Source: http://negotiumlex.wnj.com/
Timestamp: 2017-07-25 20:47:15
Document Index: 255190131

Matched Legal Cases: ['§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541', '§541']

Hold it, hold it, FLSA Regulations on Hold 23. November 2016Fair Labor Standards ActSteve PalazzoloComments Off on Hold it, hold it, FLSA Regulations on Hold	I’m not having a very good month. I have been just flat out wrong twice this month. The first time was on the 8th. And now last night.
Now What? 14. November 2016LegislationSteve PalazzoloComments Off on Now What?	I am not a political pundit and I am certainly not going to use this blog to share my political views, but I think it is safe to say that none of us, no matter which way we voted, saw that coming. But come it did, and on January 20th we are going to have a new President and a new House and a new Senate and they are all controlled by a single party.
Everything is bigger in Texas . . . . Even when it is in Ohio. 23. September 2016Sexual HarassmentSteve PalazzoloComments Off on Everything is bigger in Texas . . . . Even when it is in Ohio.	You have heard the old saying “Everything is bigger in Texas,” right? Seems that’s true for settlement amounts, even when they aren’t really in Texas. Yesterday, the EEOC issued a press release announcing that the owners and operators of a Texas Roadhouse Restaurant in Columbus, Ohio, had agreed to pay $1.4 million to settle a class-action sexual harassment suit filed by the Equal Employment Opportunity Commission (EEOC) against the owners and the management company of this particular restaurant. The settlement also included mandatory reporting and training among other affirmative relief for the victims.
Leave it to the DOL to publish the regulations when I’m out – the Final Overtime Regs are here. 18. May 2016Fair Labor Standards Act, UncategorizedSteve PalazzoloComments Off on Leave it to the DOL to publish the regulations when I’m out – the Final Overtime Regs are here.	Well, leave it to the Department of Labor. They wait until I’m out of the office to issue new Regulations. That’s right, yesterday afternoon, the Department of Labor announced that the long awaited final Regulations under the FLSA will be issued today. I’m not going to read them today because I’m going to a baseball game. So let me give you the highlights that the DOL provided yesterday.
Outside Sales . . . and that’s the end! 15. April 2016Fair Labor Standards ActSteve PalazzoloComments Off on Outside Sales . . . and that’s the end!	The last exemption we are going to discuss is for Outside Sales Employees. And this one is going to be short too. An Outside Salesperson is an employee whose primary duty is:
(a) The term ‘employee employed in the capacity of outside salesman’ in section 13(a)(1) of the Act shall mean any employee:
(b) The term ‘primary duty’ is defined at §541.700. In determining the primary duty of an outside sales employee, work performed incidental to and in conjunction with the employee’s own outside sales or solicitations, including incidental deliveries and collections, shall be regarded as exempt outside sales work. Other work that furthers the employee’s sales efforts also shall be regarded as exempt work including, for example, writing sales reports, updating or revising the employee’s sales or display catalogue, planning itineraries and attending sales conferences.
29 CFR §541.500.
So, what does an outside salesperson do to get the exemption? Well to start with they have to “make sales or obtain orders.”
Sales within the meaning of section 3(k) of the Act include the transfer of title to tangible property, and in certain cases, of tangible and valuable evidences of intangible property. Section 3(k) of the Act states that ‘sale’ or ‘sell’ includes any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.
29 CFR §541.50.
But not just tangible property:
. . . ‘services’ extends the outside sales 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. Id.
Wow, outside sales people have to make sales. That’s a shock. Usually no problem there. But where people get caught up and make mistakes is with the word “outside.” Outside means that the sales person is making sales at “the customer’s place of business.”
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. Thus, 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.
29 CFR §541.502.
So if you have a salesperson who works from a home office and does not call on customers to make sales or solicit orders, that employee is not an Outside Salesperson.
Well, that’s it. No more FLSA . . . at least until the new regulations are published. Can you see me dropping the mic and walking off?
Computer Professionals – Calculating the Exemption 1. April 2016Fair Labor Standards ActSteve PalazzoloComments Off on Computer Professionals – Calculating the Exemption	This one is going to be short and sweet. Well, maybe not sweet, but certainly short. First, some computer employees, like Software Engineers, for example, may qualify for the Professional Exemption. To put some definition around when they do, the Regs give us this general rule:
(b) The section 13(a)(1) exemption applies to any computer employee compensated on a salary or fee basis at a rate of not less than . . . (remember, I‘m taking out the Salary Level Test because it is about to change). In addition, under either section 13(a)(1) or section 13(a)(17) of the Act, the exemptions apply only to computer employees whose primary duty consists of:
29 CFR §541.400.
The first thing you need to know is this. These are people who write code, design systems, or do systems analysis at very high levels. This is not your help desk guy. Your help desk guy is not exempt, and if you are paying him that way, you need to fix that. The second thing you need to know is this exemption only applies to these very highly skilled and trained computer professionals, not to other skilled people who do other work that is dependent on computers. 29 CFR §541.401.
And that, is that
Professional Employees . . . Hey, that’s Me! 25. March 2016Fair Labor Standards ActSteve PalazzoloComments Off on Professional Employees . . . Hey, that’s Me!	This is the last of the big three, the Professional Exemption. And this one is a bit more like the Executive in that it is a bit more straightforward and easy to understand. So let’s get down to it. To be eligible for a Professional Exemption you must:
(a) The term ‘employee employed in a bona fide professional capacity’ in section 13(a)(1) of the Act shall mean any employee:
(1) Compensated on a salary or fee basis at a rate of not less than . . . and (yes, I took this out again, but not all of it this time. Yes, the salary rate is going to change, but for this one it is not just a salary, but you can also pay on a fee basis. Look it up at 29 CFR §541.605).
(2) Whose primary duty is the performance of work;
29 CFR §541.300.
So we have a couple of different kinds of “professionals” here. This first is “Requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction.” That is a “Learned Professional.” The second is “Requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.” That is a “Creative Professional.” What’s the difference? Let’s look.
(1) The employee must perform work requiring advanced knowledge
29 CFR §541.301.
(b) The phrase ‘work requiring advanced knowledge’ means work which is predominantly intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment, as distinguished from performance of routine mental, manual, mechanical or physical work. Id.
(c) The phrase ‘field of science or learning’ includes the traditional professions of law, medicine, theology, accounting, actuarial computation, engineering, architecture, teaching, various types of physical, chemical and biological sciences, pharmacy and other similar occupations that have a recognized professional status as distinguished from the mechanical arts or skilled trades where in some instances the knowledge is of a fairly advanced type, but is not in a field of science or learning.
The phrase ‘customarily acquired by a prolonged course of specialized intellectual instruction’ restricts the exemption to professions where specialized academic training is a standard prerequisite for entrance into the profession.
So what we are talking about here? Doctors, lawyers, engineers, teachers CPAs are professionals under this definition, but not HR professionals and paralegals are not.
So what about “Creative Professionals”?
29 CFR §541.302.
Again, we get some nice explanations in the Regulations. “To qualify for exemption as a creative professional, the work performed must be ‘in a recognized field of artistic or creative endeavor.’” Id. “The requirement of ‘invention, imagination, originality or talent’ distinguishes the creative professions from work that primarily depends on intelligence, diligence and accuracy.” Id.
There are also special rules for Teachers and the Practice of Law or Medicine, but I’m not going to get into those. See you next time.
Administrative Employees. And, no, this does not mean that the receptionist is exempt. 18. March 2016Fair Labor Standards ActSteve PalazzoloComments Off on Administrative Employees. And, no, this does not mean that the receptionist is exempt.	The second of the White Collar Exemptions we are going to discuss is the administrative exemption. Why, you ask, is this the next one we are going to discuss? Because it is next in the Regulations. Now, we could have saved it for last and we could have done that because it is clearly the most complex, least well-defined of the Exemptions. Let me show you.
(a) The term ‘employee employed in a bona fide administrative capacity’ in section 13(a)(1) of the Act shall mean any employee:
(1) * * * (this is the Salary Level Test, and as I told you last time, I took this out because it is about to change)
29 CFR §541.200.
You can see already why this one is a bit more complex. The second requirement is pretty simple and straightforward. To start with, the primary duty has to be the performance of “office or non-manual work.” OK, simple enough, it is not somebody who works on a production line or in a plant making a product. But what does “related to the management or general business operations” mean?
(a) To qualify for the administrative exemption, an 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 phrase ‘directly related to the management or general business operations’ refers to the type of work performed by the employee. To meet this requirement, an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.
29 CFR §541.201.
Well that’s very helpful . . . not. Fortunately, that is not all the Regulations provide us. They give us some examples.
(b) Work directly related to management or general business operations includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations; government relations; computer network, internet and database administration; legal and regulatory compliance; and similar activities. Some of these activities may be performed by employees who also would qualify for another exemption.
OK, I get it now, it is support functions like HR and advertising and marketing. It is not stuff like, say, facilities management – you know, the janitors. That makes some sense. But that is not all. In addition to being a staff rather than a line function, the employee must “exercise discretion and independent judgment with respect to matters of significance.” What?
(b) The phrase ‘discretion and independent judgment’ must be applied in the light of all the facts involved in the particular employment situation in which the question arises. Factors to consider when determining whether an employee exercises discretion and independent judgment with respect to matters of significance include, but are not limited to: whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment of the business; whether the employee has authority to commit the employer in matters that have significant financial impact; whether the employee has authority to waive or deviate from established policies and procedures without prior approval; whether the employee has authority to negotiate and bind the company on significant matters; whether the employee provides consultation or expert advice to management; whether the employee is involved in planning long- or short-term business objectives; whether the employee 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.
29 CFR §541.202.
Come on, that is not helpful at all. Here is what we do know – the receptionist is not exempt. What we also know is that this standard requires that “the employee has authority to make an independent choice, free from immediate direction or supervision. . . .” Id. So determining if someone meets this standard is a bit of an art rather than the more straightforward application of requirements under the Executive Exemption. This is also the sort of “catch all” category that employers tend to throw people in when they don’t know what else to do with them, and the one that causes the most trouble. Not often that you get a misclassified supervisor or professional (although it does happen from time to time). Very often you get a misclassified administrative employee. To help, the Regs give us examples. I’m not going to put them all in here, because the Regulation is very long, but go look at 29 CFR §541.203.
And one more thing. Before you go and classify your mortgage loan originators or paralegals as exempt, give us a call. Because they are not, and it will save you in the long run.
Executive Employees: That’s the People in Charge 3. March 2016Fair Labor Standards ActSteve PalazzoloComments Off on Executive Employees: That’s the People in Charge	OK, so last time we talked about improper deductions from an exempt employee’s pay. There are some other Regulations in that part, but we are not going to go into them as they don’t come up all that often.
Instead, we are going to move on to what I hope are the last 5 posts on the FLSA before we try to find another topic to write about: the heart of the so-called White Collar Exemptions. We talked about them back here. We have already discussed the Salary Basis Test and the Salary Level Test and now, over the next 5 posts, we will talk about the duties tests and call it a day.
We start with the bosses. The Executive Employees. To be an Executive Employee, you must:
(a) The term ‘employee employed in a bona fide executive capacity’ in section 13(a)(1) of the Act shall mean any employee:
(1) * * * (this is the Salary Level Test and I took this out because it is about to change);
29 CFR §541.100.
Pretty simple, right? Basically it means you are a manager or supervisor of two or more employees. But, if you work for a smaller company, for example, it might also mean you are an owner:
The term ‘employee employed in a bona fide executive capacity’ in section 13(a)(1) of the Act also includes any employee who owns at least a bona fide 20-percent equity interest in the enterprise in which the employee is employed, regardless of whether the business is a corporate or other type of organization, and who is actively engaged in its management. The term ‘management’ is defined in §541.102. The requirements of Subpart G (salary requirements) of this part do not apply to the business owners described in this section.
29 CFR §541.101.
Management means basically what you would think it means:
… activities such as interviewing, selecting, and training of employees; setting and adjusting their rates of pay and hours of work; directing the work of employees; maintaining production or sales records for use in supervision or control; appraising employees’ productivity and efficiency for the purpose of recommending promotions or other changes in status; handling employee complaints and grievances; disciplining employees; planning the work; determining the techniques to be used; apportioning the work among the employees; determining the type of materials, supplies, machinery, equipment or tools to be used or merchandise to be bought, stocked and sold; controlling the flow and distribution of materials or merchandise and supplies; providing for the safety and security of the employees or the property; planning and controlling the budget; and monitoring or implementing legal compliance measures.
29 CFR §541.102.
The Regulations also tell you what a “Department or Subdivision” means at 29 CFR §541.103, that “two or more other employees” means “two full time employees or their equivalent”, 29 CFR §541.104; what “particular weight means when determining if an employee has the ability to effectively recommend, for example, hiring or firing”, 29 CFR §541.105; and finally, what happens when an employee has concurrent duties, 29 CFR §541.106.
The concurrent duties section is particularly important when it comes to managers in the retail setting. The Regulations recognize that in retail, different rules apply:
29 CFR §541.106.
See, pretty simple, right? You bet it is, but don’t worry, it will get more complex as we go.
It is going to cost me what? The Effect of Improper Deductions from Exempt Employee’s Salary. 19. February 2016Fair Labor Standards ActSteve PalazzoloComments Off on It is going to cost me what? The Effect of Improper Deductions from Exempt Employee’s Salary.	I know, it’s been a while, but we are back. And last time we talked about the general rule for the “salary basis test” and the limited deductions you can make from an exempt employee’s salary and still keep the exemption. And last time I warned you to be very, very careful before you start making any deductions from an exempt employee’s salary. And why did I tell you to be very, very careful? Because the penalty, if you will, if you do make these improper deductions, is pretty darn bad.
29 CFR §541.603(a).
You see, you lose the exemption altogether. That means you are liable for overtime. But that is not all. You aren’t just on the hook for the employee from whom you made the improper deductions.
29 CFR §541.603(b).
Yep, that’s right, you do this wrong and you lose the deduction for everyone in the same job classification working for the same managers responsible for the improper deduction. Got 35 supervisors working for a manager that is making improper deductions for one of them? Lose the exemption for them all. And that can run into some real money.
But don’t worry too much. If it is just a mistake, you can fix it.
29 CFR §541.603(c).
And to cap it off, you can protect yourself even more. Have a policy that prohibits improper deductions and put it in your handbook. Give employees a way to report improper deductions and investigate it and do something about it if improper deductions occur.
(d) If an employer has a clearly communicated policy that prohibits the improper pay deductions specified in §541.602(a) and includes a complaint mechanism, reimburses employees for any improper deductions and makes a good faith commitment to comply in the future, such 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. If an employer fails to reimburse employees for any improper deductions or continues to make improper deductions after receiving employee complaints, the exemption is lost during the time period in which the improper deductions were made for employees in the same job classification working for the same managers responsible for the actual improper deductions. The best evidence of a clearly communicated policy is a written policy that was distributed to employees prior to the improper pay deductions by, for example, providing a copy of the policy to employees at the time of hire, publishing the policy in an employee handbook or publishing the policy on the employer’s Intranet.
29 CFR §541.603(d).
But keep one thing in mind, and this is important for every policy you have. I think you need a policy like the one described in the regulation. But that also means you have to enforce it. It is better to have no policy than it is to have a policy you are not going to enforce. So when you put this policy in place and someone complains, do the investigation, and if there are improper deductions, fix them. If you don’t do that, again, you lose the exemption for the whole class of employees working for the same manager.