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 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.

November 2, 2008

Administrative Exemption Examples Under the Fair Labor Standards Act

Filed under: News — Tags: , , , , , , , — Vision @ 10:50 am

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. Earlier posts discussed the definition of an administrative employee. The following are examples of specific jobs that generally either qualify or don’t qualify the employee under the administrative exemption:

  • Insurance claims adjusters qualify whether they work for an insurance or other type company.
  • Financial services employees who analyze information, advise customers, market, service or promote the products qualify, but not those whose primary duty is selling.
  • Employees who lead a team of employees “assigned to complete major projects for the employer”, even those without direct supervisory authority should qualify.
  • Executive assistant or administrative assistant to a business owner or senior executive will qualify if the assistant has been delegated authority over significant matters.
  • Human resources mangers who “formulate, interpret or implement employment policies” do qualify. Personnel clerks who screen applicants for minimum acceptable standards as set by others generally do not qualify.
  • Management consultants who propose changes in a business’s operation qualify.
  • Purchasing agents with authority to make significant purchases qualify even if the agents need consultation for unusually large commitments.
  • Inspectors “along standardized lines involving well-established techniques and procedures” and those doing other ordinary inspection work do not qualify.
  • Examiners or graders do not qualify, even if the employee has progressed to a point that reference to written standards is unnecessary because of acquired knowledge.
  • Comparison shoppers who report prices to a retail stores buyer do not qualify, but the buyer who evaluates the information to set the prices does qualify.
  • Inspectors and investigators in the public sector, including those involved in “fire prevention or safety, building or construction, health or sanitation, environmental or soils specialists” among others do not qualify.

Note that merely giving someone a title does not qualify the employee as exempt unless the duties and responsibilities that the job encumbers are also designated. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

August 26, 2008

Discretion and Independent Judgment Under the Fair Labor Standards Act

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. An earlier post discussed that to qualify for the administrative exemption, an employee must “exercise…discretion and independent judgment” in significant matters. Discretion and independent judgment involve “the comparison and the evaluation of possible courses of conduct, and acting or making a decision after” considering various possibilities. Some factors are “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.” The regulations specifically state that other factors may also be considered in making the determination. Discretion and independent judgment generally require an employee to make decisions “free from immediate direction or supervision.” The decisions may, however, be reviewed by upper-level personnel or not followed at all. Neither means that the employee did not exercise discretion and independent judgment. The fact that several employees may perform similar work or work of the same level of importance is not necessarily enough to disqualify the work from requiring discretion and independent judgment. Types of work that do not require discretion and independent judgment “include clerical or secretarial work, recording or tabulating data, or performing other mechanical, repetitive, recurrent or routine work.” The fact that an employer may suffer “financial losses” if an employee fails to properly perform a job does not necessarily mean that an employee who performs that job exercises discretion and independent judgment. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

August 25, 2008

Directly Related to Management or General Business Operations Under the Fair Labor Standards Act

Filed under: News — Tags: , , , , , , , — Vision @ 12:08 pm

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. An earlier post discussed that to qualify for the administrative exemption, an employee’ s primary duty must be “the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.” Therefore “working on a manufacturing production line or selling a product in a retail or service establishment” does not qualify as an exempt administrative function. Examples of work that does qualify include 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; [and] legal and regulatory compliance.” The regulations specifically state that other duties not listed above may also be included in the duties of an administrative employee and that such duties may also be performed by employees who qualify under other FLSA exemptions. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

August 24, 2008

Administrative Exemption Under the Fair Labor Standards Act

Filed under: News — Tags: , , , , , , , — Vision @ 8:35 pm

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. Only employees “employed in a bona fide administrative capacity” qualify for the exemption. Any employee who meets all the following tests shall be considered an “administrative employee” for this purpose: 1) The employee must receive a salary of at least $455 per week, not including board, lodging, or other facilities. 2) The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.” 3) The employee must “exercise…discretion and independent judgment” in significant matters. Future posts will provide further clarification of certain terms in the administrative exemption as well as provide other tests that may qualify an employee as an administrative employee. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

August 23, 2008

Concurrent Duties Under the Fair Labor Standards Act

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The executive exemption allows employees who qualify as “executives” to be exempted from both minimum wage and overtime requirements. The fact that employee may perform both exempt and non-exempt duties does not necessarily disqualify the employee from executive classification under the FLSA. The determining factor is generally whether the employee directs other non-exempt employees and remains “responsible for the success or failure of business operations” or is merely directed by another to perform the exempt function or performs it for a certain period. “An employee whose primary duty is ordinary production work or routine, recurrent or repetitive tasks cannot qualify for exemption as an executive.” Generally, the ultimate deciding factor, based on the facts and circumstances of each case, is whether or not the employee’s primary duty is management. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the executive exemption.

August 21, 2008

Particular Weight Under the Fair Labor Standards Act

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The executive exemption allows employees who qualify as “executives” to be exempted from both minimum wage and overtime requirements. One of the tests to be met is that an executive must be able to make “suggestions and recommendation [that] are given ‘particular weight.’” Among other factors to be considered are, “whether it is part of the employee’s job duties to make such suggestions and recommendations; the frequency with which such suggestions and recommendations are made or requested; and the frequency with which the employee’s suggestions and recommendations are relied upon.” The “suggestions and recommendations” should pertain to employees whom the executive manages. Occasional suggestions about co-workers are not sufficient to meet this standard. The “suggestions and recommendations” need not be the ultimate deciding factor or even the most important determinative factor to qualify as being given particular weight. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the executive exemption.

August 19, 2008

Two or More Other Employees Under the Fair Labor Standards Act

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The executive exemption allows employees who qualify as “executives” to be exempted from both minimum wage and overtime requirements. One of the tests to be met is that an executive must “customarily and regularly” direct the work of at least two other employees. The two or more employees test is an equivalency test. Four half-time employees are equal to two full-time employees. Supervision may be split among two or more employees, but each must supervise two or more full-time equivalents. A department with five non-exempt employees, for example, may not have more than two exempt supervisors under this test. Assistance in the actual manager’s absence is not sufficient to meet the requirements of this section. An employee’s work can only be credited to one supervisor; an employee who works eight hours can be credited four hours each to two different supervisors, but not eight hours to each supervisor. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the executive exemption.

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