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					                                       Georgia Merit System
                                   HR Change Management Meeting
                                           July 27, 2004
                                            10:10 – 512



     Introduction – Law Firm of Fisher and Phillips
            - John Thompson
            - Caroline Brown

     John & Carol
           - PowerPoint Presentation
           - Answered FLSA questions submitted

1.   Wage and Hour Administrator Tammy McCutcheon has suggested that all businesses should use the
     120-day waiting period until August 23 when the new rules go into effect to review and update their
     FLSA policies. What should state government or state agencies be doing in this time period?
     Answer:
     Should be looking at jobs that are exempt or might be exempt, getting current details on duties and
     responsibilities, then deciding what to do according to the rules as applied to those facts. In most
     areas, the changes are not as drastic as some reports might lead one to think. If problems will exist
     under the new rule, there could well be problems now.

2.   Part of the thrust of the new regulations seems to be to give more specific guidance on exemptions.
     Does this mean that it is likely that some exemptions that have typically been used by state agencies
     in the past may now be in question? If so, which particular areas should we attend to?
     Answer:
     The changes tried to give more guidance, and in some ways succeeded. There is still a lot of room
     for vagueness. Ambiguity still exists. Pay attention to the addition to the executive exemption (hire,
     fire, suggest/recommend, etc. additions). Labor Department and courts might be inclined to look
     closer at many public-sector positions (e.g., law enforcement, firefighters).

3.   The new regulations include a “safe harbor” provision. What policies should the state agencies have
     in place to maximize the chances that our agencies would meet the “safe harbor” requirements if
     circumstances require?
     Answer:
     Summarized in slides. Have a clearly-communicated policy on deductions not allowed. Provide a
     complaint mechanism for employee to challenge deductions. Reimburse employee for an improper
     deduction, make good-faith commitment to comply with the rules in the future.

4.   The new regulations allow for disciplinary suspensions without pay of one or more full days.
     However, the Wage and Hour Administrator has warned that the provision should be applied only
     for major breaches of discipline. What practices should agencies follow to avoid misuse of this
     provision?
     Answer:
     Covers unpaid disciplinary suspensions for workplace misconduct, rather than for things like
     attendance or performance problems. DOL says that the exception has to do with “serious”
     misconduct and is to be narrowly construed. Be careful about using euphemisms like “major
     breaches of discipline”, make sure instead that a serious violation of workplace conduct rules is at
     issue. Labor Department gives as examples things like sexual harassment, workplace violence,
     violation of federal or state laws. Can only dock pursuant to a written policy applicable to all
     employees. Make sure which rules you want to use, be sure they are written and apply to all, and
     that they are understood when applied.

5.   Regarding the Executive Exemption - What guidance can you provide regarding clerical supervisors
     (sometimes with 10-15 subordinates)? Do these employees meet the executive exemption criteria
     (their salaries are barely above the new salary minimum?)
     Answer:
     Hope this means “a supervisor of clericals” rather than “a supervisor who is a clerical”! There are
     not enough facts to give a definitive answer – need to apply all the exemption’s tests to the actual
     duties and responsibilities of the job. Supervisor of a small unit may be doing substantially more
     nonexempt work and spending less time managing, supervising, etc. as compared to a supervisor
     who is managing and supervising a department of 10-15 workers. If the employee is just barely
     meeting the salary minimum, this could mean as a practical matter that his or her work might not
     qualify as exempt.

6.   Regarding the Professional Exemption - Should the Social Service Providers, and Behavioral
     Specialist jobs meet the requirement for the Professional exemption? Master's degrees are strongly
     preferred but substitutions of experience are allowed. Currently these jobs are categorized as
     "professional" and there will probably be some political backlash if we try to change them to "non-
     exempt". If the agency can determine that 75% of the incumbents have undergraduate or graduate
     degrees related to their field, is that good enough to satisfy the requirements for the professional
     exemption?
     Answer:
     Of course, the knowledge requirement is just one of the exemption’s criteria. As to the knowledge
     requirement, look mainly at what the knowledge requirements of the work are, as opposed to just
     what the employer requires: Does the work require the necessary knowledge? Also determine how
     those in the department acquired the knowledge, but also look at how the knowledge is customarily
     acquired by those in doing the work in workplaces elsewhere. Do most people who have the
     necessary knowledge get it through a prolonged course of specialized intellectual instruction and
     study? Here, the question indicates that the department requires the knowledge, but its not clear that
     the work does. If not required by the work, then not an exempt professional. E.g. A Burger Cook
     with a law degree (required by organization but not the job). Be careful, “learned” applies to
     relatively few people. Also, be careful about the “related to their field” idea: Would a Behavioral
     Specialist be acceptable to the department if he or she had a general biology degree (because that
     probably would not meet the knowledge requirement)?

7.   Regarding the Administrative Exemption - The concept of "production worker" doesn't seem to be
     mentioned as much in the new regulations, but duties still seem to be related to the
     management/operation of the business and using judgment/discretion in "significant" areas. Can

     Page 2 of 7          HR Change Management Meeting 7/27/2004
     you give an update on the status of the concept of "production worker," as well as some examples of
     "significant" and "non - significant" areas?
     Answer:
     Significant vs. non-significant: see handout. “Production worker” element has not been abandoned.
     Background – the exemption has been said not to apply to employees whose main work is to
     produce or provide what the organization exist to produce or provide. Example: prosecutor office
     (detective or investigator) – function is law enforcement, the investigator “produces” law
     enforcement. Does not go away with new rules. Is somewhat better due to Labor Department’s
     explanatory notes, saying this is just one thing to look at, only makes the determination if the
     employee’s work clearly comes down on side of “production”.

8.   Regarding IT jobs - Are there any "gray" areas to watch out for?
     Answer:
     Yes. Must meet one of the primary-duty categories. May be administrative-exemption possibility.
     Consulting on computer systems (e.g. business analysts) with users – distinguish from help desk vs.
     other duties about the system. Probably not a computer professional if, for example, just tells people
     what to do to make a computer work, how to make existing features of software work.

9.   Suppose a temporary employee works an average of 5 hours a week at a salary of $400 per week.
     During a few weeks of the year, the employee works over 40 hours. Is the employee non-exempt
     based on the $455/week minimum?
     Answer:
     An employee whose salary is $400 per week doesn’t meet the pay requirement for exemption, is not
     exempt.

10. A food services supervisor at a state school works 10 months out of the year. The employee’s salary
    is paid at the rate of $500 per week. The employee’s 10-month salary is $21,000. For payroll
    purposes, the school pays the salary over the entire year so that the employee receives a check for
    $1,750 each month. The employee meets all requirements for an executive exemption.
                 Does the employee meet the salary test for the executive exemption?
                 If not, would the employee meet the salary test if the employee received the entire
                      salary within the 10-month period?
    Answer:
    Question is confusing, but maybe this is its point: Sometimes, a salary for a 10-month duty period is
    paid over 12 months, such as for school employees. U.S. Labor Department says that, in these
    situations, if when salary is applied to duty period (10 months) it equals or exceeds the minimum
    rate for exempt status, you’re okay. If does not meet the $455-per-week salary, there is a problem.
    If paid a salary of $500 a week, then this meets the test.

11. When can you be reasonably certain that a public safety employ qualifies for the executive
    exemption? The new rules seem to imply that Sergeants and Lieutenants who currently clearly meet
    the requirements for the executive exemption will now be non-exempt.
    Answer:
    You can be reasonably certain when you’re reasonably certain that an employee meets the tests! Be
    careful, because there has been lots of talk in connection with the exempt status of public-sector
    employees, and you can expect this to be scrutinized. There are some statements that make it sound

     Page 3 of 7          HR Change Management Meeting 7/27/2004
     as if certain public-sector employees can never be exempt, no matter what. But if an employee
     clearly meets the rules, then he or she should be exempt. It seems inappropriate for the Labor
     Department to say without any consideration of the facts or rules that an employee is non-exempt
     just because he or she is a public-safety officer. Probably will be lots of arguments and litigation. As
     a rule of thumb for management-level public-safety officers, many captains might be exempt, some
     lieutenants, sergeants unlikely, but in the end this has to be decided by-employee.

12. It seems unlikely that many organizations have ever considered non-supervisory blue-collar
    employees as exempt. On the other hand, blue-collar supervisory workers who are over work crews
    frequently meet the requirements for the executive exemption and are considered exempt. Is there
    really anything new in these regulations? Why are they making a big deal about this?
    Answer:
    Big deal for political reasons. Do not necessarily agree that people “over work crews” meet criteria
    for exemption. Most of their time they’re probably doing the same non-exempt work as the rest of
    the crew. Also, if work crews/groups change frequently, might not be managing a customarily-
    recognized department or subdivision of the organization.

13. “Occupations that customarily may be performed with only the general knowledge acquired by an
    academic degree in any field…” What is the result if the job requires, for example:
            A degree in a natural science?
            A degree in psychology, counseling social work, sociology, or a related field?
    Answer:
    If requirement is that a person have a degree in any one of a number of varied, general fields, that is
    likely not to be a professional job. Job requirement or work requirement? (Need to determine
    which). Even if work requires, may not be a learned profession job (lots of different kinds of
    “natural science” degrees). Example given from audience – if require specific hours in certain
    courses (for example for lab tests). Worries that there is also a different problem: the nature of
    work might well not meet the requirements.



14. The Labor Department’s discussion seems to indicate that, in many cases, computer network
    specialists and administrators might be able to qualify for the administrative exemption. However,
    in past rulings, the Department seemed to be very skeptical that most employees in these jobs could
    meet the “discretion and independent judgment test.” Is there really anything new here?
    Answer:
    There isn’t really anything new here. Certain computer employees might meet the administrative
    exemption for the same reasons and on the same bases given in the past. It is still wise to be careful
    about this.

15. What are some practical limitations on the use of the administrative exemption for team leaders?
    The rules indicate that any employee who is leading a team charged with “designing and
    implementing productivity improvements” would qualify. The criteria seem extraordinarily vague.
    Answer:
    Criteria are vague. Practical consideration: Examples given of positions which can be exempt as
    team leaders seem to be focused upon project-oriented work on substantial matters. Most examples

    Page 4 of 7            HR Change Management Meeting 7/27/2004
     deal with discreet teams put together for a specific purpose. Might conceivably be exempt
     executive, but be careful about this. What happens when the task force goes away? If not normal
     part of job, not exempt. Primary duty test does not apply to a specific period of time. Sort of know
     it when you see it. If a supervisor leaves, someone fills in temporarily and given a raise, if non-
     exempt employee now, leave as is, risky to change to exempt. In and out of status is risky. If no
     replacement found or decide to move the person into the job permanently, might want to convert
     then.

16. What precautions should be observed before imposing unpaid disciplinary suspensions of one or
    more full days for infractions of workplace conduct rules?
    Answer:
    Need to be certain that all the rules for doing so are met. For example, is there a written rule
    applicable to all employees? Is the misconduct of a serious and substantial nature? This will be
    narrowly construed, so don’t rationalize your way into thinking that routine unpaid suspensions will
    routinely be OK.

17. The criteria list of factors to consider when determining whether an employee exercises discretion
    and independent judgment with respect to matters of significance includes, “performs work that
    affects business operations to a substantial degree, even if the employee’s assignments are related to
    the operation of a particular segment of the business.” How small could the “segment of the
    business” that the employee’s work affects shrink before this factor ceases to apply?
    Answer:
    Assume administrative exemption is the issue. There really isn’t any particular “segment size” that’s
    in or out. The question is whether the person’s work has an important impact on the organization’s
    management or general business operations. As a practical matter, one might say that, the smaller
    the segment, the more risk there is that what the employee does fails this test. Deal with
    independent judgment vs. deal with established rules, policies, etc. Saying someone has lots of
    freedom because the person knows the job really well so that we don’t have to watch what she does,
    etc. is not the same thing as saying she is exempt; instead, she sounds mainly skilled and
    knowledgeable. Doesn’t sound like an administrative job.

18. What changes in audits or enforcement can we expect from the Labor Department after August 23?
    Is there any reason to believe that, in the absence of employees filing complaints, there will be any
    change from the status quo? Will the Labor Department be checking to determine if we have done a
    self-audit since May? If we think we are in good shape as far as the current regulations are
    concerned, what is our exposure if we don’t do the audit?
    Answer:
    Department of Labor can do audits with complaints or without them. Labor Department audits
    might well increase in the public sector. Self-audit is not required, but harder to answer external
    audit questions if not done. They put you in best position possible when well-done.

19. Is the Labor Department planning some type of publicity campaign around the new regulations that
    will lead to our employees becoming more aware of and sensitive to their FLSA rights?
    Answer:
    Already happened. Employees are already aware but may not understand. Employees may be more
    aware of lots of other FLSA matters not affected by these changes, including non-exempt

    Page 5 of 7           HR Change Management Meeting 7/27/2004
     employees. Department of Labor may step up the publicity approaching 8/23/2004.

20. In short, if I haven’t worried about FLSA for the last 5 years and nothing bad has happened, why
    should I suddenly become worried now?
    Answer:
    Depends on what it means. If satisfied that all is in good shape and reviewed then you’re probably
    okay. However, if not looked at and nothing’s been done, good luck. It will come back to haunt
    you.
    Comment from audience: Will hoards of teams from Department of Labor come out immediately? .
    Response:
    Don’t think so. But a state employee cannot sue the state for money under the FLSA. Department
    of Labor will probably become quicker and more scrupulous about looking at complaints involving a
    state and its agencies. Could be more random audits. Also will be a special team to file “friend of
    court” briefs in connection with interpretations of new rules.

     Questions from audience

1.   1 job with 2 incumbents – one receiving more funds for same work. How to address this?
     Answer:
     The FLSA does not require that everybody in a job be paid the same amount or in the same way.
     Can’t discriminate in violation of some other law, of course (e.g., Equal Pay Act, state internal
     requirements). Could be different reasons for difference (was in higher position and now
     downgraded, more time in the system, transferred in from a different, higher-paying job, may be
     doing different work even though same title, etc.).

2.   Investigators may be non-exempt – if doing internal investigation but is not the work of the agency.
     Can be administrative?
     Answer:
     An investigator performing internal agency investigations might be exempt. Probably wouldn’t be
     non-exempt due to the “production” concept if they are supporting the agency’s management or
     general business operations. Sounds as if the agency does not exist to do investigations.

3.   There are appointing authorities in state governments with hiring and firing authority, others may
     make recommendations, but someone else higher up signs the letter.
     Answer:
     Does not necessarily present an executive-exemption problem if lay track record that the person is
     actually making suggestions and recommendations in this regard that are given particular weight.
     Set up clear way to prove if need be that the people are making these suggestions and
     recommendations.

4.   In the assessment of law enforcement – which exemption are we referring to – executive? Can we
     look at administrative exemption?
     Answer:
     Probably executive or administrative. And bear in mind that the availability of exemptions might
     vary by location. Look at each one. E.g., smaller office might have too few people to support more


     Page 6 of 7          HR Change Management Meeting 7/27/2004
     than one “executive” exemption, but a larger one might support more than one.

5.   How to handle Trainers with different degrees, but not in educational setting, no degree required, but
     they are determining needs assessments?
     Answer:
     Trainers: Nothing inherently exempt about training, but might conceivably meet administrative-
     exemption requirements. (e.g., evaluating training, agency not exist to train so not “production”
     employee, evaluate who “passed” or needs more training). Look for things like deciding what to
     train in, deciding training content, deciding what the approach will be, developing the course
     content, etc.

6.   “Education establishment” – how to determine how to know that?
     Answer:
     The definition can be found at 29 C.F.R. § 541.204(b). Generally, this refers to elementary and
     secondary school systems, institutions of higher education, day or residential secondary education
     schools, other special schools for gifted or disabled, post secondary career programs, etc., whether
     for-profit or not-for-profit. Teachers don’t necessarily have to have licenses to be exempt.

     Other questions submitted

1.   When can you dock the pay of non-exempt employees?
     Answer:
     The limitations on docking the salaries of exempt “white collar” employees do not apply to non-
     exempt employees. Whether a non-exempt employee can be docked for time missed depends upon
     state policy and procedures and upon any state law or regulation applying to non-exempt employees
     of the state or its agencies. Of course, a non-exempt employee cannot be docked in a way that
     results in non-compliance with the FLSA’s minimum-wage or overtime requirements.

2.   Are there other FLSA salary rules applying to “white collar” employees?
     Answer:
     The salary of a “white collar” employee can be docked for a part-day missed for time taken as
     unpaid leave covered by the federal FMLA. There is a special deduction exception relating to the
     salaries of public-sector “white collar” employees, and it is summarized in the PowerPoint
     presentation. Emphasize “salary” because leave is different. Most of the time, leave and salary are
     separate animals. If exempt take off a half-day, salary rule does not prevent docking leave to
     account for the half-day. But don’t bounce over into salary.




     Page 7 of 7          HR Change Management Meeting 7/27/2004

				
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