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Tammy’s Top 10 Q&A’s (Overtime at the White House: Preparing for Change – February 5, 2019)

  1. Would stipends be considered incentive pay?

    Probably not, under the definition in the 2016 Final Rule.

  2. Will we see any allowance/pro-rating for part-time employees?

    I was asked for pro-rating in 2004 and commenters asked again in 2016.  DOL declined both times as doing so is unnecessary as, by definition, part-time employees do not work over 40 hours per week, and thus are not due any overtime. If your part-time workers are regularly working more than 40 hours, you may have more serious issues such as eligibility for benefits and Affordable Healthcare liability.

  3. Where is a good source of a record of FLSA decisions by the courts?

    Decisions are first published by the federal courts themselves and then reported by various publications. I follow two daily employment law publications:  Law360 and Bloomberg Law.  All federal court decisions are searchable in Westlaw and Lexis.

  4. What is the potential for indexing and does DOL have the authority for indexing?

    In my opinion, DOL does not have authority for indexing (automatic increases to salary level without further notice and comment rulemaking), as I so stated in the preamble to the 2004 Final Rule. Secretary Acosta spoke favorably of indexing, however, in a 2017 speech to the U.S. Chamber.  The business community is likely to sue DOL if they have indexing/automatic increases in the final rule.

  5. Do you think a potential change in federal minimum wage will change the overtime threshold?

    The current efforts in Congress and various states to increase the minimum wage do not include any effort to increase the minimum salary for the white collar overtime exemption. You can follow developments at www.reginfo.gov or regulations.gov, and the tracking number is 1235-AA20.

  6. Once an evaluation is done and it’s found that someone is incorrectly classified, are you legally obligated to change their status ASAP?

    Yes, and any significant delays in reclassification can transform the violation into a willful violation, leading to additional back wages and double damages. Thus, be sure to have the buy-in of business partners for reclassifications before you start an evaluation.  Every employer should audit its classifications on a regular basis, every few years.  But, doing nothing at all is better than auditing, finding a misclassification and then doing nothing.

  7. If bonuses for non-exempt employees are calculated using overtime paid during the performance period, does the regular rate of pay and retro incremental overtime still need to be calculated and paid?

    Additional overtime does need to be calculated and paid to non-exempt on most bonuses, but not for exempt employees.

  8. How far back should we go when calculating back wages for an FLSA misclassification?

    You should go back at least 2 years. If the violations are found willful, you would owe a third-year of back wages and also could be liable for double damages.  However, if you go through DOL’s voluntary self-audit program PAID (www.dol.gov/whd/paid), you will only need to pay 2 years.

  9. How do you feel about non-exempt employees managing other employees?

    In my opinion, having non-exempt employees manage other non-exempt employees is not the best situation but sometimes necessary and inevitable. There certainly is no legal prohibition.  Under CA law, for example, few retail assistant managers qualify for exemption, and thus most are classified as non-exempt and supervise other non-exempts.

  10. Let’s say for simplicity, the salary decided is $35k. I have a salaried commission employee that makes $30k in regular salary and $15k in commission. How much of the commission can I count towards annual salary?

    Currently, no part of commissions can count towards the guaranteed salary required for exemption as an executive, administrative or professional employee. And, I don’t see this changing. However, if paid commissions, the employee may be a sales employee.  The exemptions for sales are a bit different.  If the employee is considered “outside” sales — regularly making sales away from the employer’s places of business, away from a home office — then the salary requirements do not apply at all; the employee qualifies as exempt if paid 100% commissions.  If your company is a retail or service business (where 75% of sales is to an end consumer and not for re-sale), the employee is exempt if paid over 50% in commissions, and at least 1.5 times the minimum wage.  Inside sales employees in non-retail are not exempt.  This is one of the most misclassified positions, and these new regulations will be a great time to fix that!