Overtime Pay

Proposed Changes to FLSA Overtime Rules - Part I

On June 30, 2015, the United States Department of Labor (DOL) released proposed regulations that would amend various provisions of the Fair Labor Standards Act (FLSA).  In particular, the DOL proposed changes to the regulations governing the “white collar” exemption for executive, administrative, and professional employees.   The FLSA (and wage and hour laws, generally) are complicated but we will try to break down the key changes as simply as possible.

FLSA Overview

The FLSA generally requires employers to pay its employees at least the federal minimum wage plus overtime at a rate of at least 1.5 times the employee’s regular rate of pay for any hours worked over 40 in a week.  However, the FLSA provides for various exemptions from the overtime requirement.

The most commonly used exemptions are for executive, administrative, and professional employees, and are often referred to as the “white collar” exemptions.  However, the FLSA does not define the terms “executive,” “administrative,” “professional,” or “outside salesman” and the regulations have generally required that each of the following three tests be satisfied for the exemption to apply: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the “salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (the “salary level test”); and (3) the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the “duties test”). 

The regulations also exempt “highly compensated” employees who “customarily and regularly” perform one of the exempt duties of an administrative, executive or professional employee, but who do not otherwise meet the duties test.  Currently, and since 2004, an employee earning $100,000 in total annual compensation (with at least $455 paid weekly on a salary or fee basis) would be exempt from overtime as a highly compensated employee.

Salary Basis Test – NO CHANGE

There were no proposed changes to the first requirement that employees be paid on a predetermined and fixed salary that is not subject to reduction.

Salary Level Test – BIG CHANGES!

Currently, and since 2004, any employee earning less than $455 per week ($23,660 a year) is considered “nonexempt” and therefore entitled to overtime pay for hours worked over 40 in a week, regardless of whether the employee is paid on an hourly or salary basis.

Under the DOL’s proposal, the salary level required for an executive, administrative or professional employee to qualify for exemption from the FLSA minimum wage and overtime requirements would increase from $455 a week ($23,660 a year) to $921 a week ($47,892 a year), based on 2013 data.  This means that anyone who makes less than $47,892 a year will be entitled to overtime pay for hours worked beyond 40.

The proposed regulations also set forth mechanisms for annually updating the minimum salary and if one of the annual update mechanisms is implemented, the DOL anticipates that the annual salary requirement in 2016 will be $970 a week, or $50,440 a year.

Duties Test – STAY TUNED

The DOL did not propose any changes to the duties requirements but did seek comments as to whether the duties tests should be updated.  Please stay tuned for Part II of this series for an outline of the current duties test. 

Highly Compensated Employees - CHANGED

The DOL’sproposed regulations increase the required salary for “highly compensated employees” to $122,148, indexed to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers.

The DOL’s proposed rule would effectively extend overtime protections to nearly 5 million white collar workers within the first year of its implementation.  Because the overtime regulations have not been updated in so long, employers have been able to classify more and more employees as exempt and therefore avoid paying overtime.  The overtime exception was originally meant to apply to highly-compensated executive, administrative, and professional employees although it now applies to workers earning as little as $23,660 a year. 

The DOL is expected to release its final rule later in 2016. 

Am I Entitled to Overtime if I am on Salary?

Maybe.

Just because your employer pays you a salary does not necessarily mean you are ineligible for overtime.  In other words, you may be entitled to receive overtime even if your employer tells you that you are not.

Whether or not an employee is entitled to overtime depends on the following factors:

  • First, you must make at least $455 per week. 
  • Next, you must be treated like a salaried employee – you cannot get docked for working less in a given week.  You must get paid the same every week, no matter what.
  • Finally, there is the nature of the work you do.  The more responsibility (and less supervision) you have, the more likely it is that you are not entitled to overtime.  And vice versa.

Confused?  Curious?  Just want to chat?  Contact us.  An employment lawyer is standing by to speak to you right now.

Can you get overtime if paid salary?

Are you entitled to overtime if paid salary?  Maybe.

How you are paid does not impact whether or not you are entitled to overtime.  This is true regardless of whether you are paid by the hour, by the day or by the week.  It also holds true if you are paid an annual salary. What matters is what you do, not how you are paid.  Whether or not you are exempt from federal and state overtime laws depends almost entirely on the nature of your work.

A common trick used by unscrupulous employers is to pay an otherwise non-exempt (i.e. entitled to overtime) employee a "salary" so that the employee - erroneously - believes that he/she is not entitled to overtime.  The employer's decision to pay a salary does not change the employer's obligation to pay certain employees time and a half for hours over forty in a week.  Another misconception is that if someone has a "manager" or "supervisor" title that they are not entitled to overtime.  Titles do not matter - only what you do matters.

While how an employee is paid (salary versus hourly) may impact the calculation of damages (i.e. how much you could win in a lawsuit), it will not impact liability (i.e. whether the employee is entitled to overtime compensation to begin with).

If you believe that you have been denied overtime, or if you have questions about overtime if paid salary, you should contact us today.  Consultations are free - you have nothing to lose.

For more information:

Overtime Law Basics - Debunking Overtime Myths

Q&A - NY Overtime Law

 

 

 

Courts Rule Alien Workers Have Rights Under FLSA

In March, 2013 Eleventh Circuit Court of Appeals held that “there is nothing in the [Fair Labor Standards (“FLSA”)] that would allow us to conclude that undocumented aliens, although protected by the Act, are nevertheless barred from recovering unpaid wages thereunder.”  Lamonica v. Safe Hurricane Shutters, Inc.  An undocumented alien’s “ability to recover unpaid wages under the FLSA does not depend upon his immigration status.” Four months later, on July 29, 2013, another federal appellate court, the Eighth Circuit Court of Appeals ruled that, “aliens, authorized to work or not, may recover unpaid and underpaid wages under the [Fair Labor Standards Act].”Lucas v. Jerusalem Cafe, LLC.

The United States Department of Labor’s policy was and is to enforce the FLSA “without regard to whether an employee is documented or undocumented.”

Although it is still unclear to the exact extent that these rulings will affect illegal alien workers, one thing is clear: the FLSA protects alien workers from being underpaid or unpaid.

What is workplace retaliation?

Our New York Employment Lawyers are often contacted by employees who believe that they are being illegally retaliated against. Workplace retaliation is unlawful. If you feel you have been retaliated against for making complaints in the workplace, you should know if you are protected under the law.  Our experienced employment lawyers can help yo to determine if you are being retaliated against. Think about these questions to see if you might be a victim of unlawful retaliation:

  1. Have you recently objected to any activity, policy, or practice of the employer which is in violation of a law, rule, or regulation?
  2. Have you recently refused to participate in any activity, policy, or practice of the employer which is in violation of a law, rule, or regulation?
  3. Have you recently disclosed, or threatened to disclose, to any appropriate governmental agency an activity, policy, or practice of the employer that is in violation of a law, rule, or regulation?
  4. Have you recently provided information to, or testified before, any appropriate governmental agency, person, or entity conducting an investigation, hearing, or inquiry into an alleged violation of a law, rule, or regulation by the employer?

Here are some examples of other types of complaints where the law protects you from retaliation.

Discrimination: If you are the victim of discrimination or harassment based upon your race, age, sex, religion, national origin, color, disability, genetic information, disability, sexual orientation, or your association with a person in one of these categories, then you have to follow your employer’s published discrimination/harassment policy and report it.

Wage/overtime violations: If you’re terminated for objecting to failure to pay wages owed or failure to pay overtime, you may be protected from retaliation under the Fair Labor Standards Act or your state’s wage/hour laws.

What to do:

  1. Put it in writing even if the employer’s policy says to have a meeting. You can present the written document at the meeting.  That way you have proof that you complained about something that’s protected.
  2. If you complain, keep it professional and to the point. Stick to the facts.
  3. Your employer is entitled to investigate your complaint. That means even if they have a policy of keeping your complaint confidential, your boss, the person you’re complaining about, and your witnesses and other coworkers will probably find out about it. Be prepared for that to happen, and be ready to report retaliation.
  4. If you are retaliated against for reporting something illegal, put your complaint of retaliation in writing. If the retaliation doesn’t stop, or if you get fired, disciplined, demoted, or a pay cut as a result, contact an employment attorney.

If you have any questions, or think you are being unlawfully retaliated against, contact us.  Our New York Employment Lawyers can help.