Fair Labor Standards Act (FLSA) Online Training

1. Fair Labor Standards Act(FLSA)Online Training Last revised October 2008

2. Contents of Online Training • Real Life Cases • About Fair Labor Standard Act (FLSA) • Paid Time & Overtime • UNM Policy • Bargaining Unit Contracts • Compensatory Time

3. Contents continued • Shift Differential • Volunteers, Employees, and Independent Contractors • Losing FLSA Exemption • DOL Audits and Damages

4. Trends • Department of Labor recovered over $173 Million in back wages for over 246,000 employees in 2006…up from $166 Million for 241,000 people in 2005. • Over $10.5 million in civil money penalties were assessed in 2005. • The number of people collecting back wages has increased by 14% since 2001 and monetary backwage collections has increased by 30% since 2001.

5. FLSA Cases Family Dollar Stores: • Employer misclassified some employees as managers when their primary duty was not management. • The employees were awarded $19.1 Million

6. Civil Cases Merrill Lynch settled a case involving both state wage and hour violations and violations of the FLSA with a payment of $31 Million.

7. Civil CasesContinued IBM recently was ordered to pay $65 million in unpaid overtime back pay to workers who were deemed to be incorrectly classified as "exempt“ from the FLSA.

8. UNM PACT • The DOL reviewed UNM jobs. 1800 jobs were misclassified as exempt that should have been non-exempt. • 1996-The University retroactively reviewed 2 year’s pay on these employees to determine overtime wages that were due.

9. What applies to UNM? • The following applies in the order below: • State and Federal laws and regulations • Bargaining Unit Contracts • UNM Policies and Procedures If you can’t find anything in the contract, then refer to the Policy Manual. Don’t forget to use your Human Resources Consultant as a resource (see listing at the back of training)

10. Fair Labor Standards Act FLSA What is it? Established in 1938 to protect employees. Establishes basic requirements regarding pay and work.

11. What Is It? • Overtime payfor time worked over 40 hours in a work week for certain jobs • Overtime payment = 1.5 times “regular rate” • Regular rate includes shift differentials, bonuses, and other compensation • Restrictions on the employment of children • Record keeping requirements FLSA applies to all non-exempt employees including students. However the minimum wage provision does not apply to them.

12. Exempt vs. Non-Exempt FLSA classifies employees in two categories: • Exempt Employees (Exemption from FLSA) • Non-exempt (Not Exempt from FLSA)

13. Who Qualifies for Exempt Status • Executive Employees (Involved in management of business) • Administrative Employees (requires a high level of discretion and judgment) • Professional Employees (areas requiring prolonged intellectual study) • Some sales staff • 1996 Amendment includes exemption for some computer software employees. • 2004 Amendments to wage criteria-The employee must make a minimum of $23,660 per year.

14. Non-exempt Employees • Non-exempt Employees are not exempt from the FLSA and the employer is required to compensate the individual at a rate of time and ½ for any hours worked over 40 hours in a work week. • The workweek is defined as the 7 day work week defined by the employer. For UNM that is Saturday at 12:01 am to Friday at midnight.

15. Changes to Act (April 20, 2004) • Increased amount on the salary test-If the employee makes less than $23,660/year ($455/week), he could lose his exemption. • This is also true for part-time exempt employees. If their pay falls below $1971.63 per month, they could lose their exemption. • New designation requires the non-exempt employee to have a primary duty of performing non-exempt work (non-exempt work over 50% of the time).

16. UNM Policy 3305 Overtime: • Supervisors should arrange non-exempt workloads so that an employee can complete his/her duties in a 40 hour workweek. However, supervisors may require employees to work overtime. • Authorization is required from the supervisor before OT is worked

17. Overtime • If the employee works unauthorized overtime, the University will still make payment of OT in accordance with FLSA. • However, disciplinary action may be taken against the individual for creating this liability without obtaining prior supervisory approval.

18. How is overtime allotted? • Non-union: Management discretion • CWA (see Article 8) • Staff are offered overtime within their job title and work unit (as defined by management) first on the basis of seniority and then on the basis of the least number of OT hours credited to each employee. • The most readily available employee may be utilized for emergency overtime. Emergency overtime is not counted on the list of overtime credited.

19. Overtime Allotment Cont. USUNM (see article 12 section H) • OT is assigned on a rotating basis within the job classification needed, taking into consideration the needs of the work unit • The rotation of overtime will be offered based on the least number of overtime hours worked and offered to an employee.

20. Overtime (UNM Policy) 2610 Overtime records • The system will keep records on OT hours worked but in order for tracking purposes to offer overtime for CWA employees, this may need to be tracked on one document, including the OT offered but turned down (this counts against the employee as if they had worked the time in the CWA contract) • This may be requested by the Union, the Department of Labor, or the University Audit Department • Document…Document…Document

21. Union Contracts In addition: • CWA (see article 8 section 2.1) • Time-and-a-half is paid for hours in excess of 10 consecutive hours is paid • When an employee is called back to work after having completed his/her normal workday (minimum 2 hours pay at time- and-a-half.

22. What are considered hours worked? At times employees may be required to make themselves available to work on an as needed basis outside of their normal work hours. Waiting time/Standby (See contracts and Policy 3500, Wage and Salary Administration) Compensation for standby status will be determined by the degree to which an employee's free time is restricted: • restrictions on the employee's location • expected response time to return to work • number of other employees available to be called • frequency and urgency of calls received

23. Standby Pay Continued • Employees will be paid standby pay if while waiting to return to work they are so restricted that they cannot pursue personal activities.  • If employees are called back to work while on standby, they will be paid at their regular rate of pay for the hours actually worked or at time and a half for any overtime that is worked. This also applies to work done outside of the office. So if an employee has to call people to arrange things over the phone or has to do things on the computer when called, the person is working and has to be paid for that time.

24. It is often easier to have exempt employees on standby since standby pay does not apply. 

25. Standby Pay Continued • If the employee may have to do work, he/she must not be impaired. • He/she must be able to return to work, if needed within a short time (30 min. to an hour is suggested). • Carrying a beeper or leaving a phone number where one can be reached does not require compensation unless some of the conditions listed are met. • Contact your HR Consultant with any questions.

26. The employee should be told specifically that he or she is in an “on standby status” for a particular timeframe, that he/she must meet the requirements, and that the he/she will be compensated at a particular rate. • Contact your HR Consultant regarding the rates.

27. Hours Worked Cont. • Time required to change into or out of uniforms or other required activities (prep work/close out procedures) before or after work period • Traveling from worksite to worksite • Personal visits to other UNM Departments • Employees must arrange visits so as not to interrupt business operations and must notify the supervisors when they are leaving.

28. Hours Worked Cont. • Work related emergencies such as fires, etc. • Inclement weather • Callback pay (CWA) (at time and ½ regardless of total hours for the week) • 1 approved class per semester • Meetings and required training

29. Hours Worked cont. There are special regulations surrounding travel time. • During regular work hours • During regular work hours on weekends (University has decided to pay beyond this). • Hours during a one day trip • Outside of work hours if • a) driving • b) working The provisions around travel time can be tricky. Contact your Consultant for specific cases.

30. FLSA does not govern the following: • Breaks/lunch • Vacation • Sick leave • Holidays (but UNM does pay OT over 40 hours) • Leave with Pay

31. Lunch Breaks-FLSA & State Law • Although the FLSA and state law do not require lunch periods, per state law if lunch is taken, the period shall be no less than 30 minutes. • Policy (3300-Paid Time) governs lunch. The lunch period should be taken away from the work area. It is unpaid. • If a non-exempt employee eats lunch at his/her desk and answers the phone or speaks with customers, that individual is doing work and must be paid for the time. • Remember the intent of the lunch period -- to rest and return as a productive and happy employee… DON’T LET YOUR EMPLOYEE WORK DURING LUNCH!

32. UNM Policy 3300 Unpaid Time • Meal Breaks • Managers should give 30 minutes to 1 hour for each 8 hour shift scheduled approximately in the middle of the shift. Subject to business needs. • Managers may give 30 minutes to 1 hour for each shift of at least 5 hours. Subject to business needs.

33. UNM Policy 3300 Paid Time • Rest periods • 15 minutes for every 4 hour period scheduled in approximately the middle of the 4 hour period dependent upon business needs. • Employees should not work during this period as the policy is intended to allow the employee to rest.

34. CWA • CWA has very specific scheduling language. Please review the Contract for specific information.

35. Compensatory Time-UNM Policy 3310 Because we are a public employer, our supervisors may allow non-exempt employees to take compensatory time off in lieu of overtime pay.

36. Compensatory Time-UNM Cont. The following criteria must be met: • Both parties have to agree to the use of compensatory time and it must be noted in writing. • Maximum allowable accrual of 120 hours (see individual contracts for Unions). Employee must be paid time-and-a-half for anything above the maximum. • It must be used within 90 days (otherwise it must be paid)(If the employee is under a union contract, these deadlines may vary). • Upon Separation from UNM the employee must be paid for any unused compensatory time.

37. Compensatory Time-UNM Cont. • Time off is taken at a rate of time-and-a-half for the numbers worked over 40 hours (choose the time-and-a-half Comp Time earnings code).

38. Things that can get you into trouble • Pre-paying employees • Employees can only get paid for work already done or leave taken in compliance with policy. • Employees have to have leave accrued to be paid for time off.

39. State Law • It is against state law to knowingly make or receive payment for services not rendered. • The only periods during which an employee can be paid when not working are for approved leaves as defined under policy. • See the University Business Policies or Student Handbook.

40. Other issues that can get you into trouble… In other words everything is in real time! It must be factual.

41. Other issues that can get you into trouble… • Employees must be paid at the approved wage…no more, and no less. • If Payroll is estimated because it is turned in early and the time changes, a payroll adjustment form must be used to correct it in the pay period. • The employee must not start working until the hiring is complete.

42. Other issues that can get you into trouble • Student Employment and Graduate Studies has certain allowable maximums that an employee must not work beyond. Circumventing their policies can have several implications which could affect the employee. (Contact Student Employment and Graduate Studies for maximums) • In addition, circumventing the process or other pay policies by trying to make payment in another manner inconsistent with policy could be grounds for disciplinary action up to and including discharge.

43. Proper Cause for Disciplinary Action • From UBP 3215, Performance Management “Falsification (deliberate) or omission of information on employment applications or resumes, time cards/records, or other University records” constitutes proper cause.

44. Proper Cause for Disciplinary Action • UBP 2200, Whistleblower Protection and Reporting Suspected Misconduct and Retaliation, Section 2 also defines misconduct as “Falsification of documents or reports.”

45. Shift Differential Union Contracts(Subject to change with negotiations) • CWA(see article 7 section 4): Applies to all hours in the shift • Normal work schedule requires more than 4 hours of work between 4:30 pm and midnight=40 cents for the shift • Normal work schedule requires more than 4 hours of work between midnight and 8:00 am=50 cents for the shift

46. Shift Differential • USUNM (see article 11 section D): Applies to all hours in the shift • 5% per hour when at least half of regular work hours are between 4:30 pm and midnight. • 10% per hour when at least half of regular work hours are between midnight and 8:00 am.

47. Shift Differential Cont. Policy 3500 • Non Union • Paid when at least ½ of hours worked are between 4:30 p.m. and 8:00 a.m. the following day. • Must be applied to all hours worked in the entire shift. • Contact your HR Consultant when setting shift differential rates.

48. Separations • Payment of wages within 5 working days of when the employee is normally scheduled to receive pay (state law) • In other words, turn in your separation paperwork immediately so final checks can be cut. • The separation will also trigger the employee to be paid any outstanding pay due to him. • We can not hold the final check for monies owed to UNM or for not turning in uniforms or equipment. • In addition, the untimely processing of separation paperwork can result in an overpayment to terminating exempt employees.

49. Volunteers • Services have to be offered freely without the expectation of compensation for services provided • If the employee is employed by the same public employer providing the same types of services, the employee cannot be a volunteer • A formal volunteer program should be in place. • An employee may not volunteer in anticipation of securing a future paid position. • Contact Safety and Risk Services regarding insurance. Work with your HR Consultant regarding these cases.

50. Volunteers Cont. Rule of thumb: If we currently have a job description for that type of job, the person shouldn’t be a volunteer, particularly if you need the person on a long term basis. This person should be an employee.