Overwhelming Overtime! Exasperating Exemptions!
Employers must have a general understanding of labor laws and regulations to stay in compliance.

By Colleen White

Confused about who gets paid overtime and who doesn't? Or who is an "exempt" employee? Join the crowd! Many employers are still confused about the recent changes made to overtime regulations in the federal Fair Labor Standards Act (FLSA).

As an employer, you need to understand and know how to apply the regulations. Why? First, because it is the law. Second, because paying employees properly is a good way to motivate them. Third, it is the right thing to do for your employees.

Federal FLSA
Overtime violations are one of the most common wage-hour violations found by the federal and state departments of labor. In fact, 86 percent of recent federal wage complaint cases where the employees received back wages were overtime related.
 
The U.S. Department of Labor looks at overtime issues on a case-by-case basis. The federal overtime law covers almost all employers. State overtime laws apply to few employers, if any. Employers who are covered by the FLSA are not covered under Missouri's or Kansas's minimum wage and overtime laws.

To be covered under FLSA:

• An employer must have a gross dollar volume of at least $500,000 annually, or
  
• Employees produce goods for interstate commerce or must be engaged in interstate commerce, such as accepting a credit card, e-mailing out-of-state or accepting shipped goods from out-of-state.

Certain named industries, such as hospitals, governments and schools are automatically covered.

 The FLSA is the guide for most overtime application. It requires:

• Employees to be paid a minimum wage of $5.15 per hour
• Time and one-half be paid for time worked over 40 hours in a work week
• Employers determine what their workweek is, but they must be consistent

Exempt or Non-Exempt?
If you are one of the very few Missouri employers covered under Missouri law and not federal law, employees must be paid:

• At least $5.15 per hour
• Time and one-half for time worked over 40 hours in a work week

If you are one of the very few Kansas employers covered under Kansas law and not federal law, employees must be paid:

• At least $2.65 per hour
• Time and one-half for time worked over 46 hours in a work week

Complying with overtime requirements means following a few basic principles. In the new regulations, "blue collar workers," "LPNs," "police officers, paramedics and first responders" are specifically named as non-exempt workers, and must receive overtime pay. Employees falling under what are called the "white collar" exemptions to the federal minimum wage and overtime law are not required to be paid minimum wage or overtime if certain specific tests are met.

The primary tests include the pay received (also known as the salary test) and specific job duties performed. The salary test has now changed from employees being paid a minimum of $250 per week to $455 per week to be considered for exemption. Each exempted area has additional tests, too numerous to mention here, that also should be applied. All other tests must still be applied after the salary test is met. The "white collar" exempted areas are:

• Executive
• Administrative
• Professional
• Creative professional
• Computer employee
• Outside sales
• Highly compensated employees

Deductions for items such as sick leave must be made in connection with a consistent plan or policy, or suspensions made in accord with a workplace conduct rule infraction. Such deductions can only be made for a full day of pay. If you deduct a partial day's pay, for example, four hours for an employee taking a half day off for an appointment, that employee is now an hourly employee, and not exempt from overtime pay. However, if you have a bona fide sick leave plan or policy, deductions can be taken for a portion of the day's pay.

Stay in Compliance
Labor laws and regulations can be complicated, but employers need to have a general understanding to stay in compliance. Keep an eye on the minimum wage ballot initiative in November, which would change the actual minimum wage and who is covered. Review overtime laws carefully to assure you apply them properly. Seek professional advice if needed. Remember, your best course for avoiding trouble is to always ask when you have questions.

Colleen White is president of Strategic Workplace Solutions Inc., a labor law compliance consulting, coaching and training company. You can reach her at (816) 322-7808 or .

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