1 February 10 2022 OVERTIME RULES AS NFJP
1 February 10, 2022 OVERTIME RULES AS NFJP GRANTEES Presented By: EMPLOYMENT AND TRAINING ADMINISTRATION UNITED STATES DEPARTMENT OF LABOR Employment and Training Administration
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3 Unit Chief Specialty National Programs Unit Employment and Training Administration U. S. Department of Labor
4 Director of Workforce Development Association of Farmworker Opportunity Program
5 ü Learn about FLSA changes ü Discuss related challenges faced by NFJPs ü Hear some strategies for compliance ü Gather questions for follow-up
6 Ø How does bonus income factor into the salary threshold? Ø Where can agencies find guidance on writing intern or volunteer position descriptions appropriately? Ø Clarification on calculating travel time paid to non exempt employees Ø Clarification on standards for supervisors to meet the exempt status? Ø When does ‘work’ begin? Ø Are there specific guidelines for how to track hourly employee time?
7 U. S. DEPARTMENT OF LABOR WAGE AND HOUR DIVISION
8 District Director U. S. Department of Labor, Wage and Hour Division
9 Ø Coverage Ø Minimum Wage Ø Overtime Pay Ø Youth Employment Ø Recordkeeping
10 In order for the FLSA to apply, there must be an employment relationship between the “employer” and the “employee”
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12 More than 135 million workers in more than 7 million workplaces are protected or “covered” by the Fair Labor Standards Act (FLSA), which is enforced by the Wage and Hour Division of the U. S. Department of Labor
13 Two types of coverage: Ø Enterprise coverage: If an enterprise is covered, all employees of the enterprise are entitled to FLSA protections; and Ø Individual coverage: Even if the enterprise is not covered, individual employees may be covered and entitled to FLSA protections
14 A business may also be a “named enterprise. ” Ø Named enterprises include hospitals, organizations providing medical or nursing care for residents, schools, preschools, and government agencies (federal, state, and local). Ø Named enterprises are covered regardless of their ADV. Ø Every employee of a named enterprise is entitled to minimum wage and overtime protections, unless the employee is exempt.
15 Employees of businesses who are not covered on an enterprise basis may still be covered individually. Ø The employee’s (not the establishment’s) activities, determine coverage. Ø Individual coverage applies on a workweek basis. Note: 29 C. F. R. § 776. 0 – Individual Coverage
16 Ø Almost every employee in the United States is covered by the FLSA Ø Examples of employees who may not be covered • Employees working for small construction companies • Employees working for small independently owned retail or service businesses
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18 Ø Covered, non-exempt employees must be paid not less than the federal minimum wage for all hours worked Ø The minimum wage is $7. 25 per hour Ø Cash or equivalent – free and clear
19 Ø Wages (salary, hourly, piece rate) Ø Commissions Ø Certain bonuses Ø Tips received by eligible tipped employees (up to $5. 12 per hour) Ø Reasonable cost of room, board and other “facilities” provided by the employer for the employee’s benefit
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21 Counted as hours worked when • Employee is unable to use the time effectively for his or her own purposes; and • Time is controlled by the employer Not counted as hours worked when • Employee is completely relieved from duty; and • Time is long enough to enable the employee to use it effectively for his or her own purposes
22 On-call time is hours worked when • Employee has to stay on the employer’s premises • Employee has to stay so close to the employer’s premises that the employee cannot use that time effectively for his or her own purposes On-call time is not hours worked when • Employee is required to carry a pager • Employee is required to leave word at home or with the employer where he or she can be reached
23 Meal periods are not hours worked when the employee is relieved of duties for the purpose of eating a meal Rest periods of short duration (normally 5 to 20 minutes) are counted as hours worked and must be paid
24 Time employees spend in meetings, lectures, or training is considered hours worked and must be paid, unless • Attendance is outside regular working hours • Attendance is voluntary • The course, lecture, or meeting is not job related • The employee does not perform any productive work during attendance
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26 Covered, non-exempt employees must receive one and one-half times the regular rate of pay for all hours worked over forty in a workweek
27 Ø Each workweek stands alone Ø Regular rate • Payments excluded from rate • Payments other than hourly rates • Tipped Employees Ø Deductions
28 Ø Compliance is determined by workweek, and each workweek stands by itself Ø Workweek is 7 consecutive 24 hour periods (168 hours)
29 l Is determined by dividing total earnings in the workweek by the total number of hours worked in the workweek l May not be less than the applicable minimum wage
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31 There are numerous exemptions and exceptions from the minimum wage and/or overtime standards of the FLSA
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33 The most common FLSA minimum wage and overtime exemption -- often called the “ 541” or “white collar” exemption -- applies to certain Ø Executive Employees Ø Administrative Employees Ø Professional Employees Ø Outside Sales Employees Ø Computer Employees
34 Salary Level Salary Basis Job Duties
35 Ø March 2014 - Presidential Memorandum Ø July 2015 – Notice of Proposed Rulemaking Ø May 23, 2016 – Final Rule Published Ø December 1, 2016 – Final Rule Effective Date
36 Ø Salary Level Increases Ø Nondiscretionary Bonuses Ø Automatic Updates
37 Ø Standard salary level - pursuant to 29 CFR 541. 600 Current $455 Effective 12/1/2016 $913 per week Ø Highly Compensated Employee (HCE) - pursuant to 29 CFR 541. 601 Current $100, 000 Effective 12/1/2016 $134, 004 per annum
38 Ø For most employees, the minimum salary level required for exemption is $913 per week Ø Must be paid “free and clear” Ø The $913 per week may be paid in equivalent amounts for periods longer than one week • Biweekly: $1, 826. 00 • Semimonthly: $1, 978. 16 • Monthly: $3, 956. 33
39 Ø HCEs must continue to receive at least the full standard salary level amount ($913 per week) each pay period on a salary or fee basis without regard to the payment of nondiscretionary bonuses and incentive payments. (No Change to this principle) Ø Nondiscretionary bonuses and incentive payments (including commissions) may be counted towards the highly compensated employees’ total annual compensation requirement ($134, 004). (No Change to this principle) Ø The HCE test does not allow employers to credit nondiscretionary bonuses or incentive payments (including commissions) towards the standard salary level weekly requirement.
40 Ø Every three years beginning January 1, 2020, the standard salary and annual compensation levels will be automatically updated. Ø At least 150 days before the effective date, the Secretary will publish a notice in the Federal Register of the updated salary and total annual compensation amounts that will be required.
41 Ø Regularly receives a predetermined amount of compensation each pay period (on a weekly or less frequent basis) Ø The compensation cannot be reduced because of variations in the quality or quantity of the work performed Ø Need not be paid for any workweek when no work is performed
42 Ø Primary duty is management of the enterprise or of a customarily recognized department or subdivision Ø Customarily and regularly directs the work of two or more other employees Ø Authority to hire or fire other employees or recommendations as to the hiring, firing, advancement, promotion or other change of status of other employees given particular weight
43 Ø Primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers Ø Primary duty includes the exercise of discretion and independent judgment with respect to matters of significance
44 Ø Ø Ø Ø Ø Tax Finance Accounting Budgeting Auditing Insurance Quality Control Purchasing Procurement Advertising Ø Ø Ø Ø Marketing Research Safety and Health Human Resources Employee Benefits Labor Relations Public and Government Relations Ø Legal and Regulatory Compliance Ø Computer Network, Internet, and Database Administration
45 Ø Primary duty is the performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction Ø Primary duty is the performance of work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor
46 Occupations with recognized professional status, as distinguished from the mechanical arts or skilled trades Law Accounting Actuarial Computation Theology Teaching Physical Sciences Medicine Architecture Chemical Sciences Pharmacy Engineering Biological Sciences
47 Ø Doctors Ø Registered Nurses Ø Registered or certified medical technologists • 3 years of pre-professional study in an accredited college or university, plus 1 year of professional study in an accredited school of medical technology Ø Dental hygienists • 4 years of pre-professional and professional study in an accredited college or university Ø Certified physician assistants • 4 years of pre-professional and professional study, including graduation from an accredited physician assistant program
48 Ø Lawyers Ø Teachers Ø Accountants Ø Pharmacists Ø Engineers Ø Actuaries Ø Chefs Ø Certified athletic trainers Ø Licensed funeral directors or embalmers
49 The employee must also receive either Ø A guaranteed salary or fee of $913 per week or more, or Ø An hourly rate of not less than $27. 63 per hour
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51 Federal youth employment rules set both hours and occupational standards for youth
52 16 Sixteen- and 17 -year-olds may be employed for unlimited hours in any occupation other than those declared hazardous by the Secretary of Labor 14 Fourteen-and 15 -year-olds may be employed outside school hours in a variety of non- manufacturing and nonhazardous jobs for limited periods of time and under specified conditions Under 14 Children under 14 years of age may not be employed in non-agricultural occupations covered by the FLSA
53 This presentation is intended as general information only and does not carry the force of legal opinion. The Department of Labor is providing this information as a public service. This information and related materials are presented to give the public access to information on Department of Labor programs. You should be aware that, while we try to keep the information timely and accurate, there will often be a delay between official publications of the materials and the modification of these pages. Therefore, we make no express or implied guarantees. The Federal Register and the Code of Federal Regulations remain the official source for regulatory information published by the Department of Labor. We will make every effort to keep this information current and to correct errors brought to our attention.
54 COMPLIANCE STRATEGIES FOR NON -PROFITS
55 Sr. Vice President of Human Resources Path. Stone Corporation
56 Ø Path. Stone’s mission is to build family and individual self-sufficiency by strengthening farmworker, rural and urban communities. Path. Stone promotes social justice through programs and advocacy. Ø Path. Stone is a visionary, diverse organization empowering individuals, families and communities to attain economic and social resources for building better lives.
57 Ø $65 million operating budget • 95% federally funded • Majority of federal funds come from DOL ETA Ø Operations in 7 states and Puerto Rico Ø 15 lines of business: Direct Services: Employment & Training Child & Family Development Emergency & Supportive Services Housing Choice Services Health & Safety Community, Economic & Real Estate Development: Affordable Rental Housing Small Business Lending Weatherization, Home Rehabilitation Homeownership Services
58 Ø 589 year-round and seasonal employees Ø 463 employees earn less than the $47, 476 overtime threshold • Many are already classified as non-exempt based on job duties • 42 employees have exempt job duties, but have salaries lower than the $47, 476 threshold • Annual cost to raise salaries of 42 employees: $267, 505
59 Ø Disparity between salaries and job duties means that non-profits will be disproportionately impacted by the new regulations Ø Non-profits can’t raise prices to cover higher labor costs Ø Many non-profits are locked into multi-year funding contracts
60 Ø Efficiency • Non-profits tend to be inefficient because they lack the profit motive of for-profit companies Ø Work-Life Balance • Non-profits generally offer better benefits to offset their lower wages • A 40 -hour workweek can be marketed as a benefit Ø Mission • Will your constituents benefit from the new regs?
61 Ø Pay current salaries with overtime Ø Raise salaries to the new threshold Ø Reorganize workloads, adjust schedules, or spread work hours Ø Adjust wages downward to reallocate them between straight time and overtime
62 When determining which strategy to deploy, always keep these questions in mind: 1. Does the employee qualify for the OT exemption based on his or her job duties? 2. Does the employee regularly work more than 40 hours per week?
63 When This Works: Ø When the employee rarely or never works more than 40 hours per week Downfalls: Ø OT hours may not be consistent or easily predictable Ø Federal funding requirement to minimize OT
64 When This Works: Ø For employees who qualify for an exemption based on their job duties AND Ø For employees who routinely work more than 40 hours per week
65 Downfalls: Ø Lack of funding Ø Salary compression • Salary difference between senior and junior staff is reduced; fair distribution of pay Ø Equity • Pay increases not tied to performance that are given to random employees
66 Analyzing the Strategy: 1. Review hours for the last year 2. Calculate cost of increasing salary to the new threshold 3. Calculate how many hours can be worked at the OT rate 4. Compare #1 and #3
67 Example: Ø John makes $20 per hour as a program director. His annual salary is $41, 600. Ø John works an average of 45 hours/week. Ø The cost to raise his salary is $5, 876. • John’s OT rate is $30/hour, which equals about 196 hours ($5, 876 / $30) • John works 260 OT hours per year. Ø Raising John’s salary makes more sense than paying him overtime
68 When This Works: Ø Raising salaries and/or paying OT are not financially feasible
69 Options: Ø Schedule predictable and routine job duties at the beginning of the workweek and/or workday Ø If employees regularly perform job duties outside of the regular workday (e. g. outreach), adjust their workhours Ø Transfer job duties from full-time to part-time staff
70 Options: Ø Transfer job duties from non-exempt to exempt employees • Limit transfer of duties to employees who just received a pay increase to maintain their exemption status • Be careful that the transfer of job duties doesn’t jeopardize the exemption status of the employee to whom duties are transferred
71 What It Is: Ø Converting salary into an appropriate hourly rate with anticipated overtime to achieve the same level of annual compensation When This Works: Ø When employees regularly and consistently work the same number of OT hours per week
72 Example: Ø Jane makes $37, 000 per year and works 45 hours per week • $711. 54 per week; $17. 79/hour Ø Convert Jane to hourly at $15/hour • $15 x 40 x 52 = $31, 2000 • $22. 50 x 52 = $5, 850 • Annual salary = $37, 050
73 Downside: Ø Employees will view this as a pay cut, even if their annualized salary remains the same Ø Employee’s pay will in fact decrease if they don’t work the overtime hours every single week
74 “I went to law school because they told me there wouldn’t be any math. ” -Me
75 Ø Can you increase the use of volunteers? • Be aware that volunteers should not displace employees or perform work that would otherwise typically be performed by employees • Paid employees may not volunteer to provide the same type of services that they are otherwise employed to provide
76 Ø Will cross-training staff enable you to shift job duties as the need arises? Ø Are your staff engaged in activities that are not directly related to your mission? Ø Can you utilize technology to be more efficient?
77 Ø Guidance for Non-Profit Organizations on Paying Overtime under the Fair Labor Standards Act; Department of Labor Wage and Hour Division; May 18, 2016 (https: //www. dol. gov/whd/overtime/final 2016/nonprofit -guidance. pdf) Ø Calculating the Impact of Changing from Exempt to Non-Exempt (http: //sbshrs. adpinfo. com/flsa)
78 Unit Chief Specialty National Programs Unit Employment and Training Administration U. S. Department of Labor
79 Ø Increased Salary Costs Ø Reduction in man-hours and time spent with participants (if some team members have to be reclassified as non-exempt) Ø Inability to meet certificate or training goals because of increased personnel costs Ø Guidance on the Modification process
80 Ø Main WHD resource page specifically on the overtime rule (includes guidance, fact sheets, recordings of our webinars, frequently asked questions, and more): https: //www. dol. gov/WHD/overtime/final 2016/ Ø Main WHD resource page on overtime pay in general: https: //www. dol. gov/whd/overtime_pay. htm Ø Fact sheet on the duties test for exemption as an executive, administrative, or professional (EAP or “white collar”) employee: WHD Fact Sheet #17 A
81 Ø FLSA coverage: • Non-profit organizations - explaining enterprise and individual coverage under the FLSA: WHD Fact Sheet #14 A • Common exemptions from FLSA: https: //webapps. dol. gov/elaws/whd/flsa/screen 75. asp • Employment relationship under FLSA: Ø General employment relationship info: WHD Fact Sheet #13 Ø e. Laws advisors on trainees: https: //webapps. dol. gov/elaws/whd/flsa/docs/trainees. asp
82 Ø Hours Worked under the FLSA: WHD Fact Sheet #22 includes a basic overview of some concepts from the regulations, including rest and meal periods, sleep time, and travel time. The most comprehensive regulatory information is in 29 CFR 785. Ø Compensatory time: included at this e. Laws link and in WHD Fact Sheet #7 on state and local government employers. As we mentioned during the call, public sector (state/local government agency) employers can use compensatory time in lieu of (cash) overtime pay for hours worked over 40 in a work week, for non-exempt employees, under certain conditions and agreements. Exempt employees in the private sector can be provided with compensatory time for additional hours worked, but non-exempt private employees cannot be provided with compensatory time off in lieu of overtime pay. Ø Contact information for WHD offices around the country: https: //www. dol. gov/whd/america 2. htm or dial 1 -866 -4 US-WAGE
83 How do you feel after today’s webinar? 1. Let’s do this!!! 2. A little overwhelmed but excited! 3. Huh…
84 Ø Send Follow-up Questions: • nelson@afop. org Ø Attend AFOP’s In-person Workshop • AFOP Leadership Conference, January 31 to February 2, 2017 Ø Contact your FPO with concerns or questions about program or budget modifications
85 Ø https: //www. doleta. gov/Farmworker/h tml/NFJP. cfm Ø HTTPS: //WWW. DOLETA. GOV/PROGRA MS/MSFW. CFM Ø https: //farmworker. workforcegps. org/ Ø http: //afop. org/
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