one and one-half, so for overtime hours the employee is due an additional one-half of the hourly rate figured by dividing all of the workweek's worktime into the salary (that rate can never be less than the minimum wage, of course).

Working Two Jobs to Make Ends Meet: Paying Employees Working Exempt and Non-Exempt Jobs

Back in 2012, my colleague Bill Pokorny discussed how to properly pay a non-exempt employee who worked two jobs for an employer. This past week, one of my other colleagues and I were discussing a twist on this situation: what if an exempt employee works in a non-exempt job, or vice versa? As Bill and Ed Druck discussed during our recent higher education wage and hour webinar, this situation is not that uncommon. A non-exempt school district employee might perform exempt duties as a coach, or perhaps an exempt administrator might drive a bus. At one of my former employers, our receptionist doubled as our graphic designer for a couple of years. How should you pay employees who perform both exempt and non-exempt duties? Are “mixed duty” employees ever entitled to overtime?

DOL's Expansion of Overtime Pay – Update

In March, we reported that President Obama was expected to order the U.S. Department of Labor ("DOL") to revise major exemptions from overtime under the Fair Labor Standards Act ("FLSA") with the goal of increasing the number of employees eligible for overtime—and thereby increasing the regulatory burdens on and costs to American businesses.

Overtime Calculation for Employees Working at Multiple Rates

Do you really know how to calculate overtime pay? For most employers, the overtime calculation is very straightforward – employees receive one-and-a-half times their regular rate of pay for all hours worked over 40. But what if your employees work various jobs at different rates? For example, you own a hair salon and your employees perform a variety of duties at the following rates: cut/style hair at $20 per hour, wash hair at $15 per hour, and schedule appointments at $10 per hour. When your employees work over 40 hours in a week, how do you calculate their overtime rate?

Can We Define "Full Time" to Mean Something Less Than 40 Hours Per Week?

Q. Under the Fair Labor Standards Act (FLSA), do we have to define “full time” to mean 40 hours per week, or is that left to employers’ discretion? Can we maintain a 40-hour standard for wage and hour purposes, but have a lower threshold for certain benefits, like paid time off accrual or supplementary health care coverage?

Secretary of Labor has been directed to update overtime regulations.

On March 13, 2014, President Obama signed a presidential memorandum which instructs the Secretary of Labor to update regulations regarding overtime protections. According to White House officials, and supported by a fact sheet issued on that same date, the President’s memorandum will change the overtime laws so that a number of new workers would be entitled to overtime compensation.

Obama Administration Orders Department of Labor to Revise “White-Collar” FLSA Overtime Exemptions

In an unexpected move, the Obama administration officially announced today that it will issue a Presidential Memorandum to the U.S. Department of Labor (DOL) instructing its Secretary to update regulations regarding overtime protection for workers under the Fair Labor Standards Act (FLSA), the federal law that establishes minimum wage and overtime pay requirements. Any changes to the regulation would be the first since 2004, when the Bush administration increased the minimum weekly salary for overtime-exempt workers to $455 per week.

Who Will Be Entitled to Overtime Under Obama’s Expected Rule Change?

Today, President Obama signed a presidential memorandum instructing the Secretary of Labor to update regulations regarding overtime protections. According to White House officials, and a fact sheet that the White House released this morning, the president’s memorandum will change the overtime laws so that a number of new workers would be entitled to overtime compensation.

Overtime Expansion Coming?

In what could be BIG news for employers, President Obama is directing the Department of Labor to issue proposed regulations that would expand the number of employees who are eligible for overtime.

Obama Will Move to Expand Overtime Pay, Narrow FLSA Exemptions

This week, President Obama is expected to order the U.S. Department of Labor ("DOL") to revise major exemptions from overtime under the Fair Labor Standards Act ("FLSA"). These changes would make certain white collar exemptions more narrow, thereby increasing the number of employees eligible for overtime. President Obama's upcoming directive is expected to include at least two major revisions to the DOL's regulations, which could significantly increase regulatory burdens on and costs to American businesses.

The Fifth Circuit Giveth and Then Taketh Away: Another Perspective on Fluctuating Workweeks in Overtime Cases

In the course of two months, two separate Fifth Circuit panels have issued decisions that call into question the application of the fluctuating workweek (FWW) method in suits for unpaid overtime based on misclassification.

Lady Gaga Settles Personal Assistant’s FLSA Overtime Lawsuit

Lady Gaga is back in the news, but this time it has nothing to do with her music; just days before trial, the singer — real name Stefani Germanotta — settled a 2011 lawsuit filed by a former personal assistant. It is a case that reminds employers of all sizes that unless their administrative assistants meet all of the requirements of the administrative exemption test, they must be paid overtime under the Fair Labor Standards Act.

How To Calculate Unpaid Overtime: Fifth Circuit Rules In Favor of FWW

In an appeal concerning the correct calculation of overtime damages due to employees misclassified as exempt, the Fifth Circuit Court of Appeals emphatically slammed the door on a trial court’s attempt to require an employer to pay time-and-one-half for all overtime hours worked. Instead, the Fifth Circuit held that the correct measure of damages is based on the same calculation used for a fluctuating work week.

Fluctuating-Workweek Ruling Might Be Reviewed

Last month's "Fuzzy Thinking" post mentioned Sisson v. RadioShack Corp., in which a lower federal court in Ohio deferred to the U.S. Labor Department's 2011 allegation that paying performance bonuses is purportedly "incompatible" with a fluctuating-workweek compensation plan under the federal Fair Labor Standards Act. Finding that the issue is a novel one, the court has now granted RadioShack's request to put the case on hold and to allow an immediate review by the Sixth Circuit U.S. Court of Appeals (copy of ruling linked below).

Fuzzy Thinking About Fluctuating-Workweek

In 2011, the U.S. Labor Department did its best to discourage the use of fluctuating-workweek pay plans under the federal Fair Labor Standards Act. It undertook this in a grab-bag release collectively titled "Final Rule", which also dealt with numerous FLSA matters unrelated to fluctuating-workweek plans. In accompanying remarks in the preamble to this document, USDOL said that these plans are supposedly "incompatible" with the payment of bonuses or comparable sums.

Can A Fixed Sum EVER "Include" Overtime Pay?

Our Quick Quiz Answer discussing day-rate plans led one reader to observe that the federal Fair Labor Standards Act does not always bar employers from paying non-exempt employees a fixed sum that "builds in" some FLSA overtime compensation. While this is true, the permitted arrangement is strictly limited, and it does not allow a day-rate approach.

Supreme Court Rules Dismissal Of FLSA Collective Actions Are Appropriate When Individual Claim Is Rendered Moot

On April 16, 2013 the U.S. Supreme Court upheld the concept that a wage and hour collective action brought pursuant to the Fair Labor Standards Act (FLSA), can be dismissed for lack of subject matter jurisdiction when the named plaintiff’s claim is rendered moot – in this case by virtue of the plaintiff being offered complete relief through an offer of judgment made pursuant to Rule 68 of the Federal Rules of Civil Procedure. Genesis HealthCare Corp. v. Symczyk.

Court Approves Gerrymandering Workweeks to Avoid Overtime Pay

Overtime can be expensive, but the Court of Appeals for the Eighth Circuit has approved one method of reducing costs.

Overtime Work Is Not A By-The-Job Matter

Recent reports have described more than one scenario in which an employer violated the federal Fair Labor Standards Act because the employer failed to recognize that non-exempt employees' hours worked over 40 were overtime ones. The employees had performed their work in more than one position during the week, such that their time spent in any particular job did not exceed 40 hours. However, an employee's hours worked in all of the positions in which he or she was engaged for the employer in the week totaled more than 40.

A Recent Off-The-Clock Case Should Not Breed Complacency

It might sometimes seem from the parade of headline-grabbing, employee-favoring court decisions that employers are destined to lose in so-called "off-the-clock" cases under the federal Fair Labor Standards Act. These lawsuits involve claims by non-exempt employees that the employer has failed to pay the FLSA-required wages for work that went unrecorded. But a ruling by the Tenth Circuit U.S. Court of Appeals (with jurisdiction over Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming) in Brown v. ScriptPro shows that, with the right policies, systems, and practices in place, it is possible for an employer to prevail.

Court Upholds Employer's Overtime-Reducing Workweek Change

The U.S. Court of Appeals for the Eighth Circuit (with jurisdiction over Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota) has re-affirmed that the federal Fair Labor Standards Act permits an employer to change its employees' seven-day workweek, even when one of the stated reasons for the change is to reduce FLSA overtime costs.

Employer's permanent modification of payroll workweek in order to eliminate OT is OK under the FLSA.

The 8th U.S. Circuit Court of Appeal has determined that an employer’s permanent modification of employees’ “workweeks” in a way that reduced the number of overtime hours did not violate the Fair Labor Standards Act (FLSA). Abshire v. Redland Energy Services, IIC, 8th Cir., No. 11-3380, October 10, 2012.

Quick Quiz Answer: Overtime For Multi-Rate Employees

The best answer to our October 8 Quick Quiz is, "Either Of The Above". There are two permissible ways to approach Sarah's overtime compensation under the federal Fair Labor Standards Act. In declining percentage order, the responses were:

Quick Quiz: Overtime For Multi-Rate Employees

Sarah is paid $15 an hour for work as a delivery driver, and $12 an hour for inventory-checking work in the warehouse. In a particular workweek, she works her first 40 hours as a driver, performs five more hours of driver work, and does five additional hours of inventory work, for a total of 50 hours.

Do Hours Worked On A Second Job Count Toward Overtime? [Wage & Hour FAQ]

Q. An employee works for the company full-time, 7.5 hours per day, 5 days per week, at $20 per hour. To make ends meet, the employee also voluntarily works a different part-time job for the company on Saturdays, usually working an additional 7.5 hours at $15 per hour. The two jobs are completely separate and could just as easily be done by different people. Do we have to pay overtime for the additional hours, and if so how do we calculate the amount due?

Calculating Overtime for Salaried Employees [Wage & Hour FAQ]

Q. We have a number of non-exempt employees who are nevertheless paid a salary. How do we calculate overtime for these employees?

Fluctuating-Workweek Follies: First Principles Are Unchanged

The U.S. Labor Department's unfounded April fluctuating-workweek commentary (earlier post here) continues to complicate many pre-existing pay plans and to cause employers to narrow their views of the available compensation alternatives. This is the foreseeable (and apparently intended) result of what DOL said. Unfortunately, some observers are compounding the impact of DOL's commentary by suggesting that its ramifications are more dire than ought to be the case.

The Myth of "Unauthorized" Overtime

Has something like this ever happened in your organization? You have a solid non-exempt employee working hard on a project. His supervisor is out of town and unreachable. In the supervisor's absence, to get the job done, he works a few hours of overtime. When the supervisor gets back, he asks if she will approve the extra time he has already worked. The supervisor says yes, but adds that if the employee had asked ahead of time she probably would have told him not to work overtime on this particular project. The employee responds apologetically and says that he won't put in for the overtime pay.

Overtime Blues

Your handbook says, "No unauthorized overtime permitted." Your managers tell employees that they must get their job duties completed during regular work hours because there is a company-wide prohibition against working overtime. Your managers also tell employees to accurately record their hours worked. All good stuff, right? Could be.

What Is A "Workweek", And Why Should You Care?

Many compensation policies and similar documents refer to wages for non-exempt employees in the context of a "week", a "pay week", a "pay period", "the schedule", an "overtime week", or some other ambiguous word or phrase. But the timeframe that matters under the federal Fair Labor Standards Act is a term-of-art: A "workweek". For instance, with few exceptions, FLSA overtime pay is due for a non-exempt employee's hours worked over 40 in a single workweek, which is not necessarily the same thing as the calendar week or an employee's scheduled week or pay period.

DOL Seeks To Undermine Fluctuating-Workweek Plans

The U.S. Labor Department's April 5 Final Rule attempts to transform the principles of fluctuating-workweek pay plans in two ways. Remarkably, DOL apparently plans to do so, not by facing up to these matters by actually proposing a straightforward revision of the relevant interpretative provision at 29 C.F.R. § 778.114, but instead via remarks in the preamble accompanying the Final Rule.

Wage and Hour Developments Continue: Split on Hybrid Overtime Actions Deepens and Supreme Court Leaves Half-Time Overtime Compensation Untouched

As reported here, the Seventh Circuit Court of Appeals recently held that plaintiffs could simultaneously proceed with state law wage claims brought as an opt-out class action under Federal Rule of Civil Procedure 23 in the same case with an opt-in collective action filed under the Fair Labor Standards Act (FLSA).

Quick Quiz: FLSA Overtime On Commissions.

The blogosphere is providing mixed signals about how to figure commission overtime under the federal Fair Labor Standards Act. There is particular discussion on this point where Mortgage Loan Officers are concerned, now that the U.S. Labor Department opined in March that the "typical" one is non-exempt. However, the FLSA overtime principles are the same for any commissioned employee who is subject to that law's overtime requirements.