Weekly HR News - Required Pay for Employees

Weekly HR News –Required Pay for Employees

The Fair Labor Standards Act (FLSA) requires cities to pay their employees at least the federal minimum wage (which is currently $7.25 an hour), and overtime pay for all hours worked over 40 in a work week.  The biggest FLSA mistake that cities make is classifying employees that are non-exempt as exempt from overtime.  Keep in mind that is much better to review compliance before the Department of Labor comes in to review for you. 

1. What is the Fair Labor Standards Act (FLSA)?

The Fair Labor Standards Act is a federal law that was established by the US Congress in 1938 and has been amended several times since then, most recently in 2011. It is enforced by the US Department of Labor. The FLSA defines the federal minimum wage, employee time recordkeeping requirements, and jobs required to receive overtime compensation after 40 hours have been worked in a workweek.

2. What does the term "nonexempt" mean?

As discussed last week, nonexempt employees are covered by the overtime provisions of the FLSA and must record each hour worked on the time record. If the employee works more than 40 hours in one workweek, the employee is paid time and one-half, whether in pay or in accrual of compensatory time. We will look at tracking time for nonexempt employees in a future article.

3. What does the term "exempt" mean?

As we also discussed last week, exempt employees are not covered by the overtime provisions of the FLSA and are paid an agreed amount for the whole job, regardless of the amount of time or effort required to complete the work. Exempt employees do not record hours of work on the time record. We will look at tracking time for exempt employees in a future article.

4. What are the criteria that enable employees to be exempt from the FLSA overtime provisions?

To be exempt, an employee must meet ALL of the standards in the following "tests":

  1. be paid over a minimum salary - the "salary level test" - AND
  2. be paid on a salary basis as opposed to an hourly basis - AND
  3. perform certain duties as outlined in one of the "duties tests".

5. What is the salary level test?

Currently, the FLSA salary level test requires that an employee's salary must be at least $455 a week, or $23,660 annually in order to be considered exempt from the overtime provisions. An employee with a salary less than $455 a week must be nonexempt. Part time employees may be nonexempt even though their annualized salary is well over $455 a week.

6. What does being paid a salary mean in terms of the FLSA?

Under normal circumstances, employees paid a salary are paid a predetermined amount each week regardless of quantity or quality of work or hours worked.

7. What criteria are used to determine if employees over the wage threshold are exempt from overtime?

To be exempt, an employee must qualify under one or more of the following tests:

  1. Executive exemption test
  2. Administrative exemption test
  3. Professional exemption test
  4. Computer exemption test
  5. Highly compensated employee exemption test

Each duties test has specific requirements that must be met for an employee to be exempt. For example, the Executive Exemption requires that an employee a) supervise two or more full time employees, b) have authority to hire and fire, or meaningfully recommend hiring and firing, and c) manage a recognized department. Additional information on each of the exemption tests is available on the Department of Labor website at http://www.dol.gov/elaws/esa/flsa/overtime/menu.htm or Chapter 11 of the 2015 City Officials Legal Handbook.

8. Is a nonexempt employee paid for time to travel between home and the work site?

Normally, no. There may be exceptions for travel to sites that are beyond the normal commuting area of the employee.

9. Is a nonexempt employee paid for time to travel between one work location and another work location? Or travel to training?

Travel from one work site to another during the workday is work time.  Unless the city policy states differently, the city is required to pay for travel time if the time spent in travel crosses the normal schedule worked by the employee, even if the travel is on a day off or a weekend day. The driver of the car, whether privately or city owned is paid for all hours spent driving no matter the time of day. If the employee chooses to commute back and forth from home to training, the employer would only pay for the original trip to and the original trip back (and under the guidelines indicated above). However, most employers pay for time spent in travel to training and do not worry about when the travel occurs or who drives.

10. What is the definition of overtime?

Overtime is time worked by a nonexempt employee that exceeds the employee's normally scheduled workweek. Overtime is time worked over 40 hours in a workweek.

11. May a nonexempt employee waive his/her rights to overtime compensation?

No. All nonexempt employees are compensated for all hours actually worked at the appropriate rate of pay.

12. Can the supervisor make a nonexempt employee leave early on Friday so the employee's total hours will not exceed 40 in the workweek?

Yes. This is one method to effectively manage work time and the budget.  In addition the city may have a policy that allows for comp time for any hours worked over 40.  Comp time may be granted in lieu of overtime pay, at the rate of not less than one and one-half hours for each hour the city employee is authorized to work in excess of 40 hours in a work week. (KRS 337.285)

13. Can exempt employees maintain separate overtime records and receive overtime?

No. Exempt employees are ineligible to receive overtime payment or compensatory time off. There are instances, however, when a supervisor might permit flexible work hours to accommodate, for example, an exempt employee who worked an excessive number of hours in a prior work week or who routinely works more than 40 hours in a work week.

14. Are there specific employment positions that have their own rules?

Yes, pursuant to 803 KAR 1:070.  “Police officers, detectives, deputy sheriffs, state troopers, highway patrol officers, parole or probation officers, park rangers, fire fighters, paramedics, emergency medical technicians, ambulance personnel, rescue workers, hazardous materials workers, and similar employees, regardless of rank or pay level, 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; or other similar work.” These employees often “do not qualify as exempt administrative employees, because their primary duty is not the performance of work directly related to the management or general business operations…”  Basically if the employee, such as the police chief, is out in the city performing the same duties as any other police officer, they must be paid overtime for any hours over 40 worked.

For more information on exempt vs. nonexempt check out the Department of Labor website at http://www.dol.gov/elaws/overtime.htm and Chapter 11 of the 2015 City Officials Legal Handbook.  For specific legal questions call the KLC Legal Department at 800-876-4552.