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									The Fair Labor Standards Act:
 Recent Developments and Issues of Interest
        Presentation By:                                       Presentation By:
         Jay K. Rutherford                                    Scott M. McElhaney
301 Commerce Street, Suite 2400                           901 Main Street, Suite 6000
    Fort Worth, Texas 76102                                  Dallas, Texas 75202
          (817) 334-7246                                        (214) 953-6147
      (817) 334-7290 (fax)                                   (214) 953-5822 (fax)
       jrutherford@jw.com                                    smcelhaney@jw.com
                                    Written By:
                                   Ray C. Clark
                            901 Main Street, Suite 6000
                               Dallas, Texas 75202
                                 (214) 953-5956
                               (214) 953-5822 (fax)
                                  rclark@jw.com
     Amendments to the FLSA
        Minimum Wage

•   Presently $5.15
•   $5.85 as of July 24, 2007
•   $6.55 as of July 24, 2008
•   $7.25 as of July 24, 2009
FLSA Audits, Litigation & Other WHD
             Activities

2002 – $143 million for 242,000 ees
2003 – $182.1 million for 315,000 ees
2004 – $165.4 million for 266,000 ees
2005 – $134.2 million for 219,000 ees
2006 – $135.7 million for 222,000 ees
FLSA Audits, Litigation & Other WHD
             Activities

• FLSA wage & hour cases in federal court
  increased by 137% since April, 1999

• 4,389 FLSA cases filed between April
  2005 and March 2006 (more than in any
  other recent 12 month period)
FLSA Audits, Litigation & Other WHD
             Activities

• Still far more civil rights cases (15,408)
  and ERISA cases (10,417)
• FLSA filings increased from 2000 – 2003
• In the years 2003 – 2005, FLSA filings
  declined or remained constant
• In 2006, FLSA filings increased again
FLSA Audits, Litigation & Other WHD
             Activities

 Will there be increased WHD audit
 activity and litigation to ensure that
 employers honor the first phase of the
 minimum wage increase scheduled to
 take place next month?
FLSA Audits, Litigation & Other WHD
             Activities

WHD Opinion Letters:
• Since the 2004 FLSA Regulations, more
  than 100 attempting to explain exemptions
• from 2001 to 2003, only 35 such letters
FLSA Audits, Litigation & Other WHD
             Activities

  Opinion Letter FLSA2006-7 (March 10, 2006)

• Deductions from exempt employees’ salaries for
  damage to or loss of company equipment
  violates FLSA salary requirement
• Deductions from non-exempt employees’
  salaries can violate minimum wage and OT
  provisions
FLSA Audits, Litigation & Other WHD
             Activities


 Does your company have a policy
 requiring employees to reimburse the
 company for damage or losses of
 company equipment, such as cell
 phones, lap tops, or other tools?
FLSA Audits, Litigation & Other WHD
             Activities

  Opinion Letter FLSA2007-6 (Feb. 8, 2007)

• Full-day deductions from exempt employees’
  salaries pursuant to state leave acts are
  permissible
• Partial-day deductions are not permissible unless
  expressly authorized by the FLSA regulations
• Leave under state leave acts may not qualify as
  FMLA leave, so no partial-day deductions
FLSA Audits, Litigation & Other WHD
             Activities


 Be careful when administering state law
 leave.

 Partial-day deductions for such leave are
 permissible only if the leave also qualifies
 as FMLA leave.
FMLA & the FLSA Salary Requirement

  Partial-day deductions are permitted for
  partial-day absences due to intermittent or
  reduced schedule FMLA leave

  If an exempt employee performs work
  while on FMLA leave, pay for only the
  hours worked (instead of full-day pay) is
  permissible
              Intern Programs

  Interns must be compensated unless the
  internship program that satisfies all six of
  the following criteria:
1. The training is similar to that which would be
   given in a vocational school.
2. The training is for the benefit of the trainee.
3. Trainees do not displace regular employees, but
   work under close observation.
              Intern Programs

  (continued):

4. The employer derives no immediate advantage
   from trainees’ activities and on occasion
   operations may actually be impeded.
5. Trainees are not necessarily entitled to a job at
   the completion of the training period
6. There is an understanding that trainees are not
   entitled to compensation
      Review of FLSA “Exemptions”
     and the 2004 FLSA Regulations
FLSA exemptions exist for:
•   Executives
•   Administrators
•   Professionals
•   Computer Systems Analysts & Programmers
•   Outside Salespeople
•   Combination Exemption
•   Highly-Compensated Employees
     The Two-Pronged Test

       Prong 1: The Salary Requirement
• Paid on a fee or salary basis on a weekly or less
  frequent basis
• With certain limited exceptions, pay must not be
  subject to deductions
       Prong 2: The Duties Requirement
• “Primary duties” must be those of the applicable
  exemption
    The Salary Requirement
  Safe harbor for improper salary deductions is
  now permitted where employers:

1. promulgate a clear policy (with an employee
   complaint mechanism) prohibiting improper
   deductions;
2. reimburse employees for improper deductions;
   and
3. commit in good-faith to comply with the FLSA
   overtime provisions in the future.
 The Salary Requirement


Does your company have an FLSA
“Safe Harbor” policy?
           Executive Employees

              Prong 1: Salary
• $455 per week

                 Prong 2: Duties
• Manages enterprise or department thereof
• Directs the work of two or more other
  employees
• May hire or fire or make recommendations that
  are “given particular weight”
         Administrative Employees

                 Prong 1: Salary
• Paid $455 per week

                  Prong 2: Duties
• Performs office or non-manual work directly
  related to the employer’s or customer’s
  management or general business operations
• Exercises discretion and independent judgment
  with respect to matters of significance
              Professional Employees
                 Prong 1: Salary
• Paid $455 per week

                 Prong 2: Duties
• Learned Professional - work requires knowledge
  of an advanced type in a field of science or
  learning customarily acquired by a prolonged
  course of specialized intellectual instruction, or

• Creative Professional - performs work requiring
  invention, imagination, originality or talent in a field
  of artistic or creative endeavor
             Computer Employees


                Prong 1: Salary
• Paid $455 per week or $27.63 per hour

                  Prong 2: Duties
• Performs systems analysis techniques and
  procedures, including consulting with users to
  determine hardware, software or system
  functional applications; or
             Computer Employees
           Prong 2: Duties (continued)

• Designs, develops, documents, analyzes, creates,
  tests, or modifies computer systems or programs,
  including prototypes, based on and related to user
  or system design specifications; or
• Designs, documents, tests, creates or modifies
  computer programs related to machine operating
  systems; or
• A combination of all of the above
Computer Executives & Administrators

              Prong 1: Salary
• Not specified

              Prong 2: Duties
• Performs a combination of exempt duties
  for exempt computer employees,
  executives, and/or administrators
         Outside Sales Employees

               Prong 1: Salary
• No compensation requirement

                  Prong 2: Duties
• Making sales or obtaining orders or contracts for
  services or for the use of facilities
• Customarily and regularly engaged away from
  the employer’s place or places of business
            Combination Exemption

                  Prong 1: Salary
• Not specified

                 Prong 2: Duties
• Performs a combination of exempt duties for
  exempt executives, administrators,
  professionals, outside sales and/or computer
  employees
   Highly Compensated Employees

                 Prong 1: Salary
• $100,000 annual compensation, at least $455
  weekly
                 Prong 2: Duties
• Performs any one or more of the exempt duties for
  exempt executives, administrators or professional
  employees
• Does not apply to employees who perform manual
  labor
      Calculating FLSA Overtime

                Common Errors
• Confusion over the workweek
• Omission of non-discretionary bonuses
• Confusion over activity that counts as “hours
  worked” under the FLSA
      The Fair Labor Standards Act:
Recent Developments and Issues of Interest

          Presentation By:                 Written By:
         Scott M. McElhaney               Ray C. Clark
     901 Main Street, Suite 6000   901 Main Street, Suite 6000
        Dallas, Texas 75202           Dallas, Texas 75202
           (214) 953-6147               (214) 953-5956
        (214) 953-5822 (fax)          (214) 953-5822 (fax)
        smcelhaney@jw.com                rclark@jw.com

								
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