I am not one for New Year’s resolutions (because every day is a chance for positive change) but when it comes to the Fair Labor Standards Act (FLSA), January 2020 is an ideal time for employers to resolve to confirm full compliance.
The FLSA requires an employer to pay not less than 1.5 times an employee’s regular rate for hours worked over 40 in a workweek. The “regular rate” includes “all remuneration” with certain exceptions, and nondiscretionary bonuses must be included in the regular rate of pay. In December 2019, the Department of Labor issued a Final Rule regarding what types of employee perks and benefits may be excluded from the regular rate, which may serve as incentives for employers seeking to increase employee workplace benefits in 2020.
The FLSA exempts from minimum wage and overtime pay those employed in executive, administrative, or professional capacities, provided they satisfy the complex duty and salary-related requirements. Effective January 1, 2020, the FLSA threshold for exempt employees (who are not entitled to overtime pay) increases from $23,660/year ($455 week) to $35,568/year ($684/week).
In 2020, the Department of Labor (DOL) issued 2 Opinion Letters, one of which addresses whether certain per-project payments may constitute a “fee.’’ Administrative and professional employees are paid on a fee basis if they receive “an agreed sum for a single job regardless of the time required for its completion” and which is based on the “accomplishment of a given single task” and not “on the number of hours or days worked.” Failure to pay a salary or fee in accordance with the FLSA requirements could jeopardize an employee’s exempt status.
Another Opinion Letter addresses the methods of computing overtime pay for non-discretionary lump sum bonus earnings and employers who pay bonuses should utilize the proper method when calculating overtime payments which include a nondiscretionary lump sum bonus.
While space does not allow for a full discussion of detailed FLSA requirements, the DOL also just announced hiring 45 new wage-and-hour investigators, providing incentive for employers to evaluate their practices and to consult with knowledgeable counsel to ensure compliance with the FLSA and other employment laws.