Restoring Overtime Pay for Working Americans Act: Senate Democrats Join President Obama’s War On FLSA Exemptions

by BakerHostetler
Contact

Yesterday, Senate Democrats introduced a bill cited as the “Restoring Overtime Pay for Working Americans Act” (“the Act”), which would amend the Fair Labor Standards Act (“FLSA”) to make it more difficult for employers to classify employees as exempt and impose penalties on employers for failing to comply with the FLSA’s record-keeping provisions. This action by the Senate Democrats provides a second front to the war on exemptions declared by President Obama in March, when the White House directed the U.S. Department of Labor (“DOL”) to “modernize and streamline the existing overtime regulations” as they pertain to the application of exemptions, which we reported here.

The Act proposes the following:

(1) Increased Salary Basis.

For executive, administrative, and professional exempt employees, the weekly salary would increase from $455 to $1,090 over a 3-year period.  Specifically, the weekly salary would increase to $665 (1 year following enactment), $865 (2 years following enactment), and $1,090 (3 years following enactment). At 4 years after enactment, and every succeeding year, the weekly salary would increase by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers.

For highly compensated exempt employees, the annual compensation would increase from $100,000 to $125,000 over a 3-year period. Specifically, the compensation would increase to $108,000 (1 year following enactment), $116,000 (2 years following enactment), and $125,000 (3 years following enactment). At 4 years after enactment, and every succeeding year, the weekly salary would increase by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers.

(2) Cannot Spend More Than 50% of Work Hours on Duties That Are Not Exempt.

For executive, administrative, and professional exempt employees, the Act would require that an employee “shall not spend more than 50% of such employee’s work hours in a workweek on duties that are not exempt....”

If the Act becomes law, it will be interesting to see whether it has any meaningful impact on the application of exemptions to employees who contemporaneously perform exempt duties while spending time on activities that are not exempt. For instance, Courts have long recognized that exempt employees, such as store managers and restaurant managers, may properly be classified as exempt regardless of the time spent on duties that were not exempt. The “primary duty does not mean the most time-consuming duty; it instead connotes the ‘principal’ or ‘chief’ – meaning the most important duty performed by the employee.” Thomas v. Speedway SuperAmerica, LLC, 506 F.3d 496, 504 (6th Cir. 2007).  Indeed, the current federal regulations provide that “assistant managers in a retail establishment who perform exempt executive work such as supervising and directing the work of other employees, ordering merchandise, managing the budget and authorizing payment of bills may have management as their primary duty even if the assistant managers spend more than 50 percent of the time performing nonexempt work such as running the cash register.” 29 C.F.R. § 541.700(c). Accordingly, the FLSA, “recognizing the nature of retail business, exempts retail executives from the requirement that the majority of their hours be spent on executive functions.” In re Family Dollar FLSA Litigation, 637 F.3d 508, 515 (4th Cir. 2011) (holding that retail store manager was exempt executive where the plaintiff “spent 99%” of her time doing non-exempt duties such as “putting out freight, running a cash register, doing schematics and doing the janitorial work” because “during 100% of the time, even while doing those jobs, she was also the person responsible for running the store.”); Murray v. Stuckey’s Inc., 939 F.2d 614, 618 (8th Cir. 1991) (explaining that the fact the retail store managers spend up to 90% of their time on non-managerial duties “is not a controlling factor under the regulations”); Jackson v. Advance Auto Parts, Inc., 362 F.Supp.2d 1323, 1334 (N.D. Ga. 2005) (holding that retail store assistant managers were exempt executives where the plaintiffs “spent 90% of their time performing non-exempt tasks, including selling, operating the register and cleaning the store.”). To that end, “[a] number of federal courts have disregarded the time factor... where the manager is in charge of a separate facility such as a convenience store or restaurant chain.” Haines v. Southern Retailers, Inc., 939 F.Supp. 441, 449 (E.D. Va. 1996). See also, e.g., Meyer v. Worsley Co., Inc., 881 F.Supp. 1014, 1020 (E.D. N.C. 1994).

(3) Penalties For Failure To Maintain Records.

Though the FLSA currently provides that an employer who “repeatedly or willfully” fails to pay minimum or overtime wages “shall be subject to a civil penalty not to exceed $1,100 for each such violation,” the Act would also subject an employer to such penalties if it repeatedly or willfully fails to “make, keep, and preserve” records relating to wages. Under the FLSA, and the federal regulations promulgated thereunder (29 C.F.R. § 516.2), every employer shall maintain and preserve payroll or other records containing the following information and data:

  • Name in full, as used for Social Security recordkeeping purposes, and on the same record, the employee’s identifying symbol or number if such is used in place of name on any time, work, or payroll records
  • Home address, including zip code
  • Date of birth, if under 19
  • Sex and occupation in which employed
  • Time of day and day of week on which the employee’s workweek begins
  • Regular hourly rate of pay for any workweek in which overtime compensation is due
  • Basis of pay by indicating the monetary amount paid on a per hour, per day, per week, per piece, commission on sales, or other basis
  • Amount and nature of each payment which is excluded from the regular rate
  • Hours worked each workday and total hours worked each workweek
  • Total daily or weekly straight-time earnings or wages due for hours worked during the workday or workweek, exclusive of premium overtime compensation
  • Total premium pay for overtime hours
  • Total additions to or deductions from wages paid each pay period including employee purchase orders or wage assignments
  • Individual employee records reflecting the dates, amounts, and nature of the items which make up the total additions and deductions
  • Total wages paid each pay period
  • Date of payment and the pay period covered by payment
  • Records of retroactive payment of wages
  • Employees working on fixed schedules

Moreover, with few exceptions, such information must be kept for “at least 3 years.” 29 C.F.R. § 516.5.

Though passage of the Act is far from a certainty, and the DOL has yet to propose new rules for consideration, employers should note the proposed restrictions on exempt classifications and take proactive steps to prepare for the challenges that may lie ahead.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© BakerHostetler | Attorney Advertising

Written by:

BakerHostetler
Contact
more
less

BakerHostetler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.