COLORADO DEPARTMENT OF LABOR AND EMPLOYMENT1515 Arapahoe Street

Denver, Colorado 80202-2117

MEMORANDUMEffective Date: 01/02/96

Supersedes: Revision Date:

Director's Approval (Date): Under Revision: No

Document Title: FLSA HandbookDocument Category: Labor LawsSubject Matter: Fair Labor Standards ActNumber: MEMO - FLSA HandbookOriginator: HR ServicesNumber of Pages: 24Contact: GSS/DOP, Sue HuangContact Phone: (303) 866-4219

Body:

TABLE OF CONTENTS

I. Introduction 1

II. Fair Labor Standards Act Job Categories 2

A) Exempt Employees 2

- Threshold Salary Requirement 2 - Executive Exemption 3 - Administrative Exemption 4 - Professional Exemption 6 - FLSA Computer Occupations Exemption 7

B) Non-Exempt Employees 8

- Definition of "Workweek" 8 - Overtime Hour Calculation 8 - Overtime Calculation for Essential Employees 9 - Overtime Compensation 9 - Compensatory Time 9 - Hours Worked and Compensation 10 - Dual Employment 13

C) Special Category Employees 13

- Law Enforcement Employees 13 - Hospitals and Nursing Home Employees 14

D) Non-Covered Employees 15

III. Recordkeeping Requirements 16

A) Non-Exempt Employees 16B) Exempt Employees 16

IV. Employees' Appeal Right 17

V. Enforcement of the Fair Labor Standards Act 17

VI. Commonly Asked Questions 18

APPENDIXA. Exemption QuestionnaireB-1. Executive Exemption ChecklistB-2. Administrative Exemption ChecklistB-3. Professional Exemption ChecklistC. Examples of Compensatory Time AgreementD. 7(k) Work Periods and Work HoursE. Posting of Federal Minimum Wage

I. INTRODUCTION

The Fair Labor Standards Act (FLSA) was passed by Congress in 1938 to establish minimum wage, overtime, recordkeeping, and other regulations that affect employers and labor. In 1966 and 1974, the FLSA was amended to include both state and local governments and in February 1985 the U.S. Supreme Court mandated the application of the FLSA to all state and local government employees. In the Fair Labor Standards Amendments of 1985, Congress delayed the effective date of the Act as it applies to State government to April 15, 1986.

The FLSA is enforced by the U.S. Department of Labor (DOL), which is authorized to investigate any alleged violations. DOL has the power to initiate court action against violators and penalties which can include fines and/or jail terms, payment of double back pay, and payment of the employee's (or employees') attorney fees.

To assist state agencies with the implementation of the FLSA, the Colorado Department of Personnel is providing this handbook as a reference. Please be aware that the Department of Personnel will not monitor individual agencies. It has been each agency's responsibility to be in total compliance with FLSA regulations since April 15, 1986. Any liability for failure to comply rests with each individual agency. The Colorado Department of Personnel will serve as a resource for technical assistance to answer any questions pertaining to the FLSA and compliance requirements. Staff may be reached by calling (303) 866-2457.

This handbook is intended to provide general FLSA guidelines only. The U.S. Department of Labor and/or the courts are the final authorities on matters relating to the FLSA.

The FLSA recognizes four broad categories of employees: Exempt, Non-Exempt, Non-Covered, and Special categories. Every category is discussed in the following pages. Examples within each category are given below.

Exempt Non-Exempt Non-Covered Special Employee Employee Employee Category

- Executive - Not Salaried - Political - Fire Protection- Administrative - Not Executive Appointees - Law Enforcement- Professional - Not Professional - Elected Officials - Hospital and - Computer - Not Administrative - Elected Officials' Nursing Care Professional Staff - Volunteers - Legislative employees (except library

employees)

- Prisoners

FLSA Handbook

II. FAIR LABOR STANDARDS ACT JOB CATEGORIES

FLSA requirements apply to positions and employees, not to classes. With very few exceptions (see below), each individual position within a class must be evaluated to determine whether or not the position is exempt. Each agency has full responsibility for determining the FLSA exemption status for each position. (Appendix A provides a questionnaire for evaluating the exemption status of an individual position.) Additionally, the Department of Personnel may designate specific classes, e.g., some health care services classes, as eligible for overtime compensation based on prevailing compensation practices in our labor market. State agencies are not allowed to change these specific classes to overtime ineligible.

A. EXEMPT EMPLOYEES

Certain employees are referred to as "exempt employees" meaning that they are exempt from the minimum wage and overtime provisions of the FLSA. This exemption applies to executive, administrative, professional, computer professional, and outside sales employees. Exempt employees do not have to be paid overtime if they work more than 40 hours per week. That is, exempt employees are not eligible for overtime compensation.

Threshold Salary Requirement for Exempt Status

The requirement that an exempt employee be paid on a salary basis must be met in order to satisfy requirements under the executive, administrative, or professional exemptions. If the salary basis requirement is not satisfied, an employee will not meet the requirement for these exemptions. There are exceptions to this salary basis requirement. The exception applies to physicians, lawyers, teachers, and computer professional employees who receive an hourly rate exceeding 6 1/2 times the minimum wage established by FLSA.

To be paid on a salary basis, an employee must be paid a predetermined amount on a weekly or less frequent but regular basis. The predetermined amount of compensation is not subject to reduction because of variations in the quality or quantity of the work performed. There is a general rule that exempt employees need not be paid for any workweek in which no work is performed.

Deductions from an exempt employee's salary in increments of one-quarter hour or more will not destroy the exemption status when an employee is absent from work for a day or more for personal reasons, or sickness or disability, and the deduction is made

in accordance with a bona fide sick leave plan.

An exempt employee shall not lose the exemption status when (1) the employee's pay is reduced or when the employee is on leave without pay for absences due to personal reasons, illness or injury of less than one work-day, and (2) when the employee does not use accrued leave because (a) the employee does not seek for permission for use of accrued leave or has sought and been denied; (b) the employee has exhausted accrued leave; or (c) the exempt employee chooses to use leave without pay.

In addition, deductions from the pay of an exempt employee for absences due to a budget-required furlough shall not disqualify the employee from being paid "on a salary basis" except in the workweek in which the furlough occurs and for which the employee's pay is accordingly reduced.

However, deductions made from an employee's salary will destroy an exemption status obligating the agency to pay overtime for hours worked over 40 in the workweek if deduction is made for absences caused by jury duty, attendance as a witness, or temporary military leave. Finally, penalties imposed (i.e., pay reduction to exempt employees) in good faith for infractions of safety rules of major significance will not affect the exempt employee's salaried status. Otherwise, an exempt employee may lose the exemption status if fined or suspended from work and from pay due to other disciplinary seasons. Personnel Board Rule R8-3-3(A) permits suspensions only for non-exempt employees.

EXECUTIVE EXEMPTION

An employee who meets either the long or short test of Executive Exemption is considered exempt from the FLSA minimum wage and overtime provisions:

Long Test: An executive employee must meet all of the following:

1) Primary duty is managing an agency, department, or a division.2) Supervises at least two full-time employees or the equivalent.3) Has power to fire/hire or promote employees or effectively recommend such

action.4) Regularly exercises discretionary power.5) Does not devote more than 20% of weekly work to non-managerial duties.6) Is paid on a salary basis at a rate of not less than $155.00 per week excluding other expenses (e.g., meals, lodging, etc.).

Short Test: An executive employee must meet all the following three criteria to be considered exempt:

1) Primary duty is managing an agency, department, or division.2) Is paid on a salary basis at a rate of not less than $250 per week.

3) Supervises at least two full-time employees or the equivalent.

When considering the "primary duty" criteria in either the long or short test, a useful tool can be the 50% rule of thumb. That is, the managing duties should constitute at least 50% of the executive's time. In a few cases, the 50% rule may not apply. Although an executive exempt employee may not spend more than 50% of time in managerial duties, the employee might nevertheless have management as the primary duty if the other pertinent factors support such a conclusion. Such factors may be the relative importance of the managerial duties as compared with other types of duties, the frequency with which the employee exercises discretionary powers, the relative freedom from supervision, and the relationship between salary and the wages paid other employees for the kind of nonexempt work performed by the supervisor.

A step-by-step diagram (Appendix B-1(a)) and a checklist (Appendix B-1(b)) are provided to assist you in determining if a position qualifies for the Executive Exemption.

ADMINISTRATIVE EXEMPTION

An employee who meets either the long or short test of Administrative Exemption is considered exempt from the FLSA minimum wage and overtime provisions.

Long Test: An administrative employee must meet the following:

1) Performing office or non-manual work directly related to management policies or general business operations of the employer or the employer's customers,

OR

2) Performing functions in the administration of a school system, or educational establishment or institution, or of a department or subdivision thereof, in work directly related to the academic instruction or training carried on therein; and

3) Who customarily and regularly exercises discretion and independent judgment;

A) Who regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity,

OR

B) Who performs under only general supervision work along specialized or technical lines requiring special training, experience,

or knowledge,

OR

C) Who executes under only general supervision special assignments and tasks; and

4) Who does not devote more than 20% of time in a workweek to activities which are not directly and closely related to the performance of the work described above; and

5) Who is compensated for the services on a salary basis at a rate of not less than $155 per week.

Short Test: An administrative employee (for employees compensated at $250 or more per week) must meet all of the following criteria in order to be considered exempt:

1) Whose primary duty is in the performance of office or non-manual work directly related to management policies or general business operations, or the performance of functions in the administration of an educational establishment, or a department or subdivision thereof, in work directly related to the academic instruction or training; and

2) Whose primary duty includes work requiring the exercise of discretion and independent judgment.

IMPORTANT

Of the three exemptions for Executive, Administrative and Professional employees, the administrative exemption is probably the most difficult one to interpret and apply. It is important for an agency to carefully consider the criteria needed to classify an employee as an administrative exemption.

Please note that the key requirement for the administrative exemption is that the employee's primary work is directly related to management policies or general business operations. An employee who is primarily involved in carrying out the day-to-day operations of an agency, instead of overall business or policies management, is involved in "production work" only; therefore, the administrative exemption does not apply.

Specific tests must be applied to any position to determine if it qualifies for Administrative Exemption from the minimum wage and overtime provisions of FLSA. A

step-by-step diagram (Appendix B-2(a)) and a checklist (Appendix B-2(b)) are provided to assist you in determining if a position qualifies for the Administrative Exemption.

PROFESSIONAL EXEMPTION

An employee who meets either the long or short test of Professional Exemption is considered exempt from the FLSA minimum wage and overtime provisions.

Long Test: A professional employee must meet the following:

1) Primary work requires advanced specialized education (as compared to general education, routine training, apprenticeships, etc.);

OR

Work that can be described as creative or original in a recognized artistic field and which depends primarily on invention, talent, or imagination;

OR

Work which primarily consists of instructing, teaching, lecturing, or tutoring in an educational or school system; and

2) Must regularly exercise discretion and make independent judgments; and

3) Must perform work that is intellectual and varied as opposed to routine or standardized; and

4) Must not work more than 20% of time per week on activities not related to professional duties; and

5) Is paid on a salary basis at a rate of not less than $170 per week (excluding facilities, meals, board, etc.).

Short Test: A professional employee must meet all of the following criteria to be considered exempt:

1) Is paid on a salary basis at a rate of not less than $250 per week (excluding meals, board, etc.); and

2) Primary work requires advanced education (as compared to general

education, routine training, apprenticeship, etc.); OR

Regularly does work that requires imagination, invention, or talent in a recognized artistic field; and

3) Must exercise discretion and make independent judgments.

Specific tests must be applied to any position to determine if it qualifies for Professional Exemption from the minimum wage and overtime provisions of FLSA. A step-by-step diagram (Appendix B-3(a)) and a checklist (Appendix B-3(b)) are provided to assist you in determining if a position qualifies for Professional Exemption.

FLSA COMPUTER RELATED OCCUPATIONS EXEMPTION

A computer professional exempt employee is one who has primary duties in one or more of the following:

(a) Applying systems analysis techniques and procedures;

(b) Designing computer systems based on, and related to, user specifications;

(c) Creating or modifying computer programs based on, and related to, system design specifications;

(d) Creating or modifying computer programs related to machine operating systems; or

(e) A combination of the duties as described, requiring the same levels of skill; and who must exercise discretion and make independent judgments on a regular basis.

Computer systems analysts, computer programmers, software engineers, and other similarly skilled employees who are paid at a regular hourly rate exceeding six and one-half times the minimum wage are exempt from the minimum wage and overtime requirements of the FLSA. On the other hand, hourly computer-related occupation employees who are paid at a rate equal to or below the 6.5 times minimum wage threshold shall not be considered exempt.

Salaried employees in the computer field who earn an amount equal to or less than 6.5 times the minimum wage may nevertheless qualify as exempt if their jobs satisfy the duties and responsibilities tests for the executive, administrative, or executive exemption, and, presumably, the minimum salary requirements.

B. NON-EXEMPT EMPLOYEES

A non-exempt employee is an employee who does not meet the criteria for any of the exemptions discussed above (Executive, Administrative, Professional, or Computer Professional). All hourly employees are non-exempt and are automatically eligible for overtime compensation regardless of the level of job responsibilities, except medical doctors, attorneys, teachers and computer-related occupation employees who receive an hourly rate higher than six and one-half times the minimum wage. Minimum wage and overtime compensation must be paid to non-exempt employees under FLSA provisions.

Definition of "Workweek"

The FLSA considers a workweek for non-exempt employees as a "fixed and regularly recurring period of 168 hours - seven consecutive 24-hour periods." It may begin on any day of the week and at any hour of the day. Once the beginning time of an employee's workweek is established, it remains fixed regardless of the schedule of hours worked. The beginning of the workweek may be changed if the change is intended to be permanent and is not designed to evade the overtime requirements of the Act.

Hours worked include all time during which an employee is required or permitted to work. Ordinarily this consists of all hours from the beginning of the work day to the end with the exception of periods (e.g., waiting periods, or 30 minutes or more meal time) when the employee is completely relieved of all duties.

OVERTIME HOUR CALCULATION

According to the FLSA, holidays, vacation time, sick leave, etc., are not required to be counted when calculating overtime. Under Personnel Director's Procedure P15-5-2, "Only those positions determined to be essential by the executive director of the department or president of the college or university shall have a holiday or period of authorized leave of absence (unpaid or paid, including compensatory time off) counted as work time for purposes of determining overtime. Essential positions are those positions required to be on duty to perform the essential and/or emergency services of the agency without delay and/or without interruption." Calculations of overtime hours and compensation for essential employees may be complicated depending on types of leave involved. Several examples of overtime situations for essential employees are illustrated in the following page.

Overtime Calculation for Essential Employees

Work Hours

Annual Leave

SickLeave

HolidayHours

CompHours

Off

Leavew/oPay

Total Hours OT*1

StraightPay

Hours*2

Overtime Pay

Case 1 32 8 8 48 48 4

Case 2 32 8 8 48 40 4

Case 3 32 8 8 8 56 48 8

Case 4 32 16 48 32 4

*1 Total hours for overtime purposes for essential employees include all paid and unpaid hours.

*2 Straight Pay Hours are the paid hours that employees earn (e.g., work hours, holiday, paid leave including compensatory time off). They exclude the unpaid leave hours.

OVERTIME COMPENSATION

All non-exempt employees must be paid one and one-half times the regular hourly rate for each hour worked over 40 hours during the employee's designated workweek. Averaging work hours over weeks is not permitted. There are special provisions for calculating overtime for police and certain hospital and nursing home employees which will be discussed later.

COMPENSATORY TIME

The FLSA allows state and local government employers to provide compensatory time off in lieu of cash payment. Compensatory time must be paid at a rate of not less than one and one-half hours of compensatory time for each hour of overtime work. According to Personnel Director's Procedure, P15-9-6, a non-exempt employee may accumulate up to 60 hours of compensatory time at any given point in time. Any overtime worked in excess of this amount of accumulated overtime hours must be paid for in cash. Accumulated compensatory time must be taken within two months after the end of the payroll period in which the overtime was worked, after which it must be paid in cash. Exceptions to the compensatory time accrual limit and time frame for compensatory time use must be approved in writing by the Director of the Department of Personnel.

A public agency must comply with several conditions in order to use compensatory time for overtime payment. The FLSA allows compensatory time off for overtime work so long as there is an agreement from an employee that compensatory time off may be used in lieu of cash payment for overtime work. It is not necessary for a state agency to reach an agreement for employees hired prior to April 15, 1986 who do not have a representative, provided that a state agency had a regular practice of granting compensatory time off in lieu of overtime pay in place on April 15, 1986.

A state agency does not have to adopt the same agreement or understanding with all employees. In addition, this agreement or understanding need not be in writing, but a record of its existence must be kept. Finally, an employee's decision to accept compensatory time off in lieu of cash overtime payments must be made freely and without coercion or pressure. Appendix C is a copy of a typical compensatory time agreement.

Hours Worked and Compensation

Under FLSA, what constitutes working time is an important question. This is discussed below:

IMPORTANT POINTS:

Volunteering to Work - Employees who voluntarily continue working before and/or after their shifts are entitled to be paid according to FLSA regulations. It is the responsibility of the agency to make sure that overtime work is authorized. A supervisor may have to issue corrective actions against voluntary or unauthorized overtime. Regardless of the excuse (or the employee's willingness to waive the overtime payment), if employees work overtime and are able to prove the work, they must be paid.

Waiting Time - Employers must pay employees for waiting time if the employee is waiting to perform his or her primary duties on a scheduled shift, and if the employee cannot use the time freely for personal use.

Breaks - Work breaks are not mandatory. Breaks or rest periods of 20 minutes or less must be counted as hours worked.

Meal Time - Meal or lunch time is not paid time as long as the following three conditions are met:

1. the meal period must be at least 30 minutes long;

2. the employee must be completely relieved of all duties;

3. the employee must be free to leave the assigned post. However, it is not necessary

that an employee be permitted to leave the premises if the employee is otherwise completely freed from duties during the meal period.

Business trip meal times do not need to be compensated unless the employee works during the meal time.

Training Programs, - Time spent by non-exempt employees in training programs,

Lectures & Meetings - lectures or labor-management meetings does not have to be counted as paid hours provided all of the following conditions are met:

1. attendance is voluntary; and2. attendance occurs outside the employee's regular

working hours; and3. the training, lecture, or meeting is not directly

related to the employee's job; and4. the employee does not perform anything

productive directly related to work while attending.

If employees on their own initiative attend a school, college or a trade school after hours, the time is not hours worked even if the courses are related to the job.

On-Call Time - On-call time while employees can use the time freely for their personal pursuits does not have to be included in work hour calculations for overtime purposes. However, when employees are required to remain on-call at the employer's premises or are required to respond so quickly when called that they are unable to use the time effectively for their own purposes, the on-call time must be considered work time.

Travel Time - Whether travel time needs to be considered paid time depends entirely on the kind of travel involved:

Home to work travel. Ordinary traveling from home to work (and vice versa) is not considered compensable time. As a general rule, employees are not at work

until they reach their work sites. However, if an employee is required to meet somewhere to receive instructions, pick up material, etc., paid time starts at that meeting place. Whether employees use their own cars or state vehicles does not make a difference in the ordinary home to work travel.

Out of town travel. A non-exempt employee who is sent out of town for one day (without staying overnight) must be paid for all travel time (excluding travel time from home to a plane terminal, bus or other form of public transportation and meal time if not worked).

Travel that keeps an employee away from home overnight is travel away from home. Travel away from home is clearly worktime when it cuts across the employee's workday. The employee is simply substituting travel for other duties. This travel time is work time not only when it takes place on regular working days during normal working hours but also during the corresponding hours on nonworking days (e.g., weekends, holidays).

On the other hand, travel time is not considered work time when it falls outside of regular working hours as a passenger on an airplane, train, boat, bus, or automobile. However, if employees are permitted to drive their cars in traveling away from the home community, time spent driving may count as hours worked. Any work conducted outside regularly scheduled hours also must be paid.

Travel during the work day, including job-site to job-site travel during the work day, and travel from an outlying job site at the end of the day to the employer's base location is also compensable time.

Workers' Compensation If an employee is injured on the job, and, on the same day, is directed to go to see a workers' compensation doctor for diagnosis or treatment, time spent on medical attention is work time. Even if the employee does not return to work on this first day based on the doctor's advice, the first injury day is work time. However, if, on the day of injury, an employee is

permitted and directed to return to work, and the employee (non-essential) chooses to take annual leave to engage in personal business, it is not work time.

After the first day of an on-the-job injury, time that the employee spends in treatment or therapy for the on-the-job injury is not work time. If the employee is directed by the workers' compensation doctor to rest at home, or to receive in-patient hospital treatment, all of these off-duty hours are not work time. Sick leave, annual leave, administrative leave, injury leave and/or leave without pay may be used to cover this absence.

Dual Employment

A non-exempt employee who accepts additional hours of paid employment (with a different pay rate) with another state agency is entitled to overtime compensation for any hours worked over 40 hours per week, when hours worked in the two agencies are totaled. Remember, the state is considered as one employer.

The regular rate for the week that the employee works for two agencies is the weighted average of the two rates. That is, total earnings are computed to include compensation during the workweek from all such rates, and are then divided by the total number of hours worked at all jobs. Or, the employee and employers may reach an agreement on which regular pay rate is to be used for overtime compensation. However, if the employee works on an "infrequent, irregular, occasional or sporadic" basis for another agency in a different capacity from regular employment, hours worked in the different job(s) do not have to be combined for the purpose of determining overtime liability under the FLSA.

C. SPECIAL CATEGORY EMPLOYEES

State law enforcement employees are governed by special exemptions, i.e., 7(k) exemption for overtime computation. Instead of using seven-day, 40-hour workweek, a special overtime standard has been established. The special standard allows the employer to establish a work period of from seven to 28 days. No overtime compensation is required until the number of hours worked exceeds the limit (see Appendix D.)

Law Enforcement employees must meet all of the following criteria:

1. Be a uniformed/plainclothes employee engaged in law enforcement

activity;

2. Have authority to enforce laws designed to protect public safety and property, detecting and preventing crimes;

3. Have power to arrest;

4. Have undergone specialized training dealing with law enforcement.

Correctional employees are included in this group.

Overtime for Law Enforcement Employees

Agencies may designate their law enforcement positions as 7(k) exempt, provided that the criteria listed above are met. The work periods for 7(k) exempt employees cannot be less than seven consecutive nor more than 28 consecutive days. Different employees may have individual work periods. An established work period may not be changed unless the change is intended to be permanent and is not designed to evade the overtime requirements of the Act.

Performing Unrelated Work

Law enforcement or fire protection employees will lose their 7(k) exemption status during a workweek or a work period if they perform activities which are not related to law enforcement for more than 20% of scheduled time.

Attending Training Courses or Programs

Time spent in required training programs is considered work time. Voluntarily attending non-required training courses is not counted as work time, even if it is paid by the agency. Attendance outside of regular working hours at specialized or follow-up training, even if it is required by law for certification, and/or even if all or part of the cost of the training is paid by the employer, is not considered work time.

Employees, e.g., police officers who are in attendance at a training facility, i.e., a police academy, are not considered to be on duty during the time when they are not in class or at a training session, if they are free to use the time for personal uses.

Hospitals and Nursing Home Employees

The FLSA has established a partial exemption for employees working in hospitals and nursing homes that offer residential care. This partial exemption allows overtime to be calculated on a 14-day period (opposed to seven days) if all of the following conditions are met:

1. Employees are paid overtime if they work more than eight hours per day;

2. Hours worked exceeding 80 hours over a 14-day period are paid overtime;

3. There is an agreement or understanding, preferably in writing, between employees and the employer for using the 14-day period for overtime purposes.

Remember, overtime needs to be paid not only on a bi-weekly basis (80 total hours), but also on a daily basis (any hours over eight a day). For example, if an employee worked 10 hours in one day, and 80 hours over a 14-day period, the employee will still be entitled to 2 hours of overtime compensation. The special schedule must be established by an agency and the affected employees must be notified of the schedule change.

Agencies covered are state hospitals, nursing homes, mental institutions, and regional centers (the institutions providing residential care). All other agencies not offering residential care must calculate overtime using a seven-day workweek.

D. NON-COVERED EMPLOYEES

Non-covered employees are those who are elected officials, their personal staffs, policy-making appointees, legal advisors, legislative employees (except library employees), and independent contractors, so long as they are not subject to civil service laws. As such, these employees are not covered under the minimum wage and overtime provisions.

Personal staff of an elected official are employees who (1) must be appointed by and serve solely at the pleasure or discretion of the elected official; (2) must be under the direct supervision of the elected official (i.e., does not include an employee who is supervised by someone other than the elected official); (3) must have regular contact with such elected official; and (4) must not be subject to civil service laws.

Policy-making appointees are employees who have been appointed by an elected official to serve in a policy-making capacity. For example, executive directors appointed by the governor are policy-making appointees.

Legal advisors are employees who serve as legal advisors to an elected official. They must deal with highly confidential and sensitive legal work and/or give advice directly to an elected official and/or be personally accountable to the elected official.

Legislative employees are employees who work in the legislative branch of the state. This includes all service employees in the state legislature, except employees of legislative branch libraries.

For independent contractor employees, U.S. DOL uses a number of factors to determine whether an individual is truly an independent contractor or an employee for purposes of FLSA. They are:

1. The extent to which services rendered are an integral part of the employer's business;

2. The permanency of the relationship;

3. The amount of individual investment in facilities and equipment;

4. The degree of initiative, judgment, or foresight exercised by the individual who performs the services.

Prisoners who are required to work for the state are not covered employees. They do not need to be paid minimum wage. When counting the number of employees supervised by a state employee, the number of prisoners working for the employee must be excluded.

Bona fide volunteers are individuals who perform services for the state for civic, charitable, or humanitarian reasons. They volunteer to render their services without promise, expectation or receipt of compensation. These volunteers are not covered employees under FLSA.

III. RECORDKEEPING REQUIREMENTS

Employers are required to keep records for both non-exempt and exempt employees under FLSA regulations. Records for non-exempt employees differ from exempt employees.

A. NON-EXEMPT EMPLOYEES (covered employees who are eligible for overtime compensation)

1. Name, home address, social security number (and birth date if under 19);

2. Sex and occupation;

3. Time of the day and day of the week the employee's workweek (or work period) begins and ends;

4. Hours worked each work day and total hours worked each workweek (or period);

5. Regular hourly pay for any week where overtime was worked;

6. Total daily or weekly straight time earnings;

7. Total overtime or compensatory time earned, used or compensated in cash for the workweek (or period);

8. Additions or deductions from wages paid each pay period;

9. Total amount of wages paid each pay period; and

10. Date payment is made and the pay period covered.

B. EXEMPT EMPLOYEES (covered employees who are not eligible for overtime compensation)

1. Full name, home address, social security number (and date of birth if under 19);

2. Sex and occupation;

3. Time of the day and day of the week the employee's workweek begins;

4. The basis on which wages are paid to the employee, in sufficient detail to permit calculation for each pay period of the employee's total compensation for employment including fringe benefits.

Records may be kept on paper, microfilm or other basic source documents, as long as they are accessible and reproducible. Time records shall be retained for at least three years. The records must be made available to the Administrator of the Wage and Hour Division (or a duly authorized representative) within 72 hours of a request. Finally, each agency is required to display the Wage and Hour Division's minimum wage poster which briefly outlines FLSA requirements (Appendix E).

IV. EMPLOYEES' APPEAL RIGHT

According to Personnel Director's Procedure P15-13-1, "The Director shall review overtime appeals including the overtime eligibility designation of positions, the counting and recording of overtime hours in assigned work schedules, and the payment of overtime compensation (including the recording, use and payment of compensatory time off)..." Agencies and employees are encouraged to informally resolve issues of overtime work, overtime compensation, and/or position eligibility. However, such informal resolution does not negate an employee's right to appeal such issues to the Director.

V. ENFORCEMENT OF FLSA

State agencies were given until April 15, 1986 to be in total compliance with the Fair Labor Standards Act. Agencies are held liable for noncompliance with FLSA provisions. The Wage and Hour Division within the U.S. Department of Labor is authorized to survey agencies and to investigate complaints filed with them. In addition, they can initiate legal action against employers on an employee's behalf where such violations have been found to occur.

When found in noncompliance, an agency could end up paying:

- Attorney's fees;- Liquidated damages, commonly referred to as "double back pay";- Fines (and/or jail terms depending on the severity of the violation).

REMEMBER

The Colorado Department of Personnel will not monitor compliance or assume liability if an agency is not in compliance with FLSA. Any liability for failure to comply with the regulations of the FLSA rests with the individual agency.

VI. COMMONLY ASKED QUESTIONS ABOUT THE FAIR LABOR STANDARDS ACT

1. Would working supervisors or lead workers be considered exempt under the executive category?

The FLSA places a 20% limitation on the amount of non-exempt work an employee may perform under the long test found in the "white collar" exemptions. The purpose of the limitation is to distinguish between bona fide executives and lead worker or working supervisors who regularly perform production work or other work which is unrelated to or only remotely related to their supervisory activities. However, the 20% limitation does not apply under the "short test" if the employee earns at least $250 a week.

Generally, under the long test, leadworkers and working supervisors would not be considered exempt if:

- They spend more than 20% of their time performing the same work as their subordinates; or

- They spend more than 20% of their time performing ordinary production work or other routine, repetitive tasks which are a regular part of their duties.

2. The regulations provide for long and short tests for determining whether employees are exempt under the professional, executive or administrative categories. In some instances, an employee may qualify for the exemption under the short test, but not the long one. Which test should be used?

Determining which test to use in classifying an employee depends on the salary of the employee. For the executive and administrative categories, the short test calls for compensation of not less than $250 per week. The long test requires compensation of not less than $155 per week. Under the professional category, the short test provides for compensation of not less than $250 per week,

whereas the long test requires compensation of not less than $170 per week. If the employee earns $250 a week or more, the agency is advised to use the short test.

3. What constitutes the "exercise of discretion" in tests of whether an employee is exempt from coverage or not?

Exercise of discretion or independent judgment exists if an employee makes decisions freely without needing to consult a supervisor. The work must require the employee to compare and evaluate possible courses of conduct and act or make a decision after various possibilities have been considered. This decision-making power should be real and substantial, free from immediate supervision, and exercised with regard to matters of consequence.

4. What is the difference between a non-covered and exempt employee?

Non-covered employees are not bound by any provisions of the FLSA. Exempt employees, while covered by the FLSA, are exempt from the minimum wage and overtime provisions of the Act. Certain records are required to be kept for exempt employees, whereas there is no FLSA recordkeeping requirement for non-covered employees.

5. Are employees entitled to be paid for lunch time if they eat at their desks?

If employees choose to eat at their desks and are completely relieved from duty, then the lunch time would not be considered as work time. However, if an employee is required to eat at the desk, the time would be considered working time. For those employees who voluntarily eat at their desks, and answer phones or perform other work, they are "working" even though it is voluntary. They must be paid for the work. Finally, if employees choose to eat lunch at their desks and do not perform any job-related tasks, the lunch hour does not have to be counted as work time.

6. Must employees who come in early to work be paid for their time?

The conditions under which the employees come to work early would determine whether that time would be considered work time. If an employee comes in early and is completely relieved from duty, the time would not be considered working time. However, if the employee comes in early and begins working, then that time would be considered working time.

7. Is on-call time considered work time?

The issue of pay for on-call time depends largely upon the employee's freedom while on-call, including how quickly the employee is required to respond to the

call. While on call, if the employee is able to use the time freely for personal purposes, the time is not compensable. However, if the employee must remain on the employer's premises or remain so close to the premises that the employee cannot use the time freely, then that time is compensable. In general, the more restriction that is placed upon an employee while on-call, the more likely that the on-call time may be considered as work time.

Employees who are required to leave telephone numbers, or to carry beepers where they may be reached would not be compensated for that on-call time, unless a very short response time, e.g., within a few minutes, is required.

8. Do hours spent being treated (at the suggestion of the employer) for an on-the-job injury count as work time?

Time spent by an employee on the first day of an on-the-job injury in waiting for and receiving medical attention at the direction of the employer during the employee's normal work hours on days when the employee is working would be considered work time. Beginning with the day after the on-the-job injury, time spent on medical attention is not work time.

9. Can compensatory time be substituted for overtime pay?

Under the 1985 amendments to the FLSA, state and local governments have the option to use compensatory time instead of paying overtime. However, certain conditions apply to the use of compensatory time. First, compensatory time must be paid at time and one-half for hours worked over 40 hours in an established work week. Second, an employee and an employer must agree to using compensatory time in lieu of cash payment. This agreement must be reached prior to the performance of overtime work; and the existence of such an agreement must be kept.

A non-exempt employee may accumulate up to 60 hours of compensatory time at any given point in time. Any overtime worked in excess of this amount of accumulated overtime hours must be paid for in cash. Accumulated compensatory time must be taken within two months after the end of the payroll period in which the overtime was worked.

10. If an employee works 40 hours during the week, and then volunteers to help paint a state building on the weekend, would the employee be paid overtime?

If the employee truly "volunteered" to work on the weekend without contemplation of pay and if the employee's regular job assignment is not painting, then the time would not be compensable. Remember, an employee cannot work for the same employer (the state) as a non-paid volunteer doing the same type of work for which the employee is paid.

11. Is the time a state trooper spends in court waiting to testify considered work time?

Time spent by a state trooper waiting to testify is considered work time under the FLSA. The regulations state that time spent away from the employer's premises under conditions

which restrict an employee from using the time effectively for personal pursuits constitutes compensable hours of work.

12. Would it be considered work time if a state trooper is off duty but responds to an emergency?

The time spent responding to an emergency when a state trooper is off duty would be considered compensable time. Generally, all time during which the employee is "suffered or permitted" to work for the employer is compensable time.

13. How will the FLSA be enforced?

The Wage and Hour Division within the U. S. Department of Labor will initiate investigations when complaints are filed or when particular industries are targeted for investigations. The Solicitor of Labor can bring a lawsuit on an employee's behalf in appropriate cases where the Wage and Hour Division finds that FLSA violations have occurred. Additionally, the Department of Justice can criminally prosecute persons who commit willful violations of the Act.

14. How do we control overtime usage and resulting overtime cost?

According to Personnel Director's Procedure, P15-7-1, the appointing authority or designee shall be responsible for approving overtime work. What supervisors may do to control overtime may include:

1. Send a written announcement to all non-exempt employees that overtime work is not permitted unless authorized in advance.

2. Develop a policy to ensure that employees are not interrupted during their lunch breaks (30 minutes or more.) The best way to accomplish this is to have employees leave their work stations during their breaks.

3. Develop a policy to ensure that employees are not allowed to start work before their regular starting time or to continue work after their ending time.

4. Develop a corrective action policy for employees who violate the rules. An employee may not voluntarily work overtime or waive the right to

overtime compensation. (NOTE : your employees may choose to ignore the policies and continue the extra hours of work before and/or after regular work time. You could issue corrective actions to these employees according to established policies. However, you are still liable for the overtime payment, if the unauthorized overtime work is acknowledged, witnessed and/or proven.)

15. How should an employee be compensated for a part-time job worked for another agency in addition to the full-time assignment?

If the employee is a non-exempt employee, all work hours must be totaled in order to calculate overtime compensation. The regular hourly rates and the number of hours worked for two agencies are used to calculate the weighted average hourly rate for the week. Or, the employee and employers reach an agreement on a regular hourly rate for overtime compensation. The employee must be compensated one and one-half times the established hourly rate for each hour worked over 40 hours per week.

If the employee is an exempt employee, the percentage of time spent on non-exempt duties (i.e., number of hours spent on non-exempt work during a workweek divided by 40 hours) must be calculated. If the employee spends less than 80% time during the workweek on exempt duties, the employee then loses the exemption status for that workweek. The overtime compensation shall be calculated as mentioned above.

16. What are essential employees?

Essential employees are those employees who are in positions that require them to be on duty to perform the essential and/or emergency services of the agency without delay and/or without interruption. Executive directors and presidents of colleges and universities are responsible for designating whether an employee is essential or not. Remember, paid or unpaid leaves of absence must be included for overtime work hours for essential employees.

17. How can supervisors schedule non-exempt employees' compensatory time off without violating the law?

According to the FLSA, when a non-exempt employee has accrued compensatory time and requested use of this compensatory time, the employee shall be permitted to use such time within a "reasonable period" after making the request, if such use does not "unduly disrupt" the operations of the agency. The employee earns the compensatory time and should have control of the use of that banked time.

Recently, the Department of Personnel has become aware of a court decision

"...A state corrections department violated the FLSA by unilaterally imposing a policy that forced employees to use accrued compensatory times at times scheduled solely by the employer. The FLSA allows public agencies to provide compensatory time in lieu of cash overtime pay if an employee agrees to such an arrangement. The banked compensatory time essentially is the property of the employee. Any other attempt by a public employer to unilaterally exercise authority over how the employee uses the employee's accrued compensatory time is inconsistent with the Act..."

18. When should an employee's position be reviewed for overtime eligibility?

Technically, all positions should have been reviewed for overtime eligibility during Phase II of the Job Evaluation Process when employees' Position Description Questionnaires (PDQs) were reviewed for class placement purposes. In addition, when a position is created, or when duties of a position are significantly changed, supervisors should initiate the overtime eligibility review process. To initiate this process, contact the agency personnel office to assure that the review is done properly and employees are informed of the results of the review, as well as their appeal rights.

19. Can we reduce exempt employees' leave balances (e.g., accrued annual and/or sick leave) without losing their exemption status?

Yes, the U.S. Department of Labor has adopted a special rule for public sector employers to reduce exempt employees' leave balances or pay without losing the exempt employees' exemption status. The reason is that state employees are paid according to a pay system established by statute pursuant to principles of public accountability. Under the system, employees accrue annual and sick leave and are required to use the leave to cover absences for personal reasons or illness. However, when accrued leave is not used by employees, exempt employees may be placed on leave without pay (i.e., pay reduction) without being disqualified from exemption.

20. How can I hire an exempt employee for secondary employment without losing the employee's exemption status?

As a rule of thumb, an exempt employee should not spend more than 20% of work time on non-exempt duties. If an exempt employee regularly works part-time on non-exempt duties for more than 20% of a week, there is a good chance that the employee should be considered as non-exempt, i.e., eligible for overtime compensation.

Paying an exempt employee's part-time employment on an hourly basis represents another problem, since all hourly employees (with the exception of medical doctors, attorneys and teachers) are non-exempt employees. In order

to maintain an employee's exemption status, the exempt employee must be paid a pre-determined amount of compensation regardless of the number of days or hours worked. For example, when you hire an exempt employee for a part-time project, you may want to consider paying the employee a fixed amount of compensation for the entire project rather than paying on an hourly basis. This is to ensure that the basic concept of the salary test for exempt employees is kept.

21. Does keeping a detailed time record for exempt employees destroy the exemption status for exempt employees?

No. As a matter of fact, it is a good idea to keep detailed time records for exempt employees. Remember, keeping detailed time records for exempt employees does not mean that exempt employees are paid on an hourly basis. Within the state, all employees are paid according to a pay system established by statute pursuant to principles of public accountability. It is not inconsistent with the FLSA to keep track of the work records of exempt employees. Agencies are encouraged to maintain time records for exempt employees, particularly when exemption status may be questioned and/or challenged for some "exempt" employees. Without official signed time records, employees' own logs may prevail if overtime disputes should be challenged by the employees.

22. What exemption status should I designate for temporary employees?

In general, temporary employees should be considered as non-exempt. This is particularly true when temporary employees are placed on a bi-weekly payroll (i.e., are paid on an hourly basis). Remember, the exceptions include medical doctors, attorneys and teachers. Since temporary employees, according to Personnel Director's Procedures, do not receive holidays, annual leave and sick leave benefits, agencies would have to reduce temporary employees' pay due to leave of absences. Consequently, temporary employees are paid based on the number of hours they actually work. Under the law, hourly employees are non-exempt employees and are eligible for overtime compensation.

23. How do I calculate the overtime hourly rate if non-exempt employees are involved in some shift work during a work week that incurs overtime work?

The proper way of calculating the overtime hourly rate under this scenario is to calculate the weighted hourly rate for the entire work week. For example, assume a non-exempt employee's regular hourly rate is $10.00, and the third-shift pay is $11.00 per hour. The employee works 30 hours regular shift, and 20 hours on third shift. The employee's total compensation within the week is $10.00 x 30 + $11.00 x 20 = $520.00. The weighted hourly rate would be $520.00/(30 hours + 20 hours) = $10.40. The weighted hourly overtime rate would be $10.40 x 1.5 = $15.60. Remember, the overtime hourly rate needs to

be calculated on a weekly basis, since it is possible that employees work different shift schedules in different weeks.

____ Employee is not closely supervised.

____ Employee has the authority to make managerial and supervisory decisions, or recommendations of significance.

What percentage of time is spent in the following functions?

____ Assigning work to other employees.

____ Determining the method by which work will be performed.

____ Directing and supervising other employees' work.

Supporting Documents Press the associated DocLink below to view the Supporting Document(s)

- Supporting Document (Attach E, Posting of Federal Minimum Wage)

- Supporting Document (Attach B-3 Professional Exemption Checklist)

- Supporting Document (Attach D 7(k) Work Periods and Work Hours)

- Supporting Document (Attach C Examples of Compensatory Time Agreement)

- Supporting Document (Attach B-2, Administrative Exemption Checklist)

- Supporting Document (Attach B-1 Executive Exemption Checklist)

- Supporting Document (Attach-A Exemption Questionnaire)