Update on Overtime Rules - December 14, 2016

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Update on Employee Overtime Rules

December 14, 2016

KPA: Environmental Health & Safety | HR Management |Sales & Finance Compliance

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Questions

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• Questions will be answered at the end of the webinar

•If your question does not get answered, we will reach out to you individually

What happened?

• An injunction was issued that delay the implementation date,

which was to be December 1st

• The DOL filed an expedited motion of appeal on December

1st

• The rule might still be enforced and retroactively to

December 1st

What do we do?

• Employers don’t have to revert back to old

rule

• But if they do state notice requirements will

apply

• Inconsistent pay adjustments will cause

issues

What was that rule again?

• Exemption from Overtime = $47,476 ($913 per week)

More than $455 but less than $913 will need to be reclassified

• No changes to duties test

• 3 year increases

• Ability to count bonuses, commissions and incentive

payments

Federal Exemptions

MINIMUM WAGE/ OVERTIME/ RECORDS

• Executive

• Administrative

• Professional

• Highly Compensated

OVERTIME ONLY

• Salesman

• Partsman

• Mechanic

• Commission-paid

• Motor Carrier

The FLSA also has an exemption from the overtime pay requirements for certain

commission employees of a retail or service establishment. For this exemption to

apply, three requirements must be met: (1) The employee must be employed by a

retail or service establishment; (2) The employee’s regular rate of pay must exceed

one and one half times the applicable minimum wage; and (3) more than half of the

employee’s total earnings in a representative period must consist of commissions on

goods and services.

Three Factors

• How is the employee paid?

• How much is the employee paid?

• What does the employee do?

The employee must be paid a salary, must make a minimum of

$913 per week/ and must meet all of the qualification of one of

the duties test to be classified as exempt.

The Duties Test

1. Executive

2. Administrative

3. Professional

4. Computer (rarely used in dealerships)

5. Highly Compensated Employees“highly compensated employee” exemption under 29 U.S.C. §

541.601. The relevant section of the regulation reads: “An employee with total annual compensation of at least $100,000 is deemed exempt . . . if the employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative, or professional

employee.”

Federal versus State Law

• Federal law does not preempt state

employment laws

• Employees are entitled to the provision

most favorable to them

Payroll Practices: Red Flags

Watch out for “red flags” regarding payroll practices:

– Improper deductions from salaried employees

– Improper calculation of “regular rate”

– Job descriptions for exempt employees that do not reflect exempt duties

– Nonexempt employees working through meal breaks

– Nonexempt employees performing work before or after they punch or log in/out

– Employees who routinely stay late but have no overtime

– Not complying with employer’s own written policies

“Are they exempt from overtime?”

• What does the employee spend the

majority of his time doing?

• How is employee’s pay plan structured?

• Does employee fit exactly into one of

the nine exemptions?

Common Classification Mistakes

• Not considering differences in state and federal salary and duties tests

• Treating trainees as exempt before they fully qualify as exempt

• Failing to guarantee the proper minimum salary

• Prorating the salary of a part-time exempt employee to less than $913/week

• Making improper deductions from salaries of exempt employees

Questions and Answers

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QUESTIONS?

Contact Information

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