11 FLSA FAQs – What You Need to Know

November 16, 2016
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Category: Compliance, Trending

The U.S. Department of Labor announced sweeping changes to certain provisions of the Fair Labor Standards Act (FLSA), which are scheduled to go into effect on December 1, 2016.  Specifically, the updated regulations increase the salary threshold below which most white-collar, salaried workers are entitled to overtime. This impacts about 4.2 million workers, who may now be eligible for overtime pay.  

Earlier this week, we hosted a webinar on how to prepare your business for these upcoming changes, and received the following questions from our audience. Keep reading for the top 10 chatted in questions and answers to help you get squared away, as well as helpful links for further reading.

1. Exempt vs. Non-Exempt

In order to classified as exempt there are three an employer needs to look at for each job.

How is the employee paid?

  • Are they paid by the hour? This would make them non-exempt.
  • Are they paid a set amount, an annual salary? This may mean their exempt.

How much is the employee paid?

  • As of December 1, 2016 employees must earn at least $47,476 per year ($913 per week) in order to be considered exempt from overtime.

What are their job duties?

  • An employee who meets the salary level tests, earning at least $47,476 per year ($913 per week) as of December 1, 2016, must also meet a job duties test. An employee is considered exempt from overtime only if s/he also performs exempt job duties.

For more information, review the Department of Labor’s FAQ.

2. Does commission get incorporated onto the threshold?

As of December 1, 2016 up to 10% of non-discretionary bonuses may be incorporated into the salary threshold.

  • An example of a non-discretionary bonus is if you sell 100 books, you will earn a 5% commission on sales of books sold.

For further detail, visit the DOL FAQ.

3. How should I communicate these changes to my employees? 

One of the most commonly asked questions, and one that shouldn’t be taken lightly is how to message this change to your employees. If you decide to go with one of two options that requires your formerly exempt employee to begin tracking their time, it can be a challenge to communicate. Requiring an employee to record their time when they previously didn’t need to can come across like there is a lack of trust or feel like a demotion. It’s important to explain the following:

  • The change is being made to comply with a new federal law
  • That their work is no less valuable to the employer
  • The date this change is effective
  • Who the employee can talk to with additional questions
  • Additional trainings that are going to be offered
  • Company time tracking and overtime policies

Still need a few pointers? Zenefits team of HR Advisors is available to support your every HR need.

4. Do lunch breaks count towards overtime hours?

Depending on the state in which your employees perform work, you may be required to allow them an unpaid break. Meal break and rest break laws typically apply to all non-exempt employees. View state by state information regarding required meal breaks here.

If you are offering unpaid meal breaks to your employees, the time that they are clocked out for lunch does not apply to hours worked for the day or week if the unpaid break meets the minimum length of time. Overtime is calculated based on hours worked.

If you offer paid meal breaks, in which your employee is not required to clock out, this time would be counted towards their hours worked and included in overtime calculations.

5. Who’s exempt from this new law? 

Exemptions are based on your industry and type of business. Find more information in the Department of Labor’s Reference Guide.

6. How do these laws apply to part time employees?

This law applies to all employees covered by the FLSA based on their job duties and salary. Status of part time or full time does not have a factor in their FLSA exemption classification.

7. What’s the difference between non-exempt salaried vs. non-exempt hourly workers? 

Hourly, non exempt Salaried, non exempt
  • Paid an hourly rate for every hour worked
  • Eligible for overtime hours worked, in line with state and federal law
  • Required to record hours worked
  • Paid a set salary even if the employee works less than 40 hours in one week
  • Eligible for overtime hours worked, in line with state and federal law
  • Required to record hours worked
Example #1:

Hourly Employee is paid $20 per hour.

Hourly employee works 35 regular hours in

week 1.

Hourly employee is paid:

  • $20 x 35 regular hours = $700
  • Total: $700
Example #1:

Salaried Non Exempt Employee earns $45,000

per year

This equals an hourly rate of $21.63

  • $45,000 / (40 hours per week x 52 weeks)

Salaried Non Exempt Employee works 35

regular hours in week 1.

Salaried Non Exempt employee is paid:

  • $21.63 x 40 regular hours = $865.20

Total: $865.20

Example #2:

Hourly Employee is paid $20 per hour.

Hourly employee works 40 regular hours and 4

overtime hours in week 2.

Hourly employee is paid:

  • $20 x 40 regular hours = $800
  • $30 x 4 regular hours = $120
  • Total: $920
Example #2:

Salaried Non Exempt Employee earns $45,000

per year

This equals an hourly rate of $21.63

  • $45,000 / (40 hours per week x 52 weeks)

Salaried Non Exempt Employee works 40

regular hours and 4 overtime hours in week 2.

Salaried Non Exempt employee is paid:

  • $21.63 x 40 regular hours = $865.20
  • $32.45 x 4 overtime hours = $129.80
  • Total: $995

 

Looking for a deeper dive into all things FLSA? Download our latest eBook here.

 

Time and Attendance: 

8. Does Zenefits Time and Attendance sync with third party payroll providers?

Zenefits Time & Attendance syncs hours that hourly employees record to three payroll providers:

  • Zenefits Payroll
  • Intuit Full Service
  • Gusto

Salaried non exempt hours are required to be entered into payroll manually. Zenefits creates a preconfigured report that makes it easy for you to review overtime hours of these employees and enter them quickly into your payroll.

Coming early 2017, we will automatically send all overtime hours earned by salaried non exempt employees to Zenefits Payroll.  

9. How do I change someone’s exemption status in Zenefits?

To review and audit your employees’ current salary and exemption statuses, download the compensation report in your Business Intelligence app here.

If you need to add this classification or make changes to an existing FLSA classification, visit your employee’s profile. Under the Employment & Compensation section of their profile, you can update their FLSA classification.

10. How should my employees report their time? 

To protect yourself as an employer, the safest option is to have your employee clock in and out in real time. Your employees can clock in and out via their Zenefits dashboard using our Web TimeKeeper app. If they download the Zenefits mobile app, they’ll be able to clock in and out on their phones too! See the Web TimeKeeper tool in action:

 

If you’re looking for an alternative to the old, clunky time clock, the Zenefits iPad TimeKeeper app is free and super easy to use. Your employees will clock in using a unique four digit pin and take a photo to avoid any buddy punching. 

11. How much does Time & Attendance cost? 

Just $5 per employee using the product, per month. Find more information here.

To view Time and Attendance in greater detail, view the video below. Otherwise, sign up for a demo for a personalized walk through of the tool.

About

Designed as the single source of truth for managing the modern workforce, Zenefits empowers businesses to put employees first. www.zenefits.com

Category: Compliance, Trending


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