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I think it started here shortly we have today take a great topic that's very timely we're going to be talking a little bit off his wage and hour laws especially how they're gonna be changing obviously I won't be doing the talking they don't know anything above it so we have an Titanic and David Kinney from ogletree deakins here today they're going to be talking about this topic and myself Mike trigger for Minnesota National Bank and Jennifer Nelson you just want to thank you all for coming these lunch and learns we were glad you're all able to attend his lunch and learns really I think they're a good way for small business owners to say a forum with topics whether it's ones like this where is talking about all you need to compensate your employees for their time or whether it's you know social media marketing or things like that that we've done in the past we thank you for attending we also want to tell you that there will be some other topic so we're going to have coming up throughout the rest of the year or so and into early next year so you know please please be watching for that this is kind of the season where we've been doing these over the last few years so we'll send out more information to you along with the chamber and invite you to those on the road so if you ever need to stop into the chamber of sure Jennifer is willing to come and listen to you and would like your input and any ideas that we think we might be able to do and the same thing with the bank is any way we can help you out or there's an operate loan or getting a better checking account or doing remote deposit for your business there's no us no so I'm going to turn it over to any now and we'll talk about your topic today okay okay thanks Mike hello everybody thanks for having us here today we're happy to be here and going to have some fun david has never had the pleasure of being in Sauk center before but some of you may know that I have a connection if you know the banal family I'm married to one of them Susan so my mother-in-law lives little ways away from here and I have all sorts of other in-laws into the Sauk center area so I've been up here a lot we're going to be talking about wage and hour law obviously including all the new laws that you've probably heard about there's a printout of the PowerPoint that each setting and there's some space in there to take notes if you want to we would welcome questions at any time so just feel free to raise your hand or shout out or whatever and we don't know if any of you saw the debates last night but we thought in the spirit of the debates we would kind of try to you know pick up from where they left off so David's gonna he's going to be Donald Trump he's going to just interrupt me and insult me the whole time and I'm gonna just smile but then I'm going to race all your emails before you leave so why is why our wage and hour laws a hot topic I mean a lot of people are here today so obviously it is and you guys asked us to come up here and talk about it it's it's an area that's really growing legally in terms of the types of claims that employees or former employees rain against their employer the types of cases that we defend I should have mentioned we work at a firm that just represents businesses in HR issue so we defend these types of claims we advise employers and how to have good policies and good procedures so they don't get them in the first place so why is it such a hot topic well in the current administration's both at the federal state level you know whether you agree or don't with President Obama or mark date and I most things they are very committed to more on the employee side and less so much on the employer side let's put it that way so they have really kind of you know some would say declared war businesses in some of these areas the department of labor which is a federal agency will be talking about has stated that they believe that seventy percent of all employers in the country are violating the these out wage and hour laws in some way or another the State Department of Labor and Industry which is the state version I don't have any quotes like that from them but they are in some ways even more aggressive than the federal agency the number of lawsuits that have been filed about wage & hour issues has doubled in the last ten years it's actually gone up by seven times in the last 25 years a lot of these cases are class actions and there have been four times more waging our class actions now that there were about 20 years ago and there's more wage and hour claims lawsuits then there are discrimination and harassment claims at this point the Department of Labor that federal agency I mentioned has hired 350 full time investigators since 2010 just to focus on wage and hour investigations so that's one of the reason reasons as the agencies are really focused on them the other thing is that the lawyers who represent employees are focused on them you know if you have a choice as a plaintiff's lawyer of representing someone who claims that her boss touched her inappropriately or a class of 10,000 walmart employees who claim they weren't paid for their breaks you can imagine which of those cases going to put more money in your pocket so they're much bigger money types of cases that are easier to prove because in a discrimination case you have to show they fired me because of my age or my race or whatever you have to show intent by the player in an overtime case you don't even if the employer didn't mean to not pay you overtime doesn't matter you can still sue them and win so they're easy easier cases for the employees and their big bigger of money cases the lawyers like them the agencies like them and you're stuck with the results of that so that's why it's a kind of a big topic these days so what where do these laws come from that we're going to be talking about there's basically three sources we have under the federal law we have the weight fair labor standards act flsa so this is the federal law that talks about overtime minimum wage child labor all that sort of thing since it's a federal law it applies to the whole country there are some employers it doesn't apply to specifically when we'll talk about that in a minute but that's kind of the main source of most of these laws then the state each state also has its own separate state laws Minnesota that has its own version of the Fair Labor Standards Act which is we refer to as the mfsl a are in Minnesota Fair Labor Standards Act on Minnesota also has another set of laws in the statutes that deals with more kind of day-to-day issues like paychecks and travel time whatever just how people can get paid how you have to pay someone on their last day get to pain within 24 hours or just to the next pay day whatever so that's the third source another source of state law and so under the federal system loud okay under the federal labor relation of labor standards act flsa and the Minnesota FLSA will be talking about what coverage it looks like under these statutes and in specific in particular what the minimum way requirements are they there's some that new went into a fact August first of this year we'll talk about overtime pay provisions we'll talk about your requirements as an employer in terms of record-keeping and what you need to to keep how you should keep the records and we'll talk about regulations as it relates to child labor you know folks who are working on kits we're working on farms or bringing them along in the office doing a little bit of work here and there and we'll also talk about how under the FLSA or Minnesota Fair Labor Standards Act laws about employers providing the employees time for meals and breaks and and that's specific to Minnesota and not necessarily related to wage an hour but is something that as an employer you want to be thinking about as you manage your workforce in terms of hours worked and scheduling everything like that and while the laws are somewhat different generally employers should refer to the law that provides employees with the greatest amount of benefits right so we'll sort of point out the differences between what federal law requires and what Minnesota state law requires and when you see that if there's differences between the two employers should generally speaking go with the one that provides the most benefits to employers that's how the law is typically going to look at the issue okay so the first thing now before you even have to worry about what these laws say is do they even cover your business because some of them may not you may be familiar with the Family Medical Leave Act which is outside the scope of what we're talking about today but it's an example of the law that doesn't apply it to some businesses because you have to have 50 or more employees so first question does the delise wait an hour laws apply to me so the federal law applies to most to employers it's got three two requirements you have to be involved in interstate commerce so what does that mean at this point it kind of means everybody for the you know for all practical purposes if you if your business buys anything else from outside of Minnesota or if you sell anything outside of Minnesota you are in the cold stream of interstate commerce as the law puts it so this is kind of one of their requirements but it's somewhat irrelevant these days when these laws were first passed in the 1930s there were a lot more businesses that were purely local we didn't have the internet we didn't have all the shipping and all that so that's somewhat irrelevant there could be you know a small very small business that only does business locally that this would apply to but it would be rare more importantly maybe there's also a requirement for not the size of the business in terms of the number of employees but the size of the business in terms of revenues you have to have gross annual sales of at least five hundred thousand dollars a year to come under the Federal Fair Labor Standards Act so that part of it does get some small businesses off the hook in terms of the federal law there are some types of businesses as you can see there that are covered even if they are under five hundred thousand dollars hospitals residential care schools and public agencies so that's the federal law now you may think you know we're under five hundred thousand dollars so none of those eyes to me so I'm going to just eat my pizza and go home but not so fast because the state law doesn't have any such requirement state law applies to anybody in an employee and player relationship and you wouldn't be here today if you weren't in an employee employee relationship I'm seizure so if you have any employees at all you're covered by the state law there are a lot of types of businesses though that are specifically outside of these laws so so the laws will say here's who's covered and then they'll say but here's a list of specific industries that aren't covered so for example under the federal amusement parks recreational facilities camp and educational conference centers fishing agriculture may be an important one smaller newspapers switchboard operators babysitter's Border Patrol agents they're specifically outside the federal law the state law has exceptions to most importantly for your purposes perhaps the agriculture is not exempt under state law so if you're a dairy farmer like for example you aren't covered by the federal wage and hour laws but you are covered by the state wage and hour laws so you might think I don't have to pay overtime to the people that are working on my dairy farm because I'm not covered by that federal law and someday the state law the Department of Labor and Industry might come knocking at your door and say guess what you're not covered by the federal law but you are covered by the state law so that's a important distinction the state law does have exceptions for some salaried agricultural work workers it's not as broad as the federal law exception though it also in the state law accepts corn beat a seller's seasonal day camps circus fairs employees skis ski employees he resorts carnival workers elected officials babysitters taxi drivers police firefighters miners who work part-time municipal recreational programs conservation officers pilots and clergy so unless you are employing people in that group you are more than likely covered by the state law even if you're not covered by the federal law so in terms of what the law actually requires remember we talked about the minimum wage requirement and under federal law as you probably know the minimum wage requirement is seven dollars and twenty-five cent an hour but under minnesota state law as of august first the minimum wage requirement is 950 per hour for large employers and that's going to be employers who have annual gross revenue value of sales made or business done of five hundred thousand dollars or more and seven dollars and seventy-five cents so still 50 cent more than the federal minimum wage for small employers and that's basically going to be everyone else I mean any business with less than five hundred thousand dollars in annual sales revenue and then there's some some other categories that apply but still at seven seventy-five an hour for employees who work or under the age of 18 we'll talk about child labor laws in a moment and for employees who are under twenty years of age you can pay them the same rate for their training time within the first 90 days of their employment the wage requirements apply to both full-time and part-time employee a show there's no real just distinguishing a wage minimum for part-time and full-time employees doesn't matter if they're hourly or salary if they earn commission or even you know if they're doing piece rate type work the employer has a responsibility to regardless of how much you know an employer would play what pay for peace work that at the end of every hour or that at the you know when you're doing the payroll that they're getting that meeting that minimum threshold these apply to all hours worked so there's no again the minimum applies if there's true training time that people are going to you can't pay on some employees and they pay a different rate and that's fine as long as the minimum is at seven seventy-five an hour or 950 if you're a large employer for certain break times typically generally speaking any break times that are under the 20-minute mark should be paid time and we'll talk about breaks through later on in the presentation and really any other times when as an acquiring an employee to be available and otherwise work I should mention one other thing here is that in Minneapolis and I think in st. Paul as well some of the unions and other employee groups have started to push for increasing this in the state of Minnesota or at least in Minneapolis and st. Paul to fifteen dollars an hour throughout the country you've probably seen and heard cities and Nyssa pallet ease that have gone to twelve dollars an hour in New York after you went to 15 so it's I think you know over the next couple years is probably likely that at least in the cities you'll see this hike up and who knows if it'll go throughout the state or not but these are the numbers for now and as employers make sure that you're complying with it in paying their employees this minimum threshold rate just let's go back once we the tips do tips count toward the minimum wage the answer that question is different between federal law and state law under federal law tips do count as long as the person is getting too dot thirteen cents an hour straight pay and you have to give written notice to the employees that you're going to count their tips but the state law says no so on state law you still gotta pay the 775 or 950 an hour even if people make more than that with tips so that's minimum wage so what about overtime kind of talk about some of the basics here so federal law the one that we're all pretty familiar with if someone works more than 40 hours in a workweek which means consecutive seven-day period you've set you know our work week goes from sunday till Saturday or Monday through Sunday it can't you can't conveniently change it every week but it would be a seven day period after 40 hours the person has to
et one and a half times pay a distinction under state law that many of you may not be familiar with is that in state law the overtime requirement doesn't kick in until somebody works 48 hours a week so why is that important or not important it's not that important because like I talked about before you probably covered by the federal law anyway but it is important because if you don't meet that five hundred thousand dollar threshold you're not covered by the federal law or if you're in agriculture there's the exemption under federal law that I mentioned before but not under state law so if you are a dairy farmer and the State Department of Labor and Industry does come knocking at your door saying should then paying overtime they're going to say you should have been paying overtime after 48 hours they're not going to be saying it after 40 so you get a little bit of a break the state law so that's the basics there are some types of businesses that are not generally exempt from these wage and hour laws but are specifically exempt just from the overtime regulations that would include Department of Transportation employees dairy buyers radio and TV employees and smaller markets vehicle sales car dealership dealerships the sales that parts people delivery employees waterway employees taxi drivers firefighters police movie theaters for some reason timber woods employers national parks and forests those are all federal exemptions just for overtime so we've talked about minimum wage and we talked about overtime what about the third area major area is covered by this federal laws child labor all the basics are on the PowerPoint that you have in front of you so I won't just read through them here save a little time but as you can see the requirements for child labor varies based on how old the child is so there's more flexibility if they're sixteen or seventeen less if they're 14 for 15 in terms of what hours they can work number of hours they can work and under 14 very limited in terms of what they can do the ones you know things that you would think of you know babysitters can be under 14 child actors otherwise there wouldn't be any child actors newspaper delivery those types of things are okay for under 14 but it's pretty limited so if you have anybody between law under 18 you should make sure that you're not breaking the Fair Labor Standards that by having work more hours than they should are coming in before they should or staying after they're allowed to standing there are separate rules for agriculture employees in terms of child labour so as you can see during school hours so whatever that is 723 or whatever or if they're working in with hazardous machinery they have to be at least 16 if it's outside school hours so nighttime hours weakens it can be on at least four teens they could be 14 or 15 if they're between 12 and 14 so 12 or 13 that can only work in agriculture if that one of the parents works at the same place that has consented to it and under 12 they can work only in a family farm actually owned by one parents so in terms of record-keeping and particularly notice requirements under both state and federal law employers are required to post notice of an employee's right in a conspicuous place at the employees work site and I'm sure you all have these posters already posted and I've seen them they typically are in break rooms or hallways that lead to break rooms that's where I almost always are and employers have also started to post them on their intranet site if you have an intranet site that you use for employees so that they're also made aware and provided notice on those sites employees are also required to maintain records of employees each employees pay and hours for up to four at least three years so you know the file cabinets can get thick you can also keep them electronically but it's important to maintain for that three three-year period some employers are doing longer than that for time keeping records important to make sure obviously that they're complete and accurate that's under the statute in terms of posters and notices if you if you're an employer who haven't seen a notice or don't have a poster you can go online you can go to either the federal Department of Labor website or Minnesota's counterpart and you'll be able to get the language that's required for the further notice requirements this is also important in terms of the I don't know if you again the cities have both st. Paul and Minneapolis this year adopted paid leave regulations for the that apply to workers who work in Minneapolis and st. Paul even if the employers are located other places and there's some requirements around being accurate to know how much an employee works for them to qualify for some of this paid leave so that's another reason why it's important to keep the records accurate David mentioned the websites the federal one is really easy to remember it's just DOL gov Department of Labor the state I don't know offhand but if you just Google Minnesota Department of Labor and Industry you'll come up with that and that he said they both they not only have a list of what you have to have post it but I think there's links where you can have them send you the posters for free Jennifer just told me that probably the most important thing you'll hear us say all day is that you can go back for seconds if you're still so help yourselves Thank You Jennifer so one other thing that is covered by these Labor Standards Act by the federal one anyway there's a permit in there that says that you can't retaliate against an employee who makes a complaint raises an issue under this law so if somebody calls the Department of Labor and says hey my employer is not paying me overtime you can't fire them for that retaliation is illegal they can either if they are retaliated against they can either file a complaint with the wage and hour division of the Department of Labor or they can just file suit and this applies even if the employee is not actually covered by this federer fair labor standard deck so if you are under half a million dollars so you don't have to pay someone over time let's say under federal law but they think that you do and they make a complaint even if they're wrong you can't really retaliate against them and state law doesn't have a specific provision like that but it does have a much broader whistleblower statute that says you can retaliate against an employee for making a report of anything illegal so whether it's about overtime or that you're dumping toxic chemicals in the river or whatever you can't retaliate against employees who make good faith reports either to a government agency or to you as the employer or you're violating those are Minnesota whistleblower statute and these can be expensive cases was the lower claims are pretty common under state law anyway and if somebody Sue's you for that and when is they can get back pay if you fired them they can get reinstated if you fired them and you can have to end up not only paying your own lawyer but I was also paying their lawyer if they win now in terms of breaks and what an employer is required to give to an employee during the work day the federal statute doesn't speak to it but Minnesota state law does and there's no specific amount of time that's set forth in the in the law for how much time you're required to give but in terms of bathroom breaks every four hours and required to give enough time for employee to use the bathroom and for meal breaks it's every eight hours and the suggested timeframe is about 30 minutes for a lunch I mean the general practice is that an employee who's working about eighty eight hour shift typically gets about 2 15 minute breaks that are paid and then the 30-minute unpaid lunch break there's also a Minnesota law that specifically relates to mothers who need to express milk and the law requires that employers provide a private area that's not a bathroom so a separate private area with an outlet where the mother can go to express milk the employer is required to provide reasonable time for a mother to do so throughout the workday it doesn't have to be paid and but it does have to be reasonable time and those brakes are covered by the law any questions about that or any questions about anything we've gone over so far good oh yes great Noah desperately the question was a few and this I I'm glad you asked because I wasn't clear obviously the interstate commerce and the five hundred thousand dollars you have to meet both of those to come within the federal law so if you're under five hundred thousand and you're in interstate commerce you're still not covered right yeah okay just one reality check sometimes yep yeah that question and just repeating them for the cameras if an employee doesn't want to take their break and we get that question a lot you know this employee wants to work through their lunch break so they can leave a half hour earlier right or come in a half hour later it's a it's a violation I mean technically it's a violation what I would be worried about is that at some point they're not happy about something or maybe they've been let go and now they're going to say I never said I wanted to do that you know you told me I couldn't take a lunch break so you know it it it's it's a technically a violation you have to basically force them to take the brake and the danger is that while they may be all happy about it now at some point they might not be in the story might change employees tend to do that sometimes you know a little things that they were happy about when they worked for you now that you fired them all of a sudden they're not so happy about when they go talk to a lawyer I think that one other thing because this does come up a lot is that as an employer remember going back to the record keeping peace and employers needs to make sure that they're accurately recording the time both you know that the employee is working and taking breaks because oftentimes you'll see an arrangement like this where then you've got an employee who shows up taking all these breaks and then they come back and they say well I didn't take any of these breaks an employer of course as to say you're right we have this arrangement but then you've got another issue with falsifying the records so that needs to be accurately reflected whatever the breakouts on the on the records as well and you can't get around it by saying well you were scheduled to work eight to 430 why don't you just take your meal break at four o'clock and go home a half hour early that the Minnesota Department of Labor industry will just see that they work paid before and didn't get a break and they won't kill you for it so one other area that's covered by these state statutes is not covered by the Fair Labor Standards Act at either the federal or state level abide by those other separate statutes I mentioned before involves kind of the nuts and bolts of paychecks so under these laws you have to pay by a non-negotiable chapter order we all do that but you can't pay someone cash under the table you have to pay employees every month at least 15 is if they're like migrant workers one issue a question that we get a lot is about the final paycheck the final paycheck has to be paid if the person was terminated involuntarily you have to pay within 24 hours so we you should probably bring that final paycheck to the termination meeting with you or if you're not terminating them a person mail it to them right away if it's voluntary someone quits then obviously that doesn't apply because you did know they were going to quit most likely so in that situation you just had to pay them on their next regularly scheduled painting and another issue that comes up a lot is an employee left and they all the employer money we have loaned them some money or you know we advance some some hey maybe they work at a restaurant and they broke a bunch of dishes or you know something like that can you deduct that from their pay the answer is generally no you can do it only under certain circumstances you can deduct it from there check if they agree in writing after the debt is incurred so you can't have someone's when they start working for you to sign something saying I author as you to deduct if I break anything you opted for my paycheck you they have to sign it after they broke whatever it was and the written document that states what that is has to say exactly how much you're going to take out of each paycheck another exception to this final pay deal is that if someone works with money like they're your accountant for example you do have a tenday grace period to like audit the books before you pay their final paycheck so one another issue you know what what exactly do i had to pay people for do i have to pay people for travel time for training volunteer all these things that you can see on the powerpoint here so we kind of said here what the requirements are so i won't go over each of them because you can read them for yourselves but one thing clocking in and clocking out there are cases believe it or not where people have gone to court saying well I should get paid for the three minutes I had to stand in line waiting to punch in and the courts have said for the most part no that's not unpaid but one thing I want to note is that if you do have like that time clock situation you can't round the time to the nearest 15 minutes or whatever in a way that comes out always against the employee so you can't always round the start time back and round the finish time up you can do a rounding if you do it the same direction if that makes sense so as long as you always round forward or backward that's fine but you can't fix it so that you know they're always getting that the worst end of that of that bargain travel time comes up sometimes somebody has to travel overnight they only are entitled to be paid for that time you're in there traveling that will be normal during their normal working hours so if they are normally a day time employee and they travel somewhere overnight at night to work the next day that actually is not does not have to be paid donning and doffing is kind of a legal term that is used in some industries where people have to put on like protective gear or if they're working like in need packing facility they have to put on there whatever their robes and things that there's a lot of cases whether they have to be paid for that and the laws not very clear frankly there's cases on it but they're hard to understand but they basically say that if the time is indispensable to the person's duties then it has to be paid so if you have a specific question about that we can talk about it afterwards because it's kind of complicated but that's the basics of it only other one I'll mention is some people have jobs where they may work at a residential facility or something where they're actually permitted to sleep at night on the job so do they have to be paid for that if it's the answer is yes unless they're working less than 24 hours then they don't have to be and you but you can exclude up to eight hours of sleep if they have a place to sleep and if they get at least five hours of uninterruptedly the just a general concept about this whole hours of pay thing what if somebody works hours they weren't authorized to work didn't work well we didn't schedule them to work till six o'clock they just chose to work till six o'clock so I'm not going to pay him for it or I specifically told them you have to go home at four thirty but they stay until six o'clock so I'm not going to pay them for it no you can't do that as long as you know or should have known that they were working have to be paid now if they violate a directive that you gave them like nobody can work on authorized over time you can take disciplinary action against them because they violated what you told them to do but you still have to pay them for those hours okay we're going to talk a little bit more about overtime which is such a big issue these days with a new regulations which we are getting to hear so the overtime laws obviously apply to some employees and not other employees we all know that so what are what employees are not entitled to overtime pay well there's there's three tests that ha
e to be met before someone is exempt from overtime so a lot of times clients will say well that person's salary so they don't get overtime it's definitely not quite that simple that's one of the three tests but it's not the entire test so first of all they have to be paid a certain minimum amount that's the thing that is changing with the new regulations that will talk about so if you have someone that is salary and as a manager that is only making you know twelve-thousand dollars a year or something they can't be exempted they also have to be paid on a salary basis and we'll talk about what that means that does not only mean that they're paid per year per month that goes a little bit beyond that but they can't be paid hourly and they have to have certain duties so if you have someone who is a clerical employee maintenance employee even if you pay them on a salary basis and even if you pay sixty thousand dollars a year they can't be exempt from overtime because they wouldn't need this duties requirement and won't even talk in more detail about these things all right so to the talking about the first test of the salary level test which is the question of are they paid enough right so think about it in terms of three different buckets and the first is are they paid enough to qualify to be an exempt employee well first of all there's three categories of employees in which a threshold amount they have to make a threshold amount executive administrative or professional employee and Andy will talk more about what each of those categories of employees what that terminology means for these employees but in terms of just the threshold these employees need to make at least four hundred and fifty five dollars per week or twenty six thousand six hundred and sixty dollars per year annually and don't get to use of these numbers because there are new regulations you there in your slide we're going to talk about them later and they go into effect December first so for now these are the numbers a couple months from now numbers will change and as you can guess they're gone up but so that's that's the number for now as a computer professional there's a lot of different categories of individuals who would fall into the computer professional task the number is still for 55 per week or works out to be about 2763 per hour as you can guess for computer professionals you can just see anybody that has an information technology type duty what would likely fall into that category and then for outside sales people there's no salary requirement and then there's a separate rule which applies to highly compensated employees and will talk about what that that number is and what details of that in terms of the new rule that's going to take effect in December you have anything else on that one no okay so that's the first bucket second bucket is the question of are they paid on a salary basis and what does that mean right employees must receive each pay period a predetermined amount constituting all or part of the employees compensation the predetermined amount cannot be reduced because of variations in quantity or quality of the work and the subject to a few permissible deductions employees must be paid salary regardless of number of hours or days worked okay if and this is key because if an employer improperly deduct from an employees pay then the exempt status may be lost so an employee then would be classified as non-exempt and would be then subject to the overtime provisions in terms of permissible deductions there's a number of them some of them include if an employee is taking person of personal full-time days of absence except for sickness or disability and then if they take a full day absence and it's because of a signature disability it has to be related to a legitimate paid leave program right full day they can also you can also deduct four-day absences resulting from ridden disciplinary policies or safety rules as long as they're explicit written they know about them you can make deductions based upon that and although I so I think you know the general messages be cautious about deducting pay from salaried employees but if you do deducted and it's possibly impermissible there is a safe harbor provision so the law does provide employers with some leniency to say if it's an isolated incident if it was in verden if it was clearly communicated that the employer doesn't tolerate or permit improper deductions if you obviously stop doing the deductions may be going to in Verdun and if you promptly reimburse the employee so if you find the mistake out and you say oops sorry I didn't mean to deduct this because maybe you came to the seminar today and now you're going back and adjusting it that's fine I think you'll you'll be covered there there's a couple other that others that you can deduct for infractions of a workplace safety rule if you have a written policy on it and workplace conduct rule same thing or someone is on FMLA and deduct for partial day absences and then the someone let's say they start working on Wednesday and your work week is monday through friday the first week you don't have to pay them their full salary so if they start on wednesday you'd pay them for three fifths of that week same thing in the last week someone leaves on monday you just have to pay them for one day that week so this is important because you know even if someone is salaried again if you dock their pay for something that's not permitted the Department of Labor is going to say well you say they're exempt but you're not treating them as exempt because your docking their pay which indicates they're really hourly so this person is entitled to overtime and if they if they find it finds that it's a regular practice that you're violating this provision they could say not only is Mary here entitled overtime but everybody else that also is in that same job isn't entitled to overtime so you have lost the exemption by docking Mary's pay for one hour you've lost it for all the people on that assembly line or whatever well wouldn't be an assembly line probably but in that exempt group you've lost the exemption for all of them so certain employees can be considered exempt even if they don't fall within the two buckets we just talked about to test we just talked about those two tests tests don't apply to them we already talked about outside sales people but in addition to that practicing physicians practicing attorneys teachers and computer exempt employees paid at least that threshold per hour abound don't have to that those two tests we just talked about one apply to them so we talked about you talk about others three requirements to be exempt yet to make a certain minimum salary you have to be paid on a salary basis without deductions except under limited circumstances and the third is the job duties test you remember i mentioned before that someone is a clerical work or maintenance employee that can't be exempt no matter how much you pay them or how you pay them and that's where we get into this job duties test and what that looks at is the primary duty that the person does so the principle major most important thing they do and it they don't use a strict fifty percent type of test but if so let's say it's a restaurant manager maybe two-thirds of the time he or she is waiting on tables or bussing tables to help out but the other one third there more of a management function and supervising others even though that's less than fifty percent the law would say well it's still their primary duty they're just kind of doing the other stuff to help out but the reason that their their their reason for existing at that restaurant is to be a manager so that would be the primary duty and they would pass the test so when we talk about the primary duties you may have heard people talk about the so-called white collar exemptions those are kind of the main categories of types of employees who are exempt from overtime there's all sorts of other little exemptions to but the the main groups are these white collar exemptions so you have executive professional administrative employees and I'm not going to go through to like read all this stuff but you can see in the materials what are the requirements what are the duties that you have to do to be considered an executive employee first of all and this is basically the guy or the woman who owns the business or is at a very high level that would be an executive employee you can see the details of what the requirements are on the PowerPoint but you kind of know when you see it in terms of the executive if they're running with business then yes the one that gets you in trouble as an employer much more often is a so-called administrative exemption and that is not you think of an administrative employees may be someone that runs the office or that sort of thing that's not what this means this is somebody who as it says their primary duty consists of performing office or not manually work directly relate to the management or general business of the employer or its customers and it must include the exercise of discretion and independent judgment with respect to matters of significance so we see a lot of cases involving like assistant managers well that person is a manager it says so late in their title but they may not really be managing under the legal definition of what an administrative employee is if they're not that work has to relate to the business itself not just waiting on customers or whatever but the application of the business and they must have the ability to exert to exercise some discipline in management type decisions the third one is professional employees so this will be people with like normally an advanced degree lawyers doctors architects accounts that sort of thing they may not be running the business but at that level of expertise in education they are also exempt into the professional employee exemption there's an exemption for certain types of computer employees also it's not really considered one of these so-called white collar exemptions because it's was added after that part of the law clearly I'm not going to read all this to you can read it for yourself so there's if you have computer programmer types of employees look through this and see if they can be exempt and there's that was it 2763 an hour I think they have to make also which is different from the other exemptions in the last major categories outside sales people so this is not the person selling inside the store by phone assist someone was actually out on the road making sales they can qualify to be exempt under this outside sales exemption as you can see they must be customarily and regularly engaged in working outside of the premises there is an exemption limited exemption for insight types of salespeople those would be people that are that make more than half their Commission half their compensation through commissions and they work at a retail or service establishment the regular rate still must be at least one and a half times the minimum wage and they must actually work at the retail store so they can't work at down at headquarters or at the office they have to actually be there on the floor so that's the limited inside sales exemption and David mentioned before that there's also just in case that wasn't complicated enough there's kind of a separate exemption for highly compensated employees and they don't have to fit into the categories we talked about before as long as they're they must customarily and regularly perform at least one of the exempt duties that we've talked about they don't have to meet the other requirements as long as they are paid at least a hundred thousand dollars a year and that's one of those numbers that you shouldn't get too attached to because it's going to be going away in December first speaking of which damage is going to now walk us through the new regulations yeah so forget everything we just said I'm just kidding except as you can get sentenced Oh freaking right right don't forget that and actually the buckets and the tests that we talked about still apply but as of December firs the Department of Labor US Department of Labor has implemented a new rule that's going into a fact that will apply to it will apply to the f SI right so it's federal law that it's applicable to so if you're an employer in which the FLSA applies to you this is something to pay attention to you and if you're here you should pay attention anyway the it applies to a minimal threshold being raised for salaries so we'll talk about what that number is the the Department of Labor now has a rule that in part as part of the rule has added an automatic adjustment provision so that it will be fixed to inflation shall know you know it will automatically go up this minimum that's that part of the law is currently being challenged in court but for now as a December it will take effect in law it will make some changes to the highly compensated employee compensation be some increases in that that we'll talk about them there's a provision that allows for non discretionary payments to be made to meet the salary threshold so that as long as the basically bonuses can be made to meet the threshold amount so you don't have to pay a highly compensated employee all of it in terms of a salaried amount you can reserve some of that for bonus so applicability we know the date now we already know that what the FLSA applies to entities of 500,000 annual gross sales as well as certain public welfare entities like hospitals and schools and relates to employees engaged in interstate commerce just to you know note that because I know Jennifer mentioned that there may be some confusion well we only have five employees or eight employees so we don't come under these new regulations again that has nothing to do with it what all it matters is that you're covered by the Fair Labor Standards Act which is the thing we talked about before we have to be both in interstate commerce and also have revenues of over half a million dollars so if you meet those requirements even if you have two employees you'd come under these new regulations okay so the new minimum threshold salaries salary threshold is 913 per week or you know bi-weekly semi you can we did the math for you to make it easy and it's inside there and again this applies to executive administrative professional and computer computer tech employees for exemptions so look so it applies to all the ones we talked about except for the outside and inside sales people in turn I this is the automatic adjustment provision that I just mentioned it the minimum threshold will automatically be adjusted every three years using a 40-percent I love weekly earnings a full-time non hourly employees and the lowest wage census region which this this year happened to be in the southern region of the United States and based upon that you'll see that in 2020 the projection for the minimum wage increase or minimum wage threshold is scheduled to go up to 50 1168 dollars annually he means minimum wage in terms of it's not the actual minimum wages right yes don't don't panic don't yeah great the minimum salary threshold for exemptions that's right great Claire clarification that would be important and then the notice of actual updated salaries will occur with the you'll getting the Department of Labor will issue a notice of 150 days before it's scheduled to take a fact in terms of highly compensated employees the total annual compensation level is set at 90 percentile of earnings of full-time done hourly employees nationally so not based on per region and so it was a hundred and thirty four thousand four dollars annually based on the fourth quarter of 2015 the final regulations did not change annual catch up payments at the end of the year or within one month after the end of the year want to talk about yeah so that you you can hit that 134 by giving them a you know pretty huge bonus at the end of the year if they're only making the minimum of nine thirteen a week that's the new minimum to be exempt that's what that means so while you can pay them less than a weekly basis if you want to come under this hike highly compensated employee exception you have to make up at the end of the year with a ve
y large bonus and then like the the threshold we talked about before this is it annually adjusted and so on 2020 its projected to be 140 7524 as the minimum wage no the minimum wage for exempt employee so we have our firm has lobbyists and DC that are you know give us updates on all this stuff in there's there have been lawsuits filed a couple no of to stop these from going into effect December first and our our sources tell us that they expect that that still going to happen on December first that those lawsuits probably won't be successful but they may be successful in at least stopping the items with automatic increases every three years so stay tuned on that but you should probably assume that the December first data is good to go it's the other piece i was talking about with bonuses which is that the under the regulations or new role an employer is permitted to provide 10% of minimum salary may be non discretionary bonus incentive and and or compensation payment so if an employer wants to adjust that minimum threshold amount down by ten percent and reserve that into some type of non discretionary bonus that's paid out and and this might be helpful in terms of maybe cash flow or other projections an employer can do that the non-discretionary payments must be paid quarterly or more frequently again and II talked about the ketchup provision and just if you're doing the math in your heads you're thinking well if i paid the person 913 a week i'd have to pay him a lot more than the ten percent bonus to get up to that 134 so just to clarify that that the 134 is the highly compensated employee part of the law under that part you can pay a bonus of more than ten percent but everybody else everybody is making less than that the bonus at year-end to get them above this new threshold is limited to ten percent okay and I included it we're included in here some slot some suggestions about what you can do in terms of preparing for the December first deadline obviously auditing looking through your employee roster and the compensation that they're being they're receiving doing in order to find out if there are any employees that may may qualify for changing categories because of the new limits and if so I mean if they made quality we may have them classified as an exempt employee now with the threshold you've got to your not pin them what the new threshold will be employers need to make a decision as to whether they're going to increase that threshold increase employee salary or whether you're going to just let them be non-exempt employees and if so if you want to have them actually move up to that wage you'll need to just get into place ways in which you can do that whether it's you're going to do it now you're going to be sort of a step up type increase getting you to December firs those are certain ways to do that and obviously the communication plan for employees on how this is going to affect them is important and then consider you know the implications that it has to your payroll systems particularly if you're using the outside vendor as well as your internal human resources systems and policies just a couple of things here you know one issue that my clients have are having is well if we bump that person who's kind of at the low end of the totem pole up to this 9-13 a week you know that's all well and good we can survive that but that means the people that were you know one or two steps ahead of them on the totem pole they were only making 950 in a week or whatever so now we call it compression wage compression so it's another kind of you know unintended consequence of this it may require you not legally but just doesn't matter of keeping the masses happy and you know stopping the revolt from happening on your workplace you may have to raise other people's pay also so that they're still you know making more than the people that have gotten bumped up to this minimum again you don't have to do it legally I'm just talking about more of a HR issue that you may end up facing one other thing if you choose to say well rather than round and bumping that person's salary to the new threshold I'm just going to start paying them over time you can do that that's you know the other way to deal with these regulations one danger with that is that a smart employee might say well wait a second well if I'm entitled overtype now why wasn't I Oh entitled over time before I think you should have been paying me overtime all along because you know you're saying my job is non-exempt well that hasn't changed i'm still doing the same job just because the minimum salary went up didn't change my job so and we face the same issue like if a company does an audit of all their employees to see if they're properly classifying people as exempt or nonexempt sometimes we'll end up telling them well you know these five people that you haven't been paying overtime for because you think they're exempt they're really not so you should start paying them over time and again you do that and they say well wait a second why now you should be paying me for all those years that wasn't getting overtime so one thing that you can do is you know if you can legitimately change the job somehow it may be some minor way to say well that's because you were doing that before now you're doing this and it's different in some way then you can get away with it if you roll it out with kind of some overall you know we've we've got new job descriptions not just for you and coming up with these we've decided to reclassify you so there are ways that you can try to ease this transition to reduce the risk of the clever employees and then come after you for all the overtime but they haven't been getting paid in the past any questions we're going to transition to short of another sub topic thats related to wage an hour but you know this is a lot to digest and just any questions relative to these new regulations okay okay well we just have a couple other things um somewhat you know related topic I don't know if any of you have independent contractors of your workplace one of the other areas in which these government agencies are really coming after employers is saying yeah we're not buying that that person not really an independent contractor I don't care if they have an agreement that says they are they're not as a matter of law so you should have been paying them over time or you should be paying the minimum wage you should have been giving them benefits these are some of the reasons why you might have someone classified as independent contractor so you don't have to do those things can also be an issue with discrimination laws they don't apply generally to contractors but they do apply to employees I have had it come up several times already with unemployment situations where somebody was an independent contractor and they're let go and they file for unemployment and my clients like well how can they get unemployment they were not an employee they were independent contractor and the state unemployment office seems to be on kind of a vendetta on this issue and yeah is not buying that either they're often saying know that person was an employee and that not only over time that it could throw you know all the people in that group of employees and the question in terms of whether you should have been treating them all his employees so what is the legal test said before it's not enough just have them sign something saying yeah I have an independent contractor that they have there's a the law or uses what's called an economic realities test which consists of six factors that a court or the Department of Labor will look at to see if someone is really truly an independent contractor and we have them listed earn the materials if they are integral working in an integral part of the business more likely they're an employee if their managerial skills affect profits and loss and it goes about saying they're probably not an independent contractor you would not normally entrust a contractor with that type of authority if they if they are investing more in the facilities the equipment that sort of thing that's again more likely an employee if they exercise independent business judgment that means are probably a contractor because they're doing this on their own and not just following the directions that you're giving them that's where the independent part of independent contractor comes in permanency and duration if someone has been working with you for 20 years it's going to be hard to convince anybody that they're an independent contractor that's more likely to be an employee based on the length of time they work there and I kind of mentioned a little bit before the amount of control you have over the person that's probably the most important factor so the Department of Labor's our unemployment whoever they're going to look at how closely did you supervise the person did you tell them you know you're just paint the house use your own supplies we don't care if you painted from left to right or right to left you know you're on your own just make sure it gets done that sounds more like an independent contractor if you're telling them everything is every little minutia what time to be there you know what equipment to use them they're more likely an employee so some tips if you're using independent contractors to protect that relationship I mentioned a couple times about having an agreement and I kind of said it doesn't matter what it does matter it helps to have an agreement it's not going to end the question you know you could still lose but it helps to have them sign something that says they're a contractor don't control the work control the results you know I want that room painted in this way but so how to get there that's up to you don't cover their expenses an independent contractor should cover his or her own expenses don't try to have them sign a non-compete agreement that would be a very bad idea because you can't control a contractor in that way let them hire assistance even don't include them when you have employee meetings parties and the holiday parties the softball game whatever you might feel bad because you want to include them that don't because that's going to make them look more like an employee similarly they should not go through any kind of training or orientation they should have that know how before they come to work for you don't give them an employee handbook they're not bound by that because they're not your employee and if someone has been working with you for a long time and they're going to retire don't bring them back as a quote consultant and say that they're independent contractor doing exactly the same thing they were doing before if they were an employee before the Department of Labor is going to say well nothing has changed other than you're calling them something different and that this doesn't cut it finally if you have an independent contractor who's doing the same exact job that an employee is doing that is a problem because any of these agencies are in courts going to say well that doesn't make sense an employee's doing the same thing we think this person is an employee just real quick this is maybe something that doesn't apply to a whole lot of you but there's an increasing issue out there about joint employment also you're seeing it a lot with like franchises someone at work said the American across the street it's they work for some local franchisee they don't work for some big mother corporation in New York called American incorporated but courts have been increasingly been tying both the franchisor in the franchisee together and saying if somebody discriminated against them or didn't pay the minimum wage or overtime we're going to get both of you both the franchisor in the franchisee it can also happen if you have two related companies maybe you own to small businesses that are in some ways related you may think that if one of them if somebody's makes a claim for overtime or something they're only going to make it against the one company if you're two companies are too closely interrelated they could drag the other one into and say that their joint employers so just real quick to the key here is to keep things separate separate books separate employees separate policies separate supplies all that whether you're in a vertical relationship with the franchisor above you or a horizontal relationship where you own several businesses to avoid this joint employment situation just make sure to keep everything separate between the two companies so I I know you everyone needs to get back to work and get on with your day if you have any questions and you want to share them now we're happy to answer them will also stick around here for a while afterwards and you can come up and ask at that point any questions yes sir 14 hours you mean like comp oh yeah okay right that question is about comp time so I have clients will call me and say well this person were we accidentally let them work 45 hours this week but they're going to take five of those hours as comp time next week so we don't pay them overtime rate no there's no exception of these laws for comp time if they weren't more than 40 you got to pay them overtime even if they only work 20 the next week great question anything else hmm okay so like if you think the person might owe you some money back at their final paycheck no voluntary you have within 24 hours you're a sec Lester's attending okay I know the question is about this tenday grace period for final payment why I mentioned before that if the person is involved with accounting or something you have 10 days to audit and the question is what about if it's not with money but other supplies that they may be responsible for I don't think that 10-day rule applies that I don't you have you looked at that no i think it's only for people that are you know literally involved in finances but if there is a dispute about how much you owe them the 24-hour rule is you just you if there's a bona fide dispute about what's owed them that's another exception to the 24 hours that you can say well we had a dispute so i didn't pay them that amount they think they're owed i paid them what I thought they were out I think generally my my own advice would be to just stick with the cash portion so if it's accounting related to accounting for cash and books that would apply if it's supplies or other things that would be a separate issue that you would need to if you once your accounting forward and if you found some deficiency it would be other ways to try to recover it in it you know we've just been talking about wage and hour laws if you have questions about reasonable accommodations for disabled employees or for Muslim employees who want to have their pro great or what can asking an application or sexual harassment or discrimination feel free to come up afterwards and ask us and maybe we'll come back and give you another hour on that whole separate topic at some point all right so i think it's we're just about out of time right so thank you again for having us here and spending some time with us if you have questions feel free to come up afterwards if you have questions after today you've got our contact information give us a call shoot us an email happy to answer it for you and talk through any issues that you might have thank you
