Fair Labor Standards Act Compliance and Payroll Issues

1. Fair Labor Standards ActCompliance and Payroll Issues Mary Ann Saenz-Thompson, SPHR, SHRM-SCP Human Resource Generalist Texas Association of Counties

2. Disclaimer This training is designed to provide general information about the subject matter covered. Neither TAC nor the trainers are engaged in rendering legal advice. If you need legal advice, TAC recommends that you seek the services of a competent attorney who is familiar with your specific situation.

3. Fair Labor Standards Act The FLSA does six things:

4. Vacation, holiday, sick or severance pay Meal or rest periods (except nursing mothers) Premium pay for weekends or holidays No daily overtime is required Pay raises or fringe benefits Discharge notices or immediate discharge pay Limits to number of hours worked (except for under the age of 16) Fair Labor Standards Act Does not require:

5. Exclusions • Independent Contractors • Control, profit or loss of investment, permanence skill) • Volunteers • If specific requirements are met • Must be sporadic • DOL determines case by case 29 C.F.R. 553.101

6. Volunteers • Paid expenses, reasonable benefits; IRS • Different capacity from regular job • Occasional or sporadic employment • No overtime calculation • Infrequent, irregular, or in scattered instances. 29 C.F.R. 553.101

7. Must be an employer-employee relationship Employ means “suffer or permit” to work Timesheets with actual hours worked are critical to the employment relationship Employment Relationship

8. Employee Classifications Elected officials are not defined as employees under the Act

9. Dispatcher Deputy Sheriff Detention Officer Cook LVN Deputy Clerk Maintenance Equipment Operator Non-Exempt Employees

10. Required for each employee 7-day (168 hour) recurring period May begin on any day of week and any hour of day 207(k) is an exception to this work week rule All time actually worked in workweek must be counted to determine if overtime has been worked – Paid leave not counted Each 7-day work week stands alone Defined Workweek Non Law Enforcement

11. Employees must be paid at least minimum wage ($7.25 hr) for all hours worked: Includes all time spent in the service of employer On call time may or may not be time worked – Freedom test - 29 C.F.R. 553.221 Having a county vehicle and county radio is not working Being at home with the understanding you may be called out again is not working Hours Worked

12. Overtime includes all hours actually worked over 40 in the workweek: Daily overtime is not required Dual employment counts time from both jobs worked Workweeks cannot be averaged Paid leave is not counted as hours worked Overtime Non Law Enforcement

13. Overtime for non-exempt employees who actually work over 40 hours: Paid at 1 ½ x regular (hourly) rate; OR, Compensatory time at 1 ½ hours comp time for each overtime hour worked Employees cannot give up their right to overtime if they actually work it They will receive comp time or pay depending on the county policy for actual hours worked Overtime

14. Overtime includes all hours actually worked in the work period - 7 days/43 hours up to 28 days/171 hours: Daily overtime is not required Dual employment counts time from both jobs worked as a county employee Work periods cannot be averaged Paid leave is not counted as hours worked Overtime Law Enforcement

15. Reports, washing car, taking care of police dog - 29 C.F.R. 553.221 Training, lectures, meetings - 29 C.F.R. 553.226 Meals and rest periods (20 min.) - 29 C.F.R. 553.223 Hours Worked For law enforcement: Pre-duty or post-duty activities that are an integral part of the employees principal activity: Attendance outside of normal work hours which is required for your certification is not compensable hours

16. Drug dog policies in writing Must prove time spent on dog is documented on every single timesheet Can be incorporated into regular schedule Stipends might be problematic; overtime Every single day the dog is in the employee’s care, days off, vacation days, sick days, etc. 30 minutes of work Hours Worked For law enforcement: Pre-duty or post-duty activities that are an integral part of the employees’ principal activity:

17. Non-FLSA Compensatory Time • “Other” compensatory time. • Not required by statutory FLSA provisions. • Based on county policy. • No requirement for 1 ½ times pay--can be straight time. • Keep separate from regular compensatory time balances. 29 C.F.R. 553.28

18. DOL Definition: Non-exempt employees must be paid overtime pay at no less than 1 and ½ times the employee’s regular rate of pay for hours worked in excess of 40 in a workweek. *Counties may use comp time, however, when employee leaves, comp time must be paid at Regular Rate. FLSA – Regular Rate

19. FLSA – Regular Rate Examples of inclusions in the Regular Rate: • On-call pay • Longevity pay • Incentive or certificate pay • Paid lunch – not associated with travel

20. FLSA – Regular Rate Examples of exclusions from the Regular Rate: • Travel expenses • Reasonable uniform allowances • Payments for use of comp time • Mileage reimbursement

21. Applies only to state and local government Employee can use at any time unless absence unduly disrupts department - 29 C.F.R. 553.25 Can require employee to use at county’s convenience (Christensen v. Harris County) Can require employee to use at county’s convenience - even before use of vacation or sick - Caution You must keep records - 29 C.F.R. 553.50 Comp Time Policy

22. Employee cannot lose comp time - 29 C.F.R. 553.27 Used Cashed out at any time by County choice Paid at termination Maximum accruals allowed - 29 C.F.R. 553.24 - 240 hours all employees except law enforcement - 480 hours law enforcement Comp Time

23. What About Time Keeping? Employers may use any timekeeping method they choose, but it MUST be accurate and complete for each non-exempt employee. Records must be kept at the place of employment or central records office and open for DOL inspection. Records must be kept for at least 3 years. Recording KeepingRequirements29 C.F.R. 516

24. Record Keeping • Time and day of week when employee’s workweek begins • Actual hours worked each day • Total hours worked each week • Basis on which employees wages are paid (hourly or salary) • Total daily, weekly and work period straight time earnings • Regular rate for overtime calculation

25. Complete and accurate record required Governmental record Falsification: Texas Penal Code 37.10 Absence of Records = PROBLEMS Need signed timesheets – Need both employee and supervisor signature If you make changes on the timesheet, initial each change you make Write a policy Time Sheets

26. Three Tests for Exempt Employees

27. Exempt from receiving overtime pay Must be able to prove how you came to exemption Should have written documentation as back up No deductions for quality or quantity of work Can require set hours and set times to be at work Adopt a safe harbor policy – sample attached Exempt Employees

28. The minimum salary level must be: Annually: $23,660.00 Monthly: 1,971.66 Bi-Weekly: 910.00 Weekly: 455.00 Salary Level Test

29. The minimum salary level must be: Annually: $ 35,308.00 Monthly: 2,942.33 Bi-Weekly: 1,358.00 Weekly: 679.00 Salary Level Test Proposed 2019

30. Executive Employees - (29 C.F.R. 541, Sub B) Primary duty is management of a recognized department. Directs 2 or more employees Authority to hire, fire, advance, promote employees; or, recommendations are given particular weight. Exercises discretion “Primary duty test”---short and long tests eliminated* Exempt Employees

31. Administrative Employees - (29 C.F.R. 541, Sub C) Primary duty is performance of office/non-manual work directly related to management policies or business operations. Exercises discretion and independent judgment with respect to matters of significance. “Primary duty test”—short and long tests eliminated* …Exempt Employees

32. Learned Professional Employees(29 C.F.R. 541, Sub D) Primary duty must be the performance of work requiring knowledge of an advanced type …,or; Work that is original and creative in character In a field of science or learning…customarily acquired by a prolonged course of specialized intellectual instruction Exercises discretion and judgment “Primary duty test”—short and long tests eliminated* …Exempt Employees

33. Payroll Tax Requirements *Federal Insurance Contributions Act (FICA) $132,900 income cap subject to Social Security payroll tax.

34. Other Payroll Considerations County Extension Agents Adult Probation Employees Unemployment Taxes or Reimbursing Employer

35. QUESTIONS?

36. We suggest… • Review job duties and job descriptions • Apply the standard test for exempt employees • Conduct a self audit – correct errors ASAP • Review timesheets • Review recordkeeping methods