Overtime

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On May 20, 2020, the U.S. Department of Labor (DOL) published a final rule explaining that bonuses and other incentive payments—paid in addition to an employee’s weekly salary—are compatible with the fluctuating workweek (FWW) method of calculating overtime under the Fair Labor Standards Act (FLSA). The final rule went into effect on August 7, 2020.

On August 31, 2020, the DOL issued an opinion letter confirming that an employee’s work hours do not have to fluctuate above and below 40 hours per workweek for an employer to use the FWW method of calculating overtime pay. The opinion letter also cautioned that employers who use the FWW method generally may not “deduct from an employee’s salary for absences occasioned by the employee.” Both developments are discussed below, following the FWW refresher.
Continue Reading DOL issues new final rule and updated guidance for employers who use the fluctuating workweek method to calculate overtime

The Fair Labor Standards Act (FLSA) exempts employees with certain executive, administrative, or professional job duties from the requirement that they receive overtime pay for hours worked over 40 in a workweek. Determining whether one or more of these “white collar” exemptions apply to a particular employee requires a fact-intensive analysis of the employee’s job duties. But there is another, sometimes overlooked, requirement: the employee must be compensated on a “salary basis” at a rate of not less than $684 per week. 29 C.F.R. § 541.600(a). An employee is paid on a salary basis if the employee regularly receives, on a weekly or less frequent basis, a predetermined amount which “is not subject to reduction because of variations in the quality or quantity of the work performed.” 29 C.F.R. § 541.602(a). Employers who make improper deductions from their employees’ salaries will lose the ability to claim that the executive, administrative, and professional exemptions apply if the facts demonstrate that they did not pay the employee on a salary basis. 29 C.F.R. § 541.603.

There has been a substantial amount of litigation regarding the types and frequency of deductions from an otherwise exempt employee’s salary that will cause an employer to lose the ability to claim that the white collar exemptions apply. One area of contention has been whether an employer’s policy stating that it will make improper deductions from an employee’s salary is sufficient to defeat exempt status, or whether there must be an actual practice of making such deductions for the employer to lose the exemption. Previously, courts followed the Secretary of Labor’s view that, if an employer’s policy created a “significant likelihood” of improper salary deductions, this could result in a loss of exempt status. Auer v. Robbins, 519 U.S. 452 (1997). But the Department of Labor has since promulgated regulations stating that the focus is on “an actual practice of making improper deductions.” 29 C.F.R. § 541.603.
Continue Reading Fifth Circuit clarifies when improper pay deductions make an employee ineligible for exemptions from overtime under the FLSA

On September 24, 2019, the U.S. Department of Labor (DOL) published a highly anticipated final rule that updates the salary thresholds necessary to qualify for overtime exemptions – often referred to as the “salary level test” – under the Fair Labor Standards Act (the 2019 Final Rule).[1] This rule will replace the prior final rule published on May 23, 2016 (the 2016 Final Rule) under the Obama administration, which was enjoined in 2016 and remains the subject of an abated appeal pending before the Fifth Circuit Court of Appeals.

The DOL published the Notice of Proposed Rulemaking (NPRM) underlying the new rule on March 22, 2019. In response, the DOL received more than 116,000 comments. Based on those comments, the DOL made several changes that are reflected in the 2019 Final Rule.Continue Reading DOL final overtime rule issued with few significant changes from 2019 proposed rule

Overtime work is essential in many industries. As a result, employers frequently structure job roles to require mandatory overtime. Although mandatory overtime can present difficult questions when an employee has a disability that disqualifies them from working overtime, the Eighth Circuit Court of Appeals, in McNeil v. Union Pac. R.R., No. 18-2333, recently confirmed that overtime work can be an essential function of a job in appropriate circumstances.

In McNeil, the Eighth Circuit evaluated whether Union Pacific could lawfully terminate a disabled emergency dispatcher who could no longer perform the mandatory overtime required of all Union Pacific emergency dispatchers. The plaintiff brought suit against Union Pacific following her termination and alleged disability discrimination under federal and state law. In the district court, Union Pacific moved for summary judgment arguing that the plaintiff was not a qualified individual with a disability because she was unable to perform an essential function of the position due to her inability to work overtime. The district court agreed, and granted Union Pacific’s motion.

On appeal, the Eighth Circuit affirmed the district court’s decision that the plaintiff’s ability for overtime work was an essential function of her job as a dispatcher. In doing so, the Eighth Circuit emphasized the authority of an employer to establish the essential functions of a job. To defeat a “failure to accommodate” discrimination claim, an employer must prove that the function at issue is, indeed, essential. Notably, the district court in McNeil relied on the company’s clear scheduling and attendance policies, which expressly articulated that overtime work is “mandatory.” The McNeil court also highlighted the public safety concern of always having a capable dispatcher ready and on duty. If plaintiff were permitted to avoid working overtime on an ongoing basis, then that burden would fall on another dispatcher to absorb. Such a situation, the court reasoned, could create a public safety risk.Continue Reading Eighth Circuit affirms working overtime can be essential job function

This installment of our ongoing series prognosticating about the new Presidential administration focuses on the regulatory environment employers may face. President-elect Trump has promised to revoke a number of the more employee-friendly measures that the Obama Administration has passed over the previous eight years.  Additionally, Ivanka Trump, who was influential throughout her father’s campaign, has reiterated her intention to fight for equal pay for women and family leave policies. 
Continue Reading What Employers May Expect with Trump in Office

Today, the U.S. Department of Labor (DOL) released its highly anticipated final revisions to the Fair Labor Standards Act’s (FLSA) so-called “white collar” exemptions, the first major update to the federal overtime rules in more than a decade. Although the final rule is somewhat similar to the proposed rule published by the DOL last summer,…

Another decision has been handed down to clarify – or complicate – the position on which aspects of pay should be included when calculating an employee’s entitlement to holiday pay.

The Court of Appeal in Northern Ireland (“CA”) has held that voluntary overtime is not necessarily excluded from the calculation of holiday pay for the purposes of the Working Time Regulations 1998 (as derived under the EU Working Time Directive).

The case of Patterson v Castlereagh Borough Council held that it was a “question of fact” for each Tribunal to determine whether or not voluntary overtime was “normally” carried out by the employee. If so, it should be considered to be part of the employee’s “normal remuneration” and included when calculating holiday pay.

The case was remitted to the Tribunal to hear further evidence of the overtime actually worked by the employee within a suitable reference period. Once this is determined, the Tribunal will decide as a question of fact whether the voluntary overtime should be included in this particular case.Continue Reading Should voluntary overtime be included when calculating holiday pay?

Summary

Yesterday’s decision by the Employment Appeal Tribunal (“EAT”) in Bear Scotland Ltd v Fulton and ors (and conjoined cases) on holiday pay has the potential to affect any employer that requires its workers to work overtime. The EAT held that both guaranteed and non-guaranteed compulsory overtime worked by a worker should be included when…

Holiday pay is often a tricky issue for employers and one which seems to be changing constantly. In the light of several new cases discussing holiday pay which have been reported over the summer and in the last couple of weeks, we take the opportunity to round up the legal developments, and set out five things employers should know before deciding how much holiday pay an employee may be entitled to on termination of their employment.Continue Reading Holiday pay – five things you should know when calculating holiday pay