Vision Payroll

March 1, 2010

US Department of Labor Issues and Withdraws Opinion Letter on Salary Deductions from Exempt Registered Nurse

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-25. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA). Because the letter was apparently never mailed after it was signed, the DOL under new Secretary Hilda L. Solis has decided to withdraw the letter for further consideration. Therefore, this letter may not be relied upon as a statement of agency policy. It is possible that a different conclusion may be reached when the Opinion Letter is reissued.

In this Opinion Letter, the DOL had ruled that employers could take deductions from an exempt salaried employee based upon the number of work hours missed when an employee misses an entire day of work. The employee in question was a Registered Nurse (RN) who was paid a salary to be on call and available for surgery. She was paid whether or not she was actually called in to the hospital. At some times, the RN was not available to be called for a full day. As long as the employee was absent for at least one full day, a deduction from her salary was permissible.

State laws may provide rules that are more beneficial to the employee and must be followed. The DOL may come to a different conclusion when it reissues the Opinion Letter after further consideration. Contact Vision Payroll if you have questions about this Opinion Letter.

August 16, 2009

US Department of Labor Issues Opinion Letter on Transportation Authority Employees

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-19. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA).

In this Opinion Letter, the DOL concluded that fire protection employees of a Transportation Authority, “a public benefit corporation created by, and organized under, state law”, qualified as employees in fire protection activities. As such, the FLSA provides a partial overtime pay exemption. Fire protection employees have a “maximum hour standard” that must be met before overtime is required. The standard runs from fifty-three hours in a seven-day work period to 212 hours in a twenty-eight day period.

Furthermore, buybacks of vacation time may be excluded from the regular rate of pay when calculating overtime pay, but stipends for quarterly perfect attendance must be included in the regular rate of pay.

State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

August 11, 2009

US Department of Labor Issues Opinion Letter on Mandatory Time-off for Salaried Employees

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-18. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA).

In this Opinion Letter, the DOL addressed two questions regarding an employer’s accrued paid time-off (PTO) plan.

Are exempt employees who are required to take PTO during periods of “low patient census” in danger of losing their exempt status?

If an exempt employee’s accrued PTO is exhausted and the periods of low patient census continues, could [the employer] schedule the exempt employee for less than forty hours and reduce pay accordingly?

In response to the first question, the DOL stated “[a]n employee will not be considered to be paid “on a salary basis,” however, if any deductions from the salary are made for full or partial day absences occasioned by the employer or by the operating requirements of the business.” Therefore, those employees could lose their exempt status if such deductions are made.

As for the second question, the DOL concluded, [u]nlike a salary reduction that reflects reduction in the normal scheduled workweek and is not designed to circumvent the salary basis, deductions from salary due to day-to-day or week-to-week determinations of the operating requirements of the business are precisely the circumstances the salary basis test is intended to preclude. Such a plan is, therefore, inconsistent with the guaranteed salary basis of payment required by the regulations.”

State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

August 1, 2009

US Department of Labor Issues Opinion Letter on Pay Reductions to Salaried Employees

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-14. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA).

In this Opinion Letter, the DOL ruled that reducing a salaried employee’s pay due to a reduction in hours mandated by the employer may violate the salary basis requirement and jeopardize the employee’s exempt status.

In certain cases in which there is a low patient census, the employer offers voluntary time off (VTO). VTO allows the employees to take time off and “use paid annual, personal, or vacation leave, but continue to accrue employment benefits.” An insufficient number of volunteers under this system results in the implementation of an MTO (mandatory time off) system. Employees may then use accrued leave or take unpaid MTO. If an employee does not have sufficient time to allow payment under the leave policy or elects not to use accrued leave the employer deducts the VTO or MTO from the employee’s salary for that week. If the leave lasts the entire week, no salary is paid.

Under the FLSA, deductions from salary are not allowed when work is not available if the salaried employee “is ready, willing and able to work.” A reduction may be allowed “if it is a bona fide reduction not designed to circumvent the salary basis requirement, and does not bring the salary below the applicable minimum salary” (currently $455 per week). Deductions are allowed when exempt employees “voluntarily take time off for personal reasons, other than sickness or disability, for one or more full days.” The employee must truly volunteer, however, and it must not be “occasioned by the employer or the operating requirements of the business.”

State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

July 15, 2009

Tip of the Week: Who Needs a Vacation?

Filed under: News — Tags: , , , , — Vision @ 10:00 pm

Employers are often thrilled to have those employees who are always on time, never take a sick day, and never take a vacation. But are they model employees, necessary employees, or a stress case waiting to happen? Does returning to a desk-full of unfinished work worry them? Are they worried about losing work to a co-worker? Or in this time of layoffs are they worried about appearing to uncommitted to their work?

Learn the answers to these questions and also what you need to know about how local laws may impact your vacation policies in this month’s HRCast, a recording provided by our team of HR Pros and available exclusively on MyHRSupportCenter. You’ll learn if you must offer vacation time and if you should offer vacation time. Learn if you can cap the employee’s balance at some pre-determined level, whether you can limit how much vacation is taken, or when it is taken. Learn what you need to know about forced vacation time and how it’s impacted by the employee’s exempt or non-exempt status.

Visit MyHRSupportCenter regularly not only for our HRCasts, but also to get late-breaking compliance alerts, best practices to implement, and HR tools to use every day. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

June 5, 2009

Question of the Week: How Do Students Claim Exemption from Income Tax Withholding?

This week’s question comes from Will, a restaurant owner. We’ve hired several students to work for us this summer. Most of them don’t expect to owe any income tax this year. How do students claim exemption from income tax withholding? Answer: Students or others who expect to owe no tax for 2009 should review the conditions on line 7 of Form W-4, Employee’s Withholding Allowance Certificate or the Spanish W-4, Formulario W-4(SP), Certificado de Exención de la Retención del Empleado. Employees who meet both conditions should write “Exempt” (or “Exento”) on line 7 and file the form with their employer. The employer should not withhold any federal income tax from these employees for the rest of 2009. Employees who wish to continue their exempt status in 2010 must a complete and provide to their employer a 2010 Form W-4 before February 16, 2010. These employees may also wish to file a state equivalent form to claim exemption from state withholding as well. The filing of Form W-4 claiming exempt status does not stop social security or Medicare withholding or the requirement that the employer match these withholdings. These taxes, sometimes known as FICA or OASDI, have their own rules for determining exemption which are much less likely to apply. Contact Vision Payroll if you have any questions on employees claiming exempt status.

May 4, 2009

US Department of Labor Issues Opinion Letter on Convention and Visitors Services Sales Manager

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-4. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA).

In this Opinion Letter, the DOL concluded that a convention and visitors services sales manager whose “primary duty is marketing and promotional work to enhance the city as a destination for conventions and visitors” qualified for the administrative exemption to the FLSA. In addition to a salary of at least $455 per week, to qualify for the administrative exemption an employee must perform office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers and a primary component of which involves the exercise of independent judgment and discretion about matters of significance.

The employee in question was primarily involved in marketing, which is considered office or non-manual work. This is true even though the employee performed some support and clerical duties, since this non-exempt work was not the employee’s primary duty. Furthermore, the employee exercised independent judgment and discretion since the employee performed important duties on matters of significant economic import to the city with minimal supervision.

The DOL did not address whether the employee qualified under the professional exemption since the matter was moot.

State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

May 3, 2009

US Department of Labor Issues Opinion Letter on Retroactive Overtime Calculation

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-3. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA).

In this Opinion Letter, an employer requested an opinion as to whether its method of calculating retroactive overtime pay was compliant with the FLSA. After a reorganization at the employer, certain formerly exempt employees no longer performed the duties that qualified them as exempt. These employees had been paid a salary even after they had become non-exempt employees. This salary might have been reported on their bi-weekly pay stubs as 100 hours worked at $18.25 per hour for a salary of $1,825.00 regardless of the number of actual hours worked. This was due to an understanding that these employees would generally work at least fifty hours each work week and the limitations of the employer’s payroll department and software.

The employer’s method for calculating overtime for the newly non-exempt employees was as follows:

  1. Determine the actual hours worked by an employee for a given week.
  2. Calculate the equivalent of the employee’s weekly salary by dividing the bi-weekly salary by two.
  3. Divide that weekly salary by the number of hours worked in that week.
  4. Divide that resulting hourly rate equivalent by two in order to determine the hourly overtime premium.
  5. Multiply that overtime premium rate by the overtime hours worked in that week.

In all cases, the resulting hourly rate calculated exceeded the applicable minimum wage.

The Opinion Letter stated that the fact the payroll software displayed an hourly rate on the check did not mean that the employer was required to pay overtime based on that rate; therefore, the employer’s method of calculating overtime was in compliance with the FLSA.

State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

March 15, 2009

US Department of Labor Issues Opinion Letter on Mandated Vacations for Exempt Personnel

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2009-2. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA).

In this Opinion Letter, the DOL concluded that an employer “may require exempt employees to use accrued vacation time during a plant shutdown of less than a workweek without violating the salary basis test and thereby affecting their exempt status” under the FLSA.

There is no requirement under the FLSA to provide vacation to employees. Employers may require employees to use vacation time or leave time “whether for a full or partial day’s absence, provided the employees receive in payment an amount equal to their guaranteed salary.” Therefore, so long as the employees receive their guaranteed salary there is no impact on their exempt status. Exempt employees without available time for vacation or leave must still receive their full salary “for any absence(s) occasioned by the employer or the operating requirements of the business.”

State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

February 24, 2009

US Department of Labor Issues Opinion Letter on Exempt Status During Training Periods

The US Department of Labor (DOL) recently issued Administrator signed Opinion Letter FLSA2008-19. Although Opinion Letters only apply to the exact set of facts and circumstances presented in each case, they are a valuable aid in understanding current interpretations of the Fair Labor Standards Act (FLSA).

This Opinion Letter confirms that exempt store managers do not lose their exempt status while training to become area sales managers. The company chooses store managers who are top performers to enter a seven-week training program to become area sales managers. Eight to ten store managers report to one area sales manager. At the beginning of the training period, the trainee performs little to no exempt work. As the program progresses, the trainee gradually assumes most to all of the responsibilities of the trainer. Successful trainees return to their store manager position to await an opening and a promotion. Unsuccessful trainees just return to store manager duties.

For this letter, the DOL assumed that both the store manager and area sales manger positions were exempt. Even though for some weeks of the training, the trainees may have performed mostly non-exempt work, the executive exemption need not be met or tested on a week-by-week basis. Since the primary duty of the trainees remained as store managers and since they did not perform “work that would otherwise be performed by nonexempt workers”, there is no reason for the trainees to lose their exempt status during the training program.

State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about this Opinion Letter.

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