Posts tagged ‘overtime’

DOL Finalizes Major Revisions to Overtime Rules

It’s alive! The U.S. Department of Labor finalized regulations increasing the minimum salary level for an employee to be exempt from overtime pay requirements from $455 a week to $913 a week. This means that when the regulations become effective in December, unless your supervisors make at least that amount, they must be paid the overtime rate of time and one-half for each hour they work over 40.

In addition, under current law there was an exception from  overtime pay for highly compensated employees (HCE) who make at least $100,000 annually but whose duties don’t qualify them for exempt classification. This regulation increases the HCE threshold to $134,000. Check with your HR person on this one as there are exceptions that apply to certain professions.

The minimum salary threshold will be updated every three years beginning in 2020. It will be adjusted so that it is equal to the 40th percentile of full-time salaries for workers in the lowest wage region (which is currently the South). As originally proposed, the exempt employee threshold would have been adjusted annually to equal the 40th percentile of full-time salaried workers nationally. This would have resulted in a threshold of over $50,000, which is the number I used in a recent blog. Nevertheless, if and when this regulation becomes effective, it will mark the first time that the exempt employee threshold is automatically updated on a periodic basis.

Why do I say “if and when this regulation becomes effective?” I’ve always thought that this regulation was, in part, politically motivated. I strongly suspect that it will become a major campaign issue with the Donald pledging to annul the regulation and Hillary pledging to ensure that it goes forward untouched.

But with the regulation now finalized, you must find out, if you don’t already know, how many of your currently exempt employees make less than this threshold, how much overtime they work, and if it makes more sense to bump their salaries so that you may continue to classify them as exempt employees, pay them overtime or make sure they don’t work more than 40 hours a week.

Incidentally, there is some good news in all this. Up to 10% of the standard salary level can come from non-discretionary bonuses, incentive payments and commissions, provided they are paid at least quarterly. Furthermore, the final regulation makes no changes to the way in which employers classify exempt and non-exempt employees based on the duties they perform. Many of us were concerned that the Department would institute a rigid test under which employers would have to document that a supervisor spends at least 50% of her time carrying out supervisory responsibilities. This would have harmed many small credit unions.

Finally, when you are done reading this blog, it’s time to reach out to your HR professional so that you can understand precisely how this regulation will impact your credit union. On that note, get to work and enjoy your day.

May 18, 2016 at 8:21 am 1 comment

Do Your Supervisors Make $50,000?

If not, then they can no longer be classified as exempt employees and must get overtime. According to this morning’s news reports, that’s the core part of proposed regulations updating the Fair Labor Standards Act to be released by the Obama Administration’s Department of Labor later this week.

Under existing regulations, one of the conditions for an employee to be classified as exempt is that he or she makes a little more than $23,000. Critics point out that this threshold requirement is so low that it has allowed employers to contravene the intent of federal law by classifying an employee as the supervisor and expecting them to work 50-60 hour weeks without overtime pay. They argue that a $50,000 threshold simply adjusts the Act to where it would be had it kept pace with inflation.

Opponents of this well-meaning but fatally misguided view correctly point out that a $50,000 threshold won’t increase the salary of many employees, but simply decrease the amount of hours existing employees work and, in a best case scenario, encourage the hiring of more lower-paid employees.

To put this in practical terms, review a list of your exempt employees making less than $50,000 and estimate how many hours they work over 40 each week. Then figure out how much it would cost you to pay each of these employees time and one-half for these hours. This is how much the federal government effectively wants to tax you. Occasionally, it makes me wonder if we live in a capitalist country.

June 30, 2015 at 7:54 am Leave a comment

Are You Underpaying Your Tellers?

That is the question that popped into my mind this morning after spotting an article reporting that TD Bank was slapped with a lawsuit yesterday alleging that it violated the Fair Labor Standards Act (FLSA) by misclassifying a “teller services manager” as an exempt employee. The lawsuit is by no means unique, but the simple fact that employees continue to bring these claims indicates that financial institutions are continuing to ignore the impact that the FLSA is having on their operations. In addition, with major regulations on employee classifications to be released within weeks by the Department of Labor, this and similar cases demonstrates why I feel that the Department of Labor will introduce the most potentially impactful regulations for credit unions this summer.

Remember that under the FLSA, employees are presumptively entitled to overtime if they work more than 40 hours a week. Very generally speaking, the law creates an exemption for employees who exercise managerial control. As I have previously explained, fueled by the Department of Labor, suits alleging the misclassification of non-exempt and exempt employees have become more common and more expensive. This trend was highlighted earlier this year when the Supreme Court upheld the right of the Department of Labor to classify mortgage originators as non-exempt employees.

The TD Bank case (Reinaldo Kuri v. TD Bank N.A ) is fairly typical. The employee in question alleges that even though he was given the title of manager, his duties included “spending the overwhelming majority of his time” engaged in the duties of non-exempt bank tellers and customer service representatives. In addition, he alleges that he “did not exercise any meaningful degree of independent judgment,” but instead had to rely on the policies, practices and procedures set by the Bank.

This argument shows why employers increasingly find themselves in a Catch-22 when it comes to classifying their employees. A typical credit union is too small to cleanly delineate exempt and non-exempt duties. Your typical manager chips in by helping out with teller duties and anything else that needs to be done around the credit union. In addition, any credit union that doesn’t have policies and procedures in place detailing how it expects its employees to carry out their duties is committing operational negligence.

Under existing regulations (29 CFR 541.700), you judge whether an employee is classified as exempt or non-exempt based on her primary duties. The good news is that under existing regulations, the amount of time an employee spends performing exempt work is not the sole criterion used to determine whether or not an employee is exempt. This means, for example, that the branch manager, whose primary duty is managing the branch but on any given week may spent the majority of his or her time performing non-exempt duties, can still be classified as an exempt employee. The bad news is that the Department of Labor is expected to propose narrowing this exception so that any employee who spends the majority of her time doing non-exempt work will be considered a non-exempt employee. Think of how much this could cost you in overtime.

But even without these proposed changes, financial institutions continue to ignore the changing employment landscape at their own risk. For instance, if TD Bank loses this lawsuit, it could be required to pay cumulative damages and reimburse employees for their unpaid overtime.

June 17, 2015 at 8:36 am Leave a comment

Did you violate the law this weekend?

Here is a Monday morning survey: 

  • Did you send out any e-mail to any of your employees over the weekend? 
  • Were those salaried employees? 
  • Did you violate the Fair Labor Standards Act? 
  • Can you imagine waking up with a lawyer every morning? 

There’s a great post this morning from the Harvard Business Review providing tips on how to better manage our e-mail addiction.  But the part of the post that most intrigued me was its reference to the fact that as overtime disputes become more common, the role that smart phones play in our workplace needs to be better regulated by many businesses.  For example, if you were watching your kid’s soccer game on Saturday, and sent an email asking your loan originator if a certain mortgage was approved, or if you contacted your secretary at 7:00 a.m. asking that a memo be sent, depending on the status of those employees, the time they spent on those projects should be counted against the 40-hour work week over which they are entitled to overtime.  As a matter of fact, last week U.S.A. Today reported that after years of layoffs, employees are bringing an increasing number of law suits alleging  misclassification of non-exempt employees as exempt employees with resulting overtime violations.

And remember there are special concerns in the financial sector since the Department of Labor has opined that most mortgage loan officers are non-exempt employees.  So what steps should we be taking to address these issues?  The most important one is to have strict policies as to which employees have access to company cell phones.  Remember, if there is simply no need to contact an employee outside of the workplace, then they shouldn’t need a phone.  Second,  policies should make clear who has access to cell phones and also include a reminder to supervisors that responding to email constitutes work.  Finally, the question as to who is and who is not an exempt vs. no-exempt employee is not as clear cut as you may think.  Depending on the size and complexity of your credit union, now would be a good time to sit down with your HR Professional and analyze the specific responsibilities of your employees to ensure that their classifications are correct.

 

April 30, 2012 at 7:15 am 2 comments


Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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