Could You Be At Risk Of An FLSA Lawsuit?

By | Accounting, FLSA, Nonprofit, Overtime | No Comments

A record number of FLSA lawsuits were filed against U.S. employers last year and with new overtime regulations due on December 1, this is a very good time to ask if you could be at risk.


As we reported earlier, another four million employees will be eligible for overtime pay under the new regulations and attorneys have warned this could lead to a spike in the number of disputes.


“We now have a new salary threshold that puts 4.2 million workers back into play,” said Daniel Abrahams of Brown Rudnick LLP in an interview with TSheets earlier this year. “You can bet the plaintiffs’ bar is busy monitoring this and looking for new cases.”


You may wonder what impact the Trump presidency will have on the new regulations and that remains to be seen, but experts warn it would be unwise to ignore the December 1 deadline. The Fair Labor Standards Act has been around for a long time — and it’s not going away anytime soon — so it’s a very good idea to get familiar with the regulations.


There are some great free resources out there to get you started and this one, recently published by TSheets, highlights seven of the most common risk areas:


1. Misclassification

8.6 million employees are currently misclassified and the consequences can be costly. It pays to know the difference between an independent contractor and an employee, and to know who is exempt from the FLSA and who is not.


2. Off-the-clock work

Mobile technology means more and more employees now work outside of normal hours and if they are nonexempt, this time has to be tracked and paid. This is already a common cause of disputes and more are expected after December 1.


3. Unauthorized overtime

When nonexempt employees work overtime they have to be paid for it, even if it was unauthorized. The rate is usually 1.5 times their normal pay but in some states, like California, the regulations demand more than this.


4. Breaks


Research shows that 4 out of 5 office workers now regularly work through their lunch breaks — but if they are nonexempt and the time is being deducted from their paychecks, their employers could end up in court.


5. Record-keeping


“To the degree that you don’t have this in place, start creating a really good paper trail,” says attorney Maria Hart from Parson, Behle & Latimer. “That’s an attorney’s best friend—to have documents that show what you were doing, not doing, and so forth. Document, document, document.”


6. Interns and volunteers


In 2015, just 39% of graduate interns were paid. But as attorney Mark S. Goldstein warns, a recent ruling could mean that more of them could be in future. “An employment relationship is created when the benefits to the intern are greater than their contribution to the business,” he says.


7. Regulatory changes


Should you be complying with state or federal laws? Or both? Are you following the latest labor department regulations? The shifting sands of labor laws makes it a challenge to get it right all of the time.


Disclaimer: Please refer to a professional tax or legal advisor regarding specific requirements of FLSA and how they impact your business. We do not recommend particular employee classifications or practices and leave those decisions to the discretion of your organization.

Final Rule: Overtime

By | FLSA, HR, Nonprofit, Overtime | No Comments

Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees under the Fair Labor Standards Act

On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations, which will automatically extend overtime pay protections to over 4 million workers within the first year of implementation. This long-awaited update will result in a meaningful boost to many workers’ wallets, and will go a long way toward realizing President Obama’s commitment to ensuring every worker is compensated fairly for their hard work.

Key Provisions of the Final Rule

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

  1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The effective date of the final rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

Although the Office of Management and Budget (OMB) has reviewed and approved the Final Rule, the document has not yet been published in the Federal Register. The Final Rule that appears in the Federal Register may contain minor formatting differences in accordance with Office of the Federal Register publication requirements. The OMB-approved version is being provided as a convenience to the public and this website will be updated with the Federal Register’s published version when it becomes available.