New Health Care Law Contains Provision to Amend FLSA

The new health care bill recently signed into law by President Barack Obama contains a little known and often overlooked provision about which all employers should be aware. The provision amends the Fair Labor Standards Act (FLSA) and employers now will be required to provide women with breaks to breastfeed, as well as a location to breastfeed.

Such requirements already exist in sixteen states but the requirement now will be a federal law. Under the law, employers must provide reasonable time and a place for nursing mothers to express breast milk for one year following the child’s birth. The location must be something other than a bathroom, shielded from view, and free from intrusion by coworkers and the public.

In light of the potential burden imposed and the logistical concerns (such as how to provide bus drivers, postal workers, police officers and other mobile workers a place to breastfeed), the Department of Labor Wage and Hour Division is seeking public comment before it begins writing guidelines for the new law. The public can comment through February 22, 2011 at http://www.regulations.gov/#!home. We encourage employees and employers alike to comment and provide their perspectives on this new law.

Recent 5th Circuit Decision Sheds More Light on FLSA Requirements

On May 27, 2010, the 5th Circuit Court of Appeals issued a decision interpreting the Fair Labor Standards Act’s (FLSA) differentiation between “regular rate” and “per diem” payments. In Gagnon v. United Technisource Inc; AIS Tech Services Inc., the 5th Circuit determined the employer deliberately violated the FLSA by paying a low hourly rate with an offsetting “per diem.” The employer in Gagnon agreed to pay the employee $5.50 per hour (approximately minimum wage at that time) for “straight time” and $20.00 per hour for overtime. In addition, the employer agreed to pay the employee $12.50 for every hour he worked each week up to 40 hours per week or a maximum of $500. The employer referred to this as “per diem.”

The Court determined that pursuant to the FLSA, the employee's hourly regular rate was $18.00 ($5.50 “straight time” plus $12.50 “per diem”). As such, the employer owed the employee $27.00 per hour for overtime. Particularly important in the Court's finding that the $12.50 per hour “per diem” should be considered regular rate was the fact the “per diem” was an hourly calculation as opposed to a flat rate based on travel expenses, living expenses, etc. The Court also looked at the hourly rate of pay for similar jobs at other companies and found the hourly rate varied from $18.32 to $24.00, well above the $5.50 the employer in Gagnon paid.

Whether the employer deliberately circumvented the FLSA requirements or not, the lesson all employers should learn from Gagnon is the FLSA’s payment requirements are complicated. Many terms we commonly hear such as “salary,” “overtime,” “exempt,” and “non-exempt” have different meanings under the FLSA. A mistake in properly paying employees can cost an employer greatly down the road, especially because the FLSA permits attorney’s fees and doubling the amount the employee is owed in certain circumstances. It is always best to consult with your attorney on any and all pay practices and employee classifications (especially when you have complicated and/or unique pay practices).

"Salaried" Employees Are Not Always "Exempt"

Employers often hold a common misconception that salaried employees absolutely are exempt from overtime wages under the Fair Labor Standards Act (FLSA). This misconception, as well as the resulting consequences from misclassifying a non-exempt salaried employee, can be costly. Salary is merely one aspect of some FLSA exemptions. The employee's duties and not his or her title or method of pay truly determine an employee's exempt or non-exempt status under the FLSA. Paying a non-exempt employee a salary does not determine per se whether the employee is entitled to overtime wages.

To best determine an employee's status you should contact an attorney, but the most common exemptions (and those exemptions in which salary is included in the analysis) include:

• Professional Exemption: Primary duty requires knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized instruction OR primary duty is work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.
• Administrative Exemption: Primary duty is office or non-manual work (must directly relate to management or general business operations of employer or customers). The employee must also exercise discretion and independent judgment on matters of significance.
• Executive Exemption: Primary duty must be management and the employee in question must regularly direct the work of two full-time employees (or equivalent). The employee in question also must have authority to hire and terminate employees OR recommendations on these issues are given particular weight.

Again these are simply the three most common exemptions (the FLSA includes a lengthy list of exempt employees) and even the particular requirements for these exemptions can be tricky. Assuming the employer properly classified the employee as exempt, an employer still can destroy this exemption by its actions. Some common actions that destroy exempt status are: docking pay for work quality or quantity and using exempt employees to perform non-exempt work.

Remember, your general conceptions regarding salaried versus non-salaried employees might not be entirely accurate. Ensuring you properly classify your employees as exempt or non-exempt will save you money in the long run.

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