new york flsa lawyer

Proposed Changes to FLSA Overtime Rules - Part II

The Duties Test

As we discussed in our last post, the most commonly used exemptions from the FLSA overtime pay requirements 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”). 

Although the DOL did not propose any changes (in its June 30, 2015 FLSA amendment proposals) to the duties requirements it did seek comments as to whether the duties tests should be updated.  The following outlines the current duties test. 

Administrative Employees – In order for an administrative employee to be exempt, he or she must satisfy the “salary basis” and “salary level” tests described above and the duties test. A primary duty of the employee must include:

  • 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 and
  • the exercise of discretion and independent judgment with respect to matters of significance.

Executive Employees – In order for an executive employee to be exempt, he or she must satisfy the “salary basis” and “salary level” tests described above and the duties test. A primary duty of the employee must include:

  •  management of the enterprise in which the employee is employed or manages a customarily recognized department or subdivision thereof,
  • customary and regular direction of the work of two or more other employee, and
  • the authority to hire or fire other employees or input (suggestions and recommendations) regarding the hiring, firing, advancement, promotion, or any other change of status of other employees that is given particular weight.

Professional Employees – In order for certain professional employee to be exempt, he or she must he or she must satisfy the “salary basis” and “salary level” tests described above and the duties test. A primary duty of the employee must include:

  • the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character. Advanced knowledge must be in a field of science or learning, and such knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction, or;
  • work that is original and creative in a recognized field of artistic endeavor, or;
  • teaching in a school system or educational institution, or;
  • work as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field.

For each of the categories above, the employee must perform work that requires the consistent exercise of discretion and judgment or “requiring invention, imagination, or talent in a recognized field of artistic endeavor.”

Outside Sales Employees – In order for an outside sales employee to be exempt, he or she must satisfy the duties test.  The salary requirements do not apply. A primary duty of the employee must include:

  • making sales of tangible or intangible items such as goods, insurance, stocks, bonds, or real estate or obtaining orders or contracts for services or the use of facilities; and
  • Customary and regular work away from the employer’s place of business in performing the employee’s primary duty.

For more information on the current duties test and the FLSA exemptions for executive, administrative, professional and outside sales employees, please see the DOL’s Wage and Hour Division’s Fact Sheet (https://www.dol.gov/whd/overtime/fs17a_overview.htm).

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. 

I am being forced to work off the clock. What should I do?

In general, an employee’s “hours worked” include all time an employee must be on duty, or on the employer's premises or at any other prescribed place of work. All employees must be paid for all time worked. So if your employer is forcing you to work off the clock, you may be entitled to additional compensation (even if you are paid a salary).

Common examples of work off the clock:

  • Your employer asks to you set up, open a store or facility prior to clocking in.
  • Your employer makes you clock out for a meal break, but nonetheless makes you work during that period.
  • Your employer automatically deducts some period of time from your hours (usually for an assumed “break”), but does not compensate you for work you performed during that time.
  • Your employer asks you to clock out and then, after you are clocked out, perform additional work (e.g. cleaning up, shutting down, etc.).

Am I entitled to additional compensation:

Probably. This comes down to a determination of whether an employee is exempt or non-exempt. For further information that should help you determine whether or not you are exempt, these links may be helpful:

What to do if you are being forced to work off the clock:

  • Collect the facts – you need to get a sense of how much you are working off the clock, whether any additional employees are also working off the clock. Get any documents you have about off the clock work together.
  • Contact an employment lawyer – get a better understanding of your rights. We offer a free initial consultation. In most situations involving work off the clock we do not collect a fee unless we get recovery for our client.  Contact us today for a free consultation.

Apple Retail Workers Sue Over Unpaid Wages, Overtime

Many retail stores require security bag checks of employees as they are leaving the store on break or ending their shift. But, stand and wait for the inspection for up to 10 minutes when you’re supposed to be getting a break or going home? Many employees find it unfair, but that’s exactly what two former Apple retail store employees are alleging. Amanda Frlekin and Dean Pelle are suing the technology titan, Apple Inc., for back pay. Both plaintiffs claim that they are owed monetary compensation for overtime and unpaid wages. While Frlekin feels that she was not paid approximately $1,500 in wages each year, over the course of her time with Apple, Pelle similarly calculates that he was shorted about $1,400. These sums were based on each employee’s hourly wage and the approximate total time that they spent waiting for security bag checks each week. If this is true, the Fair Labor Standards Act may have been violated by Apple Inc.

According to the Fair Labor Standards Act, nonexempt employees must be paid time and a half (one and a half times the hourly rate) when work exceeds 40 hours in a week. It also demands that all employees be paid at least the federal minimum wage. However, if found guilty, it is possible that Apple has also violated labor laws in the states where the plaintiffs were employed – New York, California, Georgia, and Florida. It is also possible that the lawsuit will be expanded to include numerous Apple retail workers in a class action suit.

Other retail businesses, such as Forever 21 and Polo Ralph Lauren, have already experienced similar lawsuits involving similar accusations by their employees. In the case of Polo Ralph Lauren lawsuit, it was reportedly settled in 2010 for $4 million. Whether the Frlekin and Pelle have a winning case, the message the two are sending is clear – your time is always worth something. If you can relate to this violation of labor laws and feel that you've experienced unfair compensation, contact a knowledgeable NY employment law attorney at Granovsky & Sundaresh PLLC.

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.