WHAT IS “AT WILL” EMPLOYMENT?

The relationship between employer and employee in America has traditionally been based on the concept of "at-will" employment.  Under this concept, persons not having a specified length of employment could be terminated or could quit, without legal liability to either party, "for a good reason...a bad reason...or for no reason at all."

During the last century or so, however, and particularly within the last forty years, the U.S. Congress, the courts and state legislatures have placed limitations on an employer's freedom to terminate employees without reason or notice.  Increasingly, employers' decisions to terminate employees are being challenged in court and employers are being subjected to substantial fines and penalties for violation of employment laws.

Limitations placed on an employer's right to discipline or terminate an employee include:

   •     Breach of an express or implied contract

   •     Discrimination (on the basis of race, color, national origin, sex, religion,

           citizenship,  age, disability, military status, union activities and other

           characteristics that are protected by state laws.)

   •     Retaliation against an employee who has reported an alleged violation of the law

           by the employer (whistleblower)

   •     Wrongful discharge in violation of public policy (i.e. it is a wrongful discharge

           and/or a violation of public policy for an employer to terminate an employee

           because the employee refused to perform an illegal act or because he/she was

           performing a public duty.)

   •     Invasion of privacy

   •     Special considerations related to certain kinds of leaves of absence

   •     Special requirements for layoffs

   •     Special considerations in the case of bargained-for employees.

Keep in mind that these considerations may come into play even when an employee resigns or retires, apparently voluntarily, if the employee later claims, under the doctrine of "constructive discharge," that he/she was forced to leave for an illegal reason, such as his or her age, race or sex, or because working conditions were intolerable due to race or sex, or because working conditions were intolerable due to illegal harassment or retaliation.  In this situation, the resignation or retirement should be analyzed as if it were an involuntary termination.

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WHAT DETERMINES IF A POSITION IS EXEMPT FROM OVERTIME? (Changes in FLSA administrative rules may not be followed by your state's regulators.  Call TMT for the latest interpretation.)

Salary Level

Three Salary Tests for Exemption

To qualify for exemption, employees must meet three tests for each exemption:

•    An exempt employee must earn a minimum amount;

•    The minimum amount must be paid on a salary basis; and

•    Exempt employees must perform certain executive, administrative

       or professional job duties set forth in the regulation.

Minimum Salary Level-$455/wk

The minimum salary level required for exemption is $455 per week (equivalent to $11.375/hr), which must be paid “free and clear” – that is, the $455 can not include the value of any non-cash items that an employer may furnish to an employee, like board, lodging or other facilities (for example, meals furnished to employees of restaurants). 

For employers that have adopted pay periods longer than one week, the equivalent of the $455 per week salary level is:

        •    $910 for biweekly pay periods;

•    $985.83, for semimonthly pay periods; and

•    $1,971.66, for monthly pay periods.

Highly Compensated Test

The regulations also recognize that highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) are exempt if they customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee identified in the standard tests for exemption.

Total Annual Compensation

Total annual compensation includes: 

•    Commissions;

•    Nondiscretionary bonuses; and

•    Other non-discriminatory compensation earned during a 52-week period.

Total annual compensation does not include: 

•    Credit for board, lodging or other facilities;

•    Payments for medical or life insurance; and

•    Contributions to retirement plans or fringe benefits.

Office or Non-manual Work

The highly compensated test is not available for:

•  non-management production line workers;

•  non-management employees in maintenance, construction and

     similar occupations such as carpenters, electricians, mechanics, plumbers,

     iron workers, craftsmen, operating engineers, longshoremen,

     construction workers, laborers; and

•  other employees who perform work involving repetitive operations

     with their hands, physical skill and energy.

Customary & Regularly

The phrase “customarily and regularly” means a frequency that must be greater than occasional but which may be less than constant.  Tasks or work performed “customarily and regularly” include work normally and recurrently performed every workweek; it does not include isolated or one-time tasks. 

If a highly compensated “white collar” employee customarily and regularly performs one or more exempt duties, detailed analysis of all the job duties performed is not necessary.  For example, an employee may qualify as a highly compensated executive employee if the employee customarily and regularly directs the work of two or more other employees, even though the employee does not meet all of the other requirements in the standard test for exemption as an executive.

Salary Basis Test

Generally, “salary basis” means that an exempt employee: 

•   must regularly receive, each pay period and on a weekly or less frequent

      basis, a “predetermined amount” of compensation, and

•   that cannot be reduced because of variations in the quality or quantity

      of work performed. 

However, for a few identified exceptions, the exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked.  However, exempt employees need not be paid for any workweek when they perform no work.

Deductions From Salary

An employee is not paid on a salary basis if the employer makes deductions from the predetermined salary, for example, for absences caused by the employer or because of the operating requirements of the business. 

If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.

Permitted Salary Deductions

The regulations contain seven exceptions to this salary basis, “no pay-docking” rule.  Employers may make deductions from salary of exempt employees in the following situations:

•   An absence from work for one or more full days for personal reasons, other

      than sickness or disability;

•  An absence from work for one or more full days due to sickness or disability

     if deductions made under a bona fide plan, policy or practice of providing

     wage replacement benefits for these types of absences;

•   To offset any amounts received as payment for jury fees, witness fees, or

      military pay;

•   Penalties imposed in good faith for violating safety rules of “major significance,”

      such as “no smoking” rules in explosive plants, oil refineries and coal mines;

•   Unpaid disciplinary suspension of one or more full days imposed in good faith

      for violations of workplace conduct rules, such as rules prohibiting sexual

      harassment or workplace violence;

•    Proportionate part of an employee’s full salary may be paid for time

       actually worked in the first and last weeks of employment; and

•    Unpaid leave under the Family and Medical Leave Act.

Improper Deductions

One important point to note is that deductions are allowed for certain types of absences are for “one or more full days.”  This means a deduction may be taken from the salary under this language only in full-day increments.   

•   Deductions for partial-day absences violate the salary basis rule generally,

      except those occurring in the first or final week of someone’s employment

      or for unpaid leave taken under the Family and Medical Leave Act.  So,

      for example,  if an employee is absent for one and a half days to handle

      personal affairs, the employer may only deduct for the one full-day absence.

      The employee must receive a full day’s pay for the partial day worked to meet

      the salary basis rule. 

•   Other examples of improper deductions include:  a deduction of a day of

      pay because the employer was closed due to inclement weather;

•   a deduction of three days of pay because the employee was absent from work

      for jury duty; and

•   a deduction for a two-day absence due to a minor illness when the

      employer does not provide wage replacement benefits for such absences.

Effects of Improper Deductions

What is the effect on an employee’s exemption status if an employer makes improper deductions from the salary?   

•  If the facts show that the employer had an actual practice of making improper

    deductions from salary, the exemption will be lost, and overtime pay due

     for hours worked over 40 per week during the time period in which improper

     deductions were made, to employees in the same job classifications and

     who work for the same managers responsible for the actual improper deductions. 

•  Employees in other, different job classifications, or working for other, different

     managers, would not lose their exempt status.  Isolated or inadvertent

     improper deductions, however, will not result in the loss of exempt status

     if the employer reimburses the employee for the improper deduction.

Safe Harbor

The regulations provide a safe harbor for employers who have a clearly communicated policy prohibiting improper deductions.  If an employer:

•   has such a clearly communicated policy which prohibits improper

      deductions and includes a complaint mechanism,

•   reimburses employees for any improper deductions, and

•   makes a good faith commitment to comply in the future, then the employer

      will not lose the exemption for any employees.

Unless the employer willfully violates the policy by continuing to make improper deductions after receiving employee complaints.

Clearly defined policy

The best evidence of a clearly communicated policy is a written one distributed to employees before the improper pay deductions occur, for example, by providing a copy of the policy to employees when they are hired, publishing it in an employee handbook or distributing it to employees over the employer’s Intranet.

Payroll Practices that DO NOT Violate the Salary Basis Test

A number of common payroll and recordkeeping practices are allowed that do not call into question whether someone is paid on a salary basis. 

For example:

    •   taking deductions from exempt employees’ accrued leave accounts;

    •   requiring exempt employees to keep track of and record their hours worked; and

    •   requiring exempt employees to work a specified schedule; and implement bona

          fide,  across-the-board changes in schedules.

Additional Compensation

Another common question that arises is whether exempt salaried employees may be paid additional compensation, without affecting their exempt salaried status.  An employer may provide additional compensation besides the minimum guaranteed salary to an exempt employee without losing the exemption or violating the salary basis test, as long as the employment arrangement includes a guarantee that at least the minimum $455 weekly amount will be paid on a salary basis.  For example, an exempt employee guaranteed at least $455 each week on a salary basis may also receive additional compensation for working beyond the normal workweek, which may be paid on any basis such as a flat sum, bonus payment, a straight-time hourly amount, time and one-half, or any other basis, and can include paid time off.  Similarly, the exemption is not lost if an exempt employee who is guaranteed at least $455 each week on a salary basis also receives additional compensation in the form of commissions on sales or a percentage of the profits.

Hourly, Daily or Shift Basis

In addition, an employer can calculate an exempt employee’s earnings on an hourly, daily or shift basis, without losing the exemption or violating the salary basis requirement, if the employer:

•   guarantees that at least the minimum weekly required amount will be paid on

      a salary basis regardless of the number of hours, days or shifts worked, and

•   there is a “reasonable relationship” between the guaranteed amount and

      the amount actually earned.

Reasonable Relationship

“Reasonable relationship” means the weekly guarantee is roughly equivalent to the employee’s usual earnings at the assigned hourly, daily or shift rate for the employee’s normal scheduled workweek. 

For example, an exempt employee guaranteed at least $500 per week and who normally works four or five shifts each week, may be paid $150 per shift without violating the salary basis requirement.  The reasonable relationship requirement applies only to situations where the employee’s pay is computed on an hourly, daily or shift basis; it does not apply, for example, to an exempt store manager paid a guaranteed salary of $650 per week who also receives a commission on store sales or profits, which in some weeks may equal or even exceed the guaranteed salary without violating the salary basis requirement.

Fee Basis

Administrative and professional employees may also be paid on a fee basis rather than on a salary basis.  An employee is paid on a “fee basis” if the employee is paid an agreed sum for completing a single and unique job, regardless of the time required to complete the work.  Payment on a “fee basis” is not available for a series of non-unique jobs repeated an indefinite number of times for which payment on an identical basis is made over and over again.  Payments based on the number of hours or days worked and not on the accomplishment of a single, unique task are not payments on a fee basis.

To test whether a fee payment meets the minimum level required, consider the time worked to complete the job and determine if the payment is at a rate that would yield at least $455 per week if the employee worked 40 hours.  For example, an artist paid $250 to paint a portrait that took 20 hours to complete meets the minimum salary requirement since the rate would yield $500 if 40 hours were worked.

No Salary Requirement

The salary level and salary basis requirements do not apply to outside sales employees, licensed or certified doctors, lawyers and teachers.  Employees in these occupations are exempt regardless of their salary.  In addition, Section 13(a)(17) of the FLSA exempts hourly paid employees in certain computer-related occupations if they are paid at least $27.63 per hour ($57,470/yr.)

Executive

Summary

In addition to the salary requirements, the executive exemption applies only if the following three duties requirements are met: 

•   the employee’s primary duty must be management;

•   the employee must customarily and regularly direct the work of two or

      more employees; and

•   the employee must have the authority to hire or fire other employees, or

     have his/her suggestions and recommendations as to hiring,

     firing, advancement, promotion or any other change of status be given

     particular weight.

Primary Duty

Primary duty means the principal, main, major or most important duty that the employee performs.  An employee’s primary duty is determined by looking at all the facts, with the major emphasis on the character of the employee’s job as a whole.

Important factors to consider when determining the primary duty include:

•   the relative importance of the exempt duties as compared with other types

      of duties;

•   the amount of time spent performing exempt work;

•   the employee’s relative freedom from direct supervision; and

•   the relationship between the employee’s salary and the wages paid to other

      non-exempt workers for the same kind of nonexempt work.

The amount of time spent performing exempt work can be a useful guide, and employees who spend more than 50% of their time performing exempt work generally will satisfy the primary duty requirement. 

Time alone, however, is not the sole test, and nothing in the regulations requires exempt employees to spend more than 50% of their time performing exempt work.

Management

The regulations define the term management by listing a number of examples of management activities.  Management includes activities related to supervising employees such as

•    interviewing, selecting, and training of employees;

•    setting and adjusting pay rates and work hours;

•    maintaining production or sales records;

•    conducting performance appraisals;

•    handling employee complaints and grievances;

•    disciplining employees; and

•    planning and apportioning work among employees.

Management also includes other functions related to running or servicing a business such as:

•    determining the merchandise to be bought, stocked and sold;

•    providing for the safety and security of employees;

•    planning and controlling the budget; and

•    monitoring or implementing legal compliance measures.

Department or Subdivision

An exempt executive must manage the entire business or have management responsibility over a “customarily recognized department or subdivision” of the business.  A “department or subdivision” is a subpart of the business that has “a permanent status and continuing function.” 

•   The subdivision need not be physically within the employer’s establishment

      and may move from place to place. 

•   The mere fact that the employee works in more than one location does

      not invalidate the exemption. 

•   In addition, if an executive supervises employees in a recognized unit, it does

      not matter if some of the employees are drawn from other recognized units. 

On the other hand, a mere collection of employees assigned from time to time to a specific job or series of jobs is not a recognized subdivision.

For Example:  A corporation may have several large departments such as finance, legal, marketing and human resources, each of which is a customarily recognized department.  But, recognized subdivisions also include different areas organized under the larger departments.  Thus, an exempt executive may manage the compensation, benefits or labor relations functions within the human resources department.  Recognized subdivisions can also be geographically separate offices or branch establishments.  In a sales organization, for example, the managers in charge of each regional or district office could be exempt.

Customarily & Regularly

The phrase “customarily and regularly” means a frequency that must be greater than occasional but which may be less than constant. 

Tasks or work performed “customarily and regularly” include work normally and recurrently performed every workweek; it does not include isolated or one-time tasks.  Thus, normally, an exempt executive employee must direct the work of other employees at least once a week, but not every day.  Also, an exempt executive will not lose the exemption if an occasional week passes during which the executive does not give direct instructions to a subordinate.

Two or More

The term “two or more other employees” means that the exempt manager must supervise two full-time employees or the equivalent.

Full-time generally means 40 hours per week.  However, the Department will recognize industry standards defining full-time employment as 37 ½ hours or 35 hours per week, for example, but not less than that.  Therefore, an exempt executive generally must supervise other employees who work a total of 80 work hours not including the hours the executive works him/herself. 

Supervision can be distributed among two or more exempt executives, as long as each executive is responsible for supervising 80 work hours of other employees each week.  Thus, for example, a department with five full-time nonexempt workers may have up to two exempt supervisors.  Of course, the work hours of nonexempt employees cannot be counted more than once.  Thus, if two supervisors share responsibility for two full-time nonexempt workers, neither of the supervisors would be exempt.  Examples of acceptable full-time equivalents: two full-time employees; one full-time employee and two half-time employees; and four half-time employees.

Particular Weight

An exempt executive employee must have “the authority to hire or fire other employees” or must have his or her suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status be given “particular weight.”  A key term in this element is “particular weight.”  Factors to consider when determining whether an employee’s recommendations are given “particular weight” include, but are not limited to:

•   whether it is part of the employee’s job duties to make recommendations;

•   the frequency with which recommendations are made or requested; and

•   the frequency with which the recommendations are relied upon.

Generally, an exempt executive’s recommendations must pertain to the employees he or she supervises.  A recommendation can be given particular weight even if a higher-level manager reviews it.  The exempt executive need not have authority to make the ultimate decision.  However, “particular weight” does not include the occasional suggestion about a co-worker.

Concurrent Duties

A common question that arises under the executive exemption is how to classify employees who perform both exempt management duties and nonexempt duties.  The regulations state that a manager who performs both exempt and nonexempt work at the same time is not automatically disqualified from the executive exemption. 

Generally, the exempt executives themselves make the decision regarding when to perform nonexempt duties.  In contrast, the nonexempt employee generally is directed by a supervisor to perform the exempt work or performs the exempt work for defined time periods. 

For example, if an assistant manager’s primary duty is management, performing work such as serving customers, cooking food, stocking shelves and cleaning the establishment does not preclude the exemption.  An assistant manager can supervise employees and serve customers at the same time without losing the exemption.  In contrast, a relief supervisor or working supervisor whose primary duty is performing nonexempt work on the production line in a manufacturing plant does not become exempt merely because he occasionally has some responsibility for directing the work of other nonexempt production line employees when, for example, the exempt supervisor is on vacation.

20% Owner Executives

Finally, the regulations recognize certain business owners as exempt executives.  Employees who own at least 20% equity in a business and are actively engaged in the management of the enterprise are exempt executives.  For example, an employee who owns 20% of the business and manages the finances of the business is an exempt executive.  Conversely, a person who owns 20% of an enterprise, but whose only responsibility is to run a cash register would not qualify as an exempt executive.

Administrative Duties

Summary

In addition to the salary requirements, the administrative exemption applies only if: the employee’s primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and the employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.  These elements contain a number of important terms that are defined in the regulations. We have already discussed the definition of “primary duty.”

Management or General Business Operations

The phrase “management or general business operations” refers to the type of work the employee performs.  To meet this requirement, the employee must perform work that is directly related to assisting with the running or servicing of the business.  This type of work is different, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.

Work “directly related to management or general business operations” includes, but is not limited to, work in such areas as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; human resources; employee benefits; public relations and government relations; legal and regulatory compliance; computer networks, Internet and database administration; and similar activities.

Employer’s Customers

An exempt administrative employee’s primary duty must be the performance of work directly related to the management or general business operations of the employer or the employer’s customers.  The regulations explain that the term “employer’s customers” means that employees who are acting as advisors or consultants to their employer’s clients or customers also may be exempt.  This would include, for example, those working as tax experts or financial consultants.

Discretion & Independent Judgment

Exercising “discretion and independent judgment” generally involves an employee comparing and evaluating possible courses of conduct, and acting or making a decision after the various possibilities have been considered. 

 The term “matters of significance” refers to the level of importance or consequence of the work performed.  In determining whether or not an employee exercises discretion and independent judgment, all the facts involved in the particular employment situation must be considered.  The term implies that the employee has authority to make an independent choice, free from immediate direction or supervision.  However, employees can exercise discretion and independent judgment even if their decisions or recommendations are reviewed, and occasionally reversed, at a higher level.

The regulations list a number of factors to consider in determining whether an employee exercises discretion and independent judgment with respect to matters of significance.  These factors include, but are not limited to whether the employee:

•   has authority to formulate, affect, interpret, or implement management policies

      or operating practices;

•   carries out major assignments in conducting the operations of the business;

•   performs work that affects business operations to a substantial degree;

•   has authority to commit the employer in matters that have significant

      financial impact;  

•   has authority to waive or deviate from established policies and

      procedures, without prior approval;

•   has authority to negotiate and bind the company on significant matters;

•   provides consultation or expert advice to management;

•   is involved in planning long- or short-term business objectives;

•   investigates and resolves matters of significance on behalf of management; and

•   whether the employee represents the company in handling complaints,

      arbitrating disputes or resolving grievances.

The exercise of discretion and independent judgment must be more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources. 

The exercise of discretion and independent judgment also does not include:

•   applying well established techniques, procedures or specific standards

     described in manuals or other sources;

•   clerical or secretarial work;

•   recording or tabulating data; or

•   performing other mechanical, repetitive, recurrent or routine work. 

      For example,  an employee who simply tabulates data is not exempt as

      an administrative employee, even if they are called a “statistician.”

Use of Manuals

Using a manual, however, does not automatically disqualify an employee from the Section 13(a)(1) exemptions.  Exempt employees may use manuals, guidelines or other established procedures if they:

•   contain or relating to highly technical, scientific, legal, financial or

      other similarly complex matters; and

•   that can be understood or interpreted only by those with advanced or specialized

      knowledge or skills.

The Section 13(a)(1) exemptions are not available for employees who simply apply well-established techniques or procedures described in manuals or other sources within closely prescribed limits to determine the correct response to an inquiry or set of circumstances.  The rules of the use of manuals applies to all of the Section 13(a)(1) exemptions.

Insurance Claims Adjusters

The regulations contain a number of examples to illustrate when employees meet the duties requirements for the administrative exemption. 

For example, although exempt status depends on the actual job duties performed by the employee, insurance claims adjusters generally meet the duties requirements for the administrative exemption if they perform work such as:

•   interviewing insureds, witnesses and physicians;

•   inspecting property damage;

•   reviewing factual information to prepare damage estimates;

•   evaluating and making recommendations regarding coverage of claims;

•   determining liability and total value of a claim;

•   negotiating settlements; and

•   making recommendations regarding litigation.

Financial Services

Financial services employees may meet the duties requirements for the administrative exemption if their duties include:

•   collecting and analyzing information regarding the customer’s income,

      assets, investments or debts;

•   determining which financial products best meet the customer’s needs

      and financial circumstances;

•   advising the customer regarding the advantages and disadvantages of

     different financial products; and

•   marketing, servicing or promoting the employer’s financial products.

A financial services employee whose primary duty is selling financial products does not qualify for the administrative exemption.

Human Resources

Similarly, some human resources employees may be exempt administrators, while others are not.  Human resource managers who formulate, interpret or implement employment policies generally meet the administrative duties requirements.

Personnel clerks who “screen” applicants to obtain data regarding minimum qualifications and fitness for employment, but make no hiring decisions, generally are not exempt administrative employees.

Other Exempt Positions

Other examples of employees who may meet the duties requirements for the administrative exemption include: 

•   an employee who leads a team of other employees assigned to complete

      major projects;

•   an executive assistant or administrative assistant to a business owner or

      senior executive of a large business who has been delegated authority

      regarding matters of significance; and

•   management consultants who study the operations of a business and

      propose changes in organization.

Non-exempt Positions

In contrast, employees who generally do not qualify as exempt administrative employees include:

•   employees performing ordinary inspection work involving well-established

      techniques and procedures;

•   examiners and graders who perform work involving comparison of products

      with established standards;

•   comparison shoppers who merely report the prices at a competitor’s store; and

•   public sector inspectors or investigators.

Learned Professional Duties

Summary

In addition to the salary requirements already discussed, the learned professional exemption applies only if the employee’s primary duty is the performance of work requiring advanced knowledge in a field of science or learning which is customarily acquired by a prolonged course of specialized intellectual instruction.

Advanced Knowledge

The regulations explain that work requiring “advanced knowledge” means work that is predominately intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment. 

An exempt professional employee generally uses the advanced knowledge to analyze, interpret or make deductions from varying facts or circumstances.  Work involving routine mental, manual, mechanical or physical work is not work requiring advanced knowledge. 

Advanced knowledge cannot be attained at the high school level.

Field of Science or Learning

Fields of science or learning are occupations with recognized professional status, as distinguished from the mechanical arts or skilled trades.  Fields of science or learning include: law, theology, medicine, pharmacy, accounting, teaching, architecture, engineering, actuarial computations and the physical, chemical or biological sciences.

Prolonged Courses of Specialized Intellectual Instruction

This phrase “prolonged course of specialized intellectual instruction” means that the learned professional exemption is limited to professions where specialized, academic training is a standard prerequisite for entering the profession.  The best evidence that an employee meets this requirement is possession of the appropriate academic degree.

The learned professional exemption is not available for occupations that may be performed with:

•   only the general knowledge acquired by an academic degree in any field;

•   knowledge acquired through an apprenticeship; or

•   training in the performance of routine mental, manual, mechanical or

      physical processes. 

The exemption also does not apply to occupations in which most employees acquire skill by experience.

Customarily

The word “customarily” means that this exemption is also available to employees in such professions who:

•   possess substantially the same knowledge level,

•   perform substantially the same work as the degreed employees, but

•   who attain the advanced knowledge through a combination of work

      experience and intellectual instruction. 

Such employees may include the occasional lawyer who has not gone to law school, or the occasional chemist who does not have a degree in chemistry.

Doctors

The learned professional exemption applies to any employee who holds a valid license or certificate permitting the practice of medicine, including:

•    osteopathic physicians,

•    podiatrists,

•    dentists, and

•    optometrists. 

The exemption is also available to an employee who holds the requisite academic degree for the general practice of medicine and is engaged in an internship or resident program.

Nurses

Registered nurses who are registered by the appropriate State examining board generally meet the duties requirements for the learned professional exemption.  However, many registered nurses receive overtime pay because they are paid by the hour, not on a salary basis as required for exemption.  Licensed practical nurses generally do not qualify as exempt learned professionals.

Other Registered Health Professionals

       •   Registered or certified medical technologists:

o    3 yeas of pre-professional study in an accredited college or university, plus 1 year of professional study in an accredited school of medical technology.

•    Dental hygienists:

o    4 years of pre-professional and professional study in an accredited college or university.

•    Certified physician assistants also generally meet the duties requirements for the

       learned professional exemption if they successfully complete four years of study

       in an accredited college or university:

o    4 years of pre-professional and professional study including graduation from an accredited physician assistant program.

Other Exempt Professionals

Other exempt learned professionals include: lawyers, teachers, accountants, pharmacists, engineers, actuaries, chefs, athletic trainers and funeral directors or embalmers.

Other Non-exempt Professionals

Employees who do not meet the requirements for the learned professional exemption include:

•   accounting clerks and bookkeepers who normally perform a great deal of

      routine work;

•   cooks who perform predominantly routine mental, manual, mechanical

      or physical work;

•   paralegals and legal assistants; and

•   engineering technicians.

Creative Professional Duties

Summary

In addition to the salary requirements, the creative professional exemption applies only if the employee’s primary duty is the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.  Because we already looked at “primary duty,” the two terms we still need to look at are “recognized field of artistic or creative endeavor” and “invention, imagination, originality or talent.”

Recognized Field of Creative or Artistic Endeavor

The recognized fields of artistic or creative endeavor include:

•   music (composers, soloists, conductors),

•   writing (essayists, novelists, short-story writers, screenplay writers,

      responsible writing positions within advertising agency),

•   acting, and

•   the graphic arts (painters, photographers and cartoonists).

Invention, Imagination Originality or Talent

The requirement of “invention, imagination, originality or talent” distinguishes the creative professions from work that primarily depends on intelligence, diligence and accuracy. 

The creative professional exemption also does not apply if the employee’s work can be produced by a person with general manual ability and training. 

Since the duties of employees vary widely, the determination of exempt creative professional status must be made on a case-by-case basis, based on the extent of the invention, imagination, originality or talent exercised by the employee.

Journalists

Journalists cannot meet the educational requirements for the learned professional exemption. 

In addition, journalists, reporters and other employees of newspapers, magazines, television and other media are not exempt creative professionals if they collect:

•    organize and record information that is routine or public,

•    do not contribute a unique interpretation or analysis, and

•    if their work product is subject to substantial control. 

However, journalists may be exempt if they:

•    perform on-air in radio or television,

•    conduct investigative interviews,

•    analyze or interpret public events, or

•    write editorials, opinion columns or commentary.

Computer Professional

Summary

To qualify for the computer employee exemption, the following tests must be met:

•   The employee must be compensated either on a salary or fee basis at a rate

      not less than $455 per week or, if compensated on an hourly basis, at a rate

      not less than $27.63 an hour ($57,470/yr);

•   The employee must be employed as a computer systems analyst, computer

      programmer, software engineer or other similarly skilled worker in the

      computer field performing the duties described below; and

•   The employee’s primary duty must consist of:

o   The application of systems analysis techniques and procedures, including

      consulting with users, to determine hardware, software or

      system functional specifications;

o    The design, development, documentation, analysis, creation, testing

       or modification of computer systems or programs, including prototypes,

       based on and related to user or system design specifications;

o    The design, documentation, testing, creation or modification of computer

       programs related to machine operating systems; or

o    A combination of the aforementioned duties, the performance of which

       requires the same level of skills.

The computer employee exemption does not include employees engaged in the manufacture or repair of computer hardware and related equipment.  Employees whose work is highly dependent upon, or facilitated by, the use of computers and computer software programs (e.g., engineers, drafters and others skilled in computer-aided design software), but who are not primarily engaged in computer systems analysis and programming or other similarly skilled computer-related occupations identified in the primary duties test described above, are also not exempt under the computer employee exemption.

Primary Duty

“Primary duty” means the principal, main, major or most important duty that the employee performs.  Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.

Outside Sales Exemption

Summary

To qualify for the outside sales employee exemption, all of the following tests must be met:

•   The employee’s primary duty must be making sales (as defined in the FLSA),

      or obtaining orders or contracts for services or for the use of facilities for which

      a consideration will be paid by the client or customer; and

•   The employee must be customarily and regularly engaged away from

       the employer’s place or places of business.

The salary requirements of the regulation do not apply to the outside sales exemption.  An employee who does not satisfy the requirements of the outside sales exemption may still qualify as an exempt employee under one of the other exemptions allowed by Section 13(a)(1) of the FLSA and the Part 541 regulations if all the criteria for the exemption is met.

Primary Duty

“Primary duty” means the principal, main, major or most important duty that the employee performs.  Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.

Making Sales

“Sales” includes any sale, exchange, contract to sell, consignment for sales, shipment for sale, or other disposition.  It includes the transfer of title to tangible property, and in certain cases, of tangible and valuable evidences of intangible property.

Obtaining Orders or Contracts for Services or for the Use of Facilities

Obtaining orders for “the use of facilities” includes:

•   the selling of time on radio or television,

•   the solicitation of advertising for newspapers and other periodicals, and

•   the solicitation of freight for railroads and other transportation agencies.

The word “services” extends the exemption to employees who sell or take orders for a service, which may be performed for the customer by someone other than the person taking the order.

Customarily and Regularly

The phrase “customarily and regularly” means greater than occasional but less than constant; it includes work normally done every workweek, but does not include isolated or one-time tasks.

Away from Employer’s Place of Business

An outside sales employee makes sales at the customer’s place of business, or, if selling door-to-door, at the customer’s home.  Outside sales does not include sales made by mail, telephone or the Internet unless such contact is used merely as an adjunct to personal calls.  Any fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation of sales is considered one of the employer’s places of business, even though the employer is not in any formal sense the owner or tenant of the property.

Promotion Work

Promotion work may or may not be exempt outside sales work, depending upon the circumstances under which it is performed.  Promotional work that is actually performed incidental to and in conjunction with an employee’s own outside sales or solicitations is exempt work.  However, promotion work that is incidental to sales made, or to be made, by someone else is not exempt outside sales work.

Drivers Who Sell

Drivers who deliver products and also sell such products may qualify as exempt outside sales employees only if the employee has a primary duty of making sales. 

Several factors should be considered in determining whether a driver has a primary duty of making sales, including

•   a comparison of the driver’s duties with those of other employees engaged

      as drivers and as salespersons,

•   the presence or absence of customary or contractual arrangements concerning

     amounts of products to be delivered, whether or not the driver has a selling

     or solicitor’s license when required by law,

•   the description of the employee’s occupation in collective bargaining agreements,

      and

•   other factors set forth in the regulation.

First Responders

Police Officers, Fire Fighters and Other First Responders

Police officers, detectives, deputy sheriffs, state troopers, highway patrol officers, investigators, inspectors, correctional officers, parole or probation officers, park rangers, fire fighters, paramedics, emergency medical technicians, ambulance personnel, rescue workers, hazardous materials workers and similar employees (“first responders”) who perform work such as preventing, controlling or extinguishing fires of any type; rescuing fire, crime or accident victims; preventing or detecting crimes; conducting investigations or inspections for violations of law; performing surveillance; pursuing, restraining and apprehending suspects; detaining or supervising suspected and convicted criminals, including those on probation or parole; interviewing witnesses; interrogating and fingerprinting suspects; preparing investigative reports; and other similar work are not exempt under Section 13(a)(1) or the regulations and thus are protected by the minimum wage and overtime provisions of the FLSA.

First responders generally do not qualify as exempt executives because their primary duty is not management.  They are not exempt administrative employees because their primary duty is not the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.  Similarly, they are not exempt learned professionals because their primary duty is not the performance of work requiring knowledge of an advanced type in a field or learning customarily acquired by a prolonged course of specialized intellectual instruction.  Although some first responders have college degrees, a specialized academic degree is not a standard prerequisite for employment.

Veterans

Veterans are not exempt administrative, executive or professional employees under Section 13(a)(1) based upon their status as veterans.  Military training, for example, generally is not sufficient to meet the requirements for the professional exemption.  Specifically, the learned professional exemption requires:

•   The employee’s primary duty must be to perform work requiring advanced

      knowledge;

•   The advanced knowledge must be in a field of science or learning; and

•   The advanced knowledge must be customarily acquired by a prolonged course

      of specialized intellectual instruction.

 No amount of military training will satisfy the requirements of the learned professional exemption because the exemption applies only to employees who are in occupations that have attained recognized professional status, which requires that an advanced specialized academic degree is a standard prerequisite for entrance into the profession.  No amount of military training can turn a “blue collar” occupation or a technical field into a profession.  For example, a veteran who has received substantial military training as a veteran but works on a manufacturing production line or as an engineering technician is not exempt under Section 13(a)(1) from the minimum wage and overtime requirements of the FLSA.

Information from:

Wage & Hour Division

Employment Standards Administration

U.S. Department of Labor

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CAN I USE "COMP-TIME" INSTEAD OF OVERTIME?

The term comp-time comes from "compensatory time-off," an old concept of allowing employees to accumulate overtime hours and then take time-off instead of being paid overtime pay.  Many employees enjoyed the extra time when it was convenient for them to take it and employers liked the balanced cash flow by leveling payroll expenses over longer periods of time.

Unfortunately, some employers abused the privilege and the federal government eliminated the practice through legislation.  Subsequent to passage of the Fair Labor Standards Act, various administrative interpretations and rulings have made the law even more stringent toward employers.

Presently, employees are not allowed to take compensatory time-off outside of their normal workweek.  While employees may wish to substitute comp-time for overtime, the law does not allow an employer to comply with employee's wishes.  Employees and employers cannot agree to skirt the law no matter how beneficial.  Any employee who is considered non-exempt from overtime will be paid time and one-half for all hours worked over 40 in a workweek.  In keeping with federal law, employees will not be allowed to substitute comp-time for overtime under any circumstances.  Under no circumstances will the Company use comp-time as part of its compensation practices.  For those employees who are exempt from overtime, comp-time is not a factor as their normal workweek is usually greater than 40 hours.  They have no prescribed limits for their workweek and are compensated for their job, not for the hours they work.

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WHAT CAN I ASK AN APPLICANT?

You can ask prospective employees any question that is not potentially discriminatory.  That means that if the information could possibly be used in a discriminatory fashion, then it is best not asked.

For example, employers may not ask if an applicant has little children at home that could possibly interfere with working overtime.  Instead, it's best to ask the question, "This position will require you to work overtime on occasion.  Will that present a problem for you?”  Employers will ask any number of illegal questions dealing with family matters, potential pregnancy, disabilities, etc. instead of sticking to the topic.  Employers must ask only those questions which, if answered, will provide the right information.  If in doubt, maybe you should not ask the question.  All you really want to know is if the person can and will do the job.  If you want help in figurine out what those questions should be...Contact TMT.

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WHO IS ELIGIBLE FOR FMLA?

Much has been written lately about the federal Family and Medical Leave Act of 1993 (FMLA).  Yet, there seems to be confusion about what employers can and cannot do under the Act.  While this mild confusion isn't anything new when it comes to legislation that is designed for the employee's benefit, it none-the-less creates anxiety for employers who prefer planning to surprises.

All private sector employers with 50 or more employees within a 75 mile radius are required to provide up to 12 weeks of unpaid, job protected, leave to their employees.  This leave is to be for specified family and medical reasons.  While providing unpaid leave may not be a big deal to some, the kicker is that eligible employers must also continue to provide employee benefits for these employees while on family medical leave.  These benefits include group life, health and disability insurance as well as continued accruals for sick leave, vacations, educational benefits and pension rights.  Although you cannot deny this leave to any highly compensated employee (in the highest 10% of the facility in question) you can refuse to rehire in the same position if you can prove that grievous harm would occur if this highly compensated employee's position were required to remain open.

Depending on your location, you also have to contend with local statute.  For example, Washington state law now covers employers with 50 or more employees and is similar  to the federal FMLA act.  In Oregon, however, state law mandates coverage for employers with 25 or more employees so it takes precedence over FMLA as to its particular features.

Not only that, but you have various state statutes relating to pregnancy and family leave that is totally focused on those issues.  Newly passed legislation on military leave as well as for domestic violence and sexual assault have been added to the mix.  As usual, there are subtle nuances that end up being important and can make a difference in each case.  When in doubt, call TMT for the answer.

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WHAT ARE THE COMMON TRAPS IN FMLA Administration

Is FMLA Leave Automatic?

Some courts have ruled that FMLA leave automatically starts as soon as an employee begins FMLA qualified leave...that nothing else is required of the employer.  Not true.  You must give notice to an employee who is using FMLA qualified leave.  The form (Contact TMT for form) must be given to the employee each time qualified leave is accessed.  If the leave is intermittent, then that can be arranged at one time.

What About Absenteeism?

When an employee is absent, you must determine if his/her absence is FMLA based.  If it is, you may have to treat those absences differently than non-FMLA absences.  In some situations, counting FMLA-leave as violations of your disciplinary policy could put you at risk for a wrongful discharge claim.  When in doubt, check with your HR advisor.

Documentation is Key

As is the case these days, you must be a stickler for communicating with employees and then documenting what was said/agreed to.  If it ever comes down to your word against the employee's, unless you can prove your actions, courts often will take the employee's word over the employers.  Be forewarned.

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WHAT POSTERS MUST MY EMPLOYEES SEE?

There are a number of state and federal posters that are required to be visible by your employees and job applicants.  How they are placed can be debated, but that they are present and visible cannot.  Check with us if you are not sure you have the up-to-date listing.  The Management Trust will be happy to send you a current poster list along with who to call to get copies sent directly to you.

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HOW DOES ADA AFFECT MY BUSINESS?

It is not the direct intent of ADA to be a quota process or to force employers to hire unqualified applicants.  It is designed to make disabled applicants more visible to employers so that they can be hired.  If an applicant is unable to perform the essential functions of the position with reasonable accommodation, then the applicant is not eligible for hire.

However, if a fully qualified disabled applicant is present but a more qualified non-disabled applicant is available, it may be in the employer's best interest to hire the qualified disabled applicant and avoid potential legal action for discriminatory hiring practices.  As each is decided on a case-by-case basis, you must look at the "real" job functions and determine if the candidate is truly qualified.

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Do I need to write an employee handbook?

Some will say that an employee handbook is more trouble than it is worth; that a poorly written handbook is worse than having no handbook at all.  They’re right!  That is why anyone tackling the seemingly simple task of writing an employee handbook needs to be very careful.  But one must also remember that both these alternatives (no handbook or a poorly written one) are no comparison to the much more preferred option, having a well-written handbook.  The trouble is, the process of producing this well-written handbook takes planning, a logical thought process and someone who knows the consequences of each word and phrase.

What may appear to be a logical alternative on the surface may have its long-term drawbacks.  For example, borrowing your brother-in-law’s handbook from his office may look like the least expensive way to go, but probably won’t cover most of the building blocks that are necessary to develop and install a successful handbook.  The following five points are an excellent tool by which you can check your current handbook to see if it measures up to the same standards you apply to other work in your company.  If not, maybe it’s time for you to re-write your handbook and give it a “shot in the arm”.  We know that an employee handbook needs to be reviewed and re-written every 2-3 years to cover changes in the workplace and changes in the law.  To do otherwise puts your company at risk.

The fees charged to write you a handbook from scratch or to revise and bring it up to speed are a lot less than you may think.   They are reasonable and make it worth your while to let us do this instead of your taking on the task.  Call to see what may be involved, how much it will cost and how quickly it can all be put into place.

Point 1:  Write it Right

Much like the nursery rhyme, Goldilocks, your handbook shouldn’t be too short or too long, but just right.  The most likely tendency is to cram as much into the handbook as possible.  While this idea sounds logical at the start, by the time you get all those pesky policies for every contingency plugged in, you are faced with a 200 page manual that is guaranteed never to be read.  On the other hand, you could end up doing the opposite and miss the opportunity to set straight many of those issues that come up on a daily basis for want of a few extra pages.

The best way to write you handbook is to follow a logical flow of policies, much like a new employee would want to know during his or her first week on the job.  But, like most things, this is easy if you know how and not so easy if you don't.

Point 2:  Protect Your Assets

The litigious society that surrounds us may be the most often quoted reason for implementing an employee handbook.  Yet, at the same time, it is the most often quoted reason for not writing a handbook.  A real Catch 22. 

Many believe that “if you don’t put it in writing, no one will know and you can’t get pinned down in a court of law.”  The feeling is if we just forget to put it in writing, that act somehow absolves us from any legal action.  Nothing could be further from the truth.  Any act by a member of management, whether intended or not, whether logical or not, is considered an act of company policy.

Whatever you do is your official policy.  And, when it isn’t in writing, it allows your supervisors and managers to pretty much do as they please.  That may please some, but it usually doesn’t please employees who see inconsistency as favoritism.  And it most certainly won’t please top management when an attorney calls with an wrongful discharge suit.  If your handbook can prevent just one law suit, it will have paid for itself many times over.

We all know how some supervisors and managers like to act on their “gut reactions”; that shooting from the hip is a skill to be proud of.  We also know how such behavior can result in legal action.  Whether it’s because of an act of discrimination, real or perceived, or that someone felt they didn’t deserve to get fired.  In any case, employees know that there are state and federal agencies that are legally required to give consideration to the flimsiest of charges.  They also know that if they want to be vindictive and get back at an employer for some perceived disciplinary action, there are many ways to accomplish that goal.  The perception is that there are many agencies out there willing to help these ex-employees at no cost to them.  Unfortunately, that isn’t the same for the employer who must hire an attorney to defend the company in any legal action.

So, how does a well-written handbook protect your assets?  Simple…by making sure all employees, including management, follow the same set of rules in the same way.  While that won’t always be as easy as it sounds, it most certainly creates the environment for consistency and fair treatment; issues that appeal to all employees.  In times of low unemployment with every employer needing to hang onto their good employees, this may be the difference between staying or leaving.  More about that in #4 on team building.

Point 3: Close the Loop

No matter how weak unions may be in your industry, every employer is ripe for a union campaign under the right circumstances.  The primary issue with any union organizer is not wages and benefits, but structure.  While the union may tell the employee that they can “guarantee” higher wages and benefits, we know that isn’t always the case.  Certainly, because the contract must be negotiated and agreed to before it can take affect, there are no guarantees.  The primary guarantee that can be made is that “we will force the company to put it in writing.” 

Why don’t we beat them to the punch!  Put it in writing without having to negotiate every section, paragraph, sentence and punctuation mark.  This is the time when you can let employees know what you mean by “dress code” and “attendance policy.”  It allows you to effectively communicate exactly what you have in mind to each and every employee.

How often have we heard the phrase, “It was just a lack of communication, that’s all.”  Somehow, if we could just communicate better, we could solve our management problems.  Yet, at the same time, when presented with the opportunity to put it in writing so everyone can fully understand what the company has in mind, we suddenly develop a shyness streak. 

Or, how about the supervisor who said, “I don’t understand why she got so upset over my coming down on her for being late.  She made it seem like it was my fault and not hers.“  Of course, the supervisor didn’t know that the employee’s friend who was also late was ignored by his supervisor.  Such mixed messages create an atmosphere of distrust and a general lack of respect for management.  This can make managing your people very difficult. 

The bottom line is that all employees must have a good idea of what is expected of them and what they can expect from the company in return.  Structure is an important way to provide a vision of stability that is comforting in times of uncertainty.  However, we know some employees like to work in a highly flexible environment and a well written handbook provides that as well. 

Point 4: Build Your Team

Look at your favorite sports team.  We all know it takes time to built the kind of team that is a winner.  When the Chicago Bulls signed Michael Jordan, they were not instant winners.  It took time to build a winning team around Mike.  We also know what happened during his 2 year experiment with baseball.  The Bulls were not the best team in basketball.  When Jordan returned, and with the acquisition of some other key players, they were champs again.  Just changing one player can upset the delicate balance of the team.

That can be the way it is in your company.  Talent is more than the ability to know and do the technical side of the job.  By the same token, having well-written policies can help your team know the parameters of their environment.  Employees will feel more like a part of the team when they know what the company is thinking and why. 

Point 5: Implementation is the Key

Of course, the best written document in the world is worthless if it isn’t properly implemented.  In this case, proper implementation must be done in two phases.

Phase 1:  Current employees:  All employees should be given the new employee handbook (or new policies/revisions) prior to a general meeting on the subject.  If your company is small enough, you can have a company-wide meeting.  However, if your company is larger, you will have department or section meetings to review the policies.  Allow time to cover key policies from the company’s standpoint (harassment, attendance, disciplinary procedures, etc.) and to answer questions from employees.  The more information about why the policies are important to the company and to employees will make them easier to understand and, therefore, easier to implement.

Phase 2:  New employees:  All new employees should be given the employee handbook and instructed as to the important company policies.  Employees should be allowed to take the handbook with them for a more detailed review.  A couple of days later you can go over any employee questions to be certain they feel comfortable with this new document..  You want to create the environment that allows for the free flow of communication.  If the new employee sees this happening, that employee will be glad he or she agreed to take the job.

Employers everywhere are debating whether or not they need an employee handbook.  That debate can be about cost as well as ethical and legal considerations.  One fact remains certain…a well-written employee handbook can be the best human resource insurance an employer can buy.  It is also an investment in the most valuable asset an employer has…the employee.

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What should I do if I have an employee tell me she is being harassed?

The best way to prevent possible harassment charges is to have an active anti-harassment program.  This includes a written policy that is published and has been distributed to all employees.  It also means training your employees as well as your management staff about harassment and how to prevent it.  It means having a complaint procedure so employees can communicate their grievances to someone in the organization (more than one person is best).  Lastly, you must have an impartial and effective investigative process for when you do receive a charge/complaint about harassing behavior.

So, what do you do if you receive a complaint?  You investigate immediately; you make sure that the investigation is thorough yet as confidential as possible; you take prompt and remedial action and you follow-up to see that the harassing behavior has, in fact, stopped.  If not, you are required to figure our why and fix it.  No excuses.

The consequences of allowing harassing behavior to continue in the workplace can be catastrophic for an employer-so much so that allowing it to continue can threaten the long-term survival of the company.

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WHAT ARE MY RESPONSIBILITIES AS AN EMPLOYER FOR RESERVISTS OR NATIONAL GUARD MEMBERS WHO ARE CALLED UP?

All employers are covered by the USERRA (Uniformed Services Employment and Reemployment Rights Act).  The uniformed services includes the full-time and reserve components of the five service branches as well as the National Guard, the commissioned corps of the Public Health Service or any other category of persons determined to be "uniformed service" by the President of the United States during a national emergency.

All employees, regardless of how long they have been with you or the number of hours they work for you each week, are eligible.  Even if you find the leave to be inconvenient or even unreasonable, leave must be granted.

USERRA does not require that employers pay employees while on leave.  It does require that employees retain their eligibility to benefits and provide COBRA-like benefits to employees even if the company is not eligible for COBRA (more than 20 employees).

When an employee returns from military service, that employee must be reinstated into their old position (or one very close to it).  The amount of time the employee has to return to work depends on how long they have been gone.  For those who have been on a short leave, they must report within the next pay period.  For those who have been gone longer, they may have up to 90 days to return to work.

If you have an employee who is requesting military leave (it may be for call-up or something as simple as a 2-week military class), ask for help.  The consequences of misapplying the Act can be costly.

Family Military Leave

Washington's new family military leave is similar to the leave granted to family members of the armed forces under the recently amended federal Family and Medical Leave Act.  Under the new Washington law, an employee whose spouse is called into active duty for the armed forces or who is or will be deployed during a period of military conflict is entitled to up to 15 days of unpaid leave from work.  The leave may be taken before deployment or when the military spouse is on a leave from the deployment.  For each new deployment, the employee may take another family military leave of up to 15 days.

The employee must provide you with notice of his intent to take family military leave within 5 business days of receiving official notice of the call to active duty or deployment or within 5 business days of official notice of the military spouse's upcoming leave from deployment.  To be eligible, the employee must work an average of at least 20 hours per week.  The leave is available only during a time of war, meaning the President of Congress has declared war or military reserves have been called to active duty.  The law went into effect June 2008.

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WHEN MUST FINAL WAGE PAYMENTS BE MADE TO A TERMINATED EMPLOYEE?

Issue:

Employees can be terminated for a number of reasons.  Whether an employee is discharged, quits, or is separated from work due to a lay-off or strike, final wage payments must be timely made.  Here is a state-by-state chart outlining when termination payments must be made:

STATE: TERMINATION PAYMENTS (13 Western States only - call The Management Trust for states not listed)

ALASKA:  Within 3 days regardless of cause of termination.  Next regular payday for laid-off or locked-out employees and strikers.

ARIZONA:  Within 3 working days or next regular payday, whichever is earlier for discharged employees.  Next regular payday when employee quits.

CALIFORNIA:  Immediately for discharged employees.  Within 72 hours or immediately if 72 hours prior notice is given by quitting employee.  Next regular payday for striking employees.

COLORADO:  Immediately for discharged employees.  Next regular payday when employee quits or goes on strike.

HAWAII:  Immediately for terminated employees, or if unable to make immediate payment, then not later than the next working day.  Next regular payday for employee who quits.

IDAHO:  Next regularly scheduled payday or within 10 days (weekends and holidays excluded) of layoff or voluntary or involuntary termination.

MONTANA:  Earlier of next regular payday or 15 days from separation.  Immediately if discharged for cause.

NEVADA:  Immediately for discharged employees.  Earlier of next regular payday or 7 days after the resignation for quitting employees.

NEW MEXICO:  Within 5 days for discharged employees.  Within 10 days for discharged employees paid by piece, task, or commission.  Next regular payday for quitting employees.

OREGON:  No later than the end of the first business day after discharge.  Immediately, if quitting employee gives 48 hours' notice of intention to quit.  Within 5 days or next regular payday, whichever occurs first, for quitting employee who does not give prior notice.

UTAH:  Within 24 hours for discharged employees.  Next regular payday for employees who quit.

WASHINGTON:  Next regular payday.

WYOMING:  Within 5 days of date of termination if employee is discharged or quits.

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How are hours worked determined under The FLSA act?

The Act requires that employees must receive at least the minimum wage and may not be employed for more than 40 hours in a week without receiving at least one and one-half times their regular rates of pay for the overtime hours.  The amount employees should receive cannot be determined without knowing the number of hours worked.

Definition of "Employ"

By statutory definition the term "employ" includes "to suffer or permit to work.”  The workweek ordinarily includes all time during which an employee is necessarily required to be on the employer's premises, on duty or at a prescribed work place.  "Workday", in general, means the period between the time on any particular day when such employee commences his/her "principal activity" and the time on that day at which he/she ceases such principal activity or activities.  The workday may therefore be longer than the employee's scheduled shift, hours, tour of duty, or production line time.

Application of Principles

Employees "Suffered or Permitted" to work: Work not requested but suffered or permitted to be performed is work time that must be paid for by the employer.  For example, an employee may voluntarily continue to work at the end of the shift to finish an assigned task or to correct errors.  The reason is immaterial.  The hours are work time and are compensable.

On-Call Time: An employee who is required to remain on call on the employer's premises is working while "on call.”  An employee who is required to remain on call at home, or who is allowed to leave a message where he/she can be reached, is not working (in most cases) while on call.  Additional constraints on the employee's freedom could require this time to be compensated.

Rest and Meal Periods: Rest periods of short duration, usually 20 minutes or less, are common in industry (and promote the efficiency of the employee) and are customarily paid for as working time.  These short periods must be counted as hours worked.  Unauthorized extensions of authorized work breaks need not be counted as hours worked when the employer has expressly and unambiguously communicated to the employee that the authorized break may only last for a specific length of time, that any extension of the break is contrary to the employer's rules, and any extension of the break will be punished.  Bona fide meal periods (typically 30 minutes or more) generally need not be compensated as work time.  The employee must be completely relieved from duty for the purpose of eating regular meals.  The employee is not relieved if he/she is required to perform any duties, whether active or inactive, while eating.

Sleeping Time and Certain Other Activities: An employee who is required to be on duty for less than 24 hours is working even though he/she is permitted to sleep or engage in other personal activities when not busy.  An employee required to be on duty for 24 hours or more may agree with the employer to exclude from hours worked bona fide regularly scheduled sleeping periods of not more than 8 hours, provided adequate sleeping facilities are furnished by the employer and the employee can usually enjoy an uninterrupted night's sleep.  No reduction is permitted unless at least 5 hours of sleep is taken.

Lectures, Meetings and Training Programs: Attendance at lectures, meetings, training programs and similar activities need not be counted as working time only if four criteria are met, namely: it is outside normal hours, it is voluntary, not job related, and no other work is concurrently performed.

Travel Time: The principles which apply in determining whether time spent in travel is compensable time depends upon the kind of travel involved.

Home To Work Travel: An employee who travels from home before the regular workday and returns to his/her home at the end of the workday is engaged in ordinary home to work travel, which is not work time.

Home to Work on a Special One Day Assignment in Another City: An employee who regularly works at a fixed location in one city is given a special one day assignment in another city and returns home the same day.  The time spent in traveling to and returning from the other city is work time, except that the employer may deduct/not count that time the employee would normally spend commuting to the regular work site.

Travel That is All in the Day's Work: Time spent by an employee in travel as part of his/her principal activity, such as travel from job site to job site during the workday, is work time and must be counted as hours worked.

Travel Away from Home Community: Travel that keeps an employee away from home overnight is travel away from home.  Travel away from home is clearly work time when it cuts across the employee's workday.  The time is not only hours worked on regular working days during normal working hours but also during corresponding hours on nonworking days.  As an enforcement policy the Division will not consider as work time that time spent in travel away from home outside of regular working hours as a passenger on an airplane, train, boat, bus, or automobile.

Typical Problems

Problems arise when employers fail to recognize and count certain hours worked as compensable hours.  For example, an employee who remains at his/her desk while eating lunch and regularly answers the telephone and refers callers is working.  This time must be counted and paid as compensable hours worked because the employee has not been completely relieved from duty.

State Issues

Depending on where you are, these rules may be over-ridden by state law.  Please call us so we can determine if that is the case and if there are other issues that may change how these rules apply.

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