Tag Archives: Fair Labor Standards Act

Federal Overtime Pay Expansion Detailed As DOL Reveals Final Exemption Threshold Regulations And Effective Dates

Is your company ready for the major overtime pay expansion announced by the United States Department of Labor (DOL)? On May 18th, the DOL revealed the details behind the final exemption threshold regulations. The new regulations will greatly expand the number of employees eligible for overtime pay. In addition, the DOL officially announced that the effective date of the Final Rule is December 1, 2016. The nationwide increase to the standard salary level (from $455 to $913 per week) and highly compensated employee total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Given the significant changes, Total HR Management is helping our client companies navigate through the new federal overtime requirements.

In 2014, President Obama directed the Department of Labor to update and modernize the regulations governing the exemption of executive, administrative, and professional employees (EAP) from the minimum wage and overtime pay protections of the Fair Labor Standards Act (FLSA). On May 18, 2016, the Department published a Final Rule to update the regulations.

Final EAP Overtime Pay Expansion Rules

overtime pay expansionIs your company ready for the major overtime pay expansion announced by the United States Department of Labor?

New DOL Rules About Employee Overtime Pay Expansion

Since 1940, the Department of Labor’s regulations have generally required each of three tests to be met for the FLSA’s EAP exemption to apply: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed; (2) the amount of salary paid must meet a minimum specified amount (“salary level test”); and (3) the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations.

Without intervening action by their employers, the new regulations extend the right of overtime pay to an estimated 4.2 million workers who are currently exempt. It also strengthens existing overtime protections for 5.7 million additional white collar salaried workers and 3.2 million salaried blue collar workers whose entitlement to overtime pay will no longer rely on the application of the duties test.

Overtime Pay Expansion Details

The most significant change involves the salary basis test for white-collar employees. In order to meet the salary basis test for the EAP exemptions, employees must be paid a minimum of $47,476 per year or $913 per week. The threshold was set based on the 40th percentile of full-time salaried workers in the lowest income Census Region, currently the Southern states. While this increase is lower than the originally proposed $50,440 per year, it still will result in a significant number of previously exempt employees being now eligible for overtime pay.

For the first time, however, employers will be able to use nondiscretionary bonuses and incentive payments, including commissions, to satisfy up to 10 percent of the standard salary level threshold of $47,476. As a result, an employee with a base salary of $42,729 per year may actually be exempt. In order to attain exemption status, the employee must also receive a minimum of $4,747 in non-discretionary bonus, commission or incentive compensation. Moreover, such compensation needs to be distributed on at least a quarterly basis.

Traditional Exemptions Still Apply

Although the $47,476 minimum salary level will affect millions of white-collar employees nationwide, it does not apply to employees who qualify for an exemption that is not tied to a salary requirement. For example, outside sales employees, teachers, attorneys and physicians all fall under these traditional exemption categories for a variety of reasons under the law. The final rule also does not impact the so-called “duties tests” for white-collar exemptions.

The new salary exemption threshold that has led to this major overtime pay expansion will not be fixed. Instead, an automatic mechanism has been instituted so the salary thresholds for exempt employees will increase every three years, beginning January 1, 2020. The goal of this ongoing increase is the DOL’s focused desire to continue to reflect the 40th percentile for salaried workers in the lowest income Census Region. Opening the door to another major overtime pay expansion, the exemption threshold is anticipated to reach $51,000 in 2020.

Changes For Highly Compensated Employees

Finally, the total compensation requirement for “highly compensated employees” has increased from $100,000 to $134,004 annually, equal to the 90th percentile of full-time salaried workers nationally. The threshold level for these employees is based on total annual compensation, not just those amounts paid on a salary basis. These levels also will adjust every three years. Such employees require “only a minimum showing” that they are otherwise exempt under one of the duties tests.

To learn more about how the overtime pay expansion and the exemption threshold regulations will affect your company, contact Total HR Management to set-up an HR audit. Please call (800) 975-5128 today to speak with an HR professional and access the help your company needs.


No Legal Advice Intended: This blog includes information about legal issues and legal questions.  Such materials are for informational purposes only and may not reflect the most current legal developments.  These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. You must not rely on the information on this website as an alternative to legal advice from your

How A PEO Can Help Your Company With FLSA Employee Travel Compliance And On-Call Pay Regulations

FLSA Compliance HelpIs your company aware of the United States Department of Labor regulations involving Fair Labor Standards Act (FLSA) employee travel compliance and on-call pay? Total HR Management can help your company avoid any travel-oriented issues by ensuring FLSA employee travel compliance.

FLSA Employee Travel Compliance

When it comes to FLSA requirements involving employee travel time being treated as working time, there are a number of gray areas. As a basic rule, “home to work” and “work to home” travel time is not work time. This is true even if the employee’s commute is greater than normal or the employee uses a company car for their commute. The employee must not, however, be performing additional work activities while commuting.

For example, the time spent by an employee writing a report is work time, even if it happens to occur while the employee is riding on a bus or a train to or from work. In addition, if an employee makes a work-related stop while commuting, the time to that stop is considered work time.

All In A Day’s Work Travel Time

Travel time that is designated as being “all in a day’s work” is work time. For example, if an employee is travelling in between work sites during the day, “all in a day’s work” begins when he arrives at the first work site, either the home office or an external site. The first work site is defined as the place where the employee first performs work activities.

For example, any employee who travels to the office and picks up needed equipment, then goes to a work site to perform the day’s activities is working from the time they first arrive at the office. Since work is being done by picking up the equipment, the office is the first work site of the day.

Challenge of Nonexempt Employees


Although a company does not need to pay nonexempt employees for their commuting time to and from the workplace, the question of when to pay nonexempt workers for travel locally or on overnight trips can be confusing. Mistakes can spark anything from what seem like trivial complaints to the nightmare of class-action lawsuits, both of which you clearly want to avoid. According to the Fair Labor Standards Act (FLSA) rules on compensating hourly employees for travel time, if the travel is for the company’s benefit, is compensable. If it is purely commuting, it’s not.

employee travel compliance

FLSA Employee Travel Compliance Is Essential

If an employee or a nonexempt employee travels out of town, the time spent traveling to and returning from the other city is work time. Although you can exclude the employee’s regular commuting time and meal breaks, this must be done carefully. Although travel time to the airport is defined in the same way as travel time to the office, everything after should be compensated as work hours, except the drive home from the airport upon the employee’s return. The only exclusion would be meal times. However, if the travel to or from the airport is longer than the employee’s normal commute, the extra mileage and time need to be recorded and compensated.

Total HR Management can help transform this complex regulatory web into clear rules and regulations in your employee handbook. You need to make sure nonexempt employees understand when they will be paid before they travel in advance. All of these regulations should be clearly outlined in your employee policies. We can help train your management staff on the FLSA rules for rest periods, on-call time, training and more.

The Challenge Of On-Call Time

Employees required to remain on-call on the employer’s premises are considered working while on-call. Employees required to remain on-call at home or while out on their own are considered not working while on call. The challenge of on-call time has been simplified by modern cellular technology. Employees are paid for waiting time when they are “engaged to wait.” Employees fall under that definition if they are required to be at a work site while waiting to perform work.

When an employee has gone home after completing his or her day’s work and is subsequently called out at night to perform an emergency job for one of the employer’s customers, all time spent traveling is work time. The Wage and Hour Division of the Department of Labor, however, has not addressed whether travel to and from the regular workplace in an emergency after hours call is work time.

Travel Rules & Remote Employees


In terms of remote employees, they need to be paid for any travel time taken to deliver their work. If the employee is home-based, but needs to deliver hard copies of their work to the office, that time must be compensated. Homeworkers must be paid for time spent traveling to and from the distribution point to pick up or deliver their work or for face-to-face meetings with their superiors.

Overall, Total HR Management understands if the rules and regulations about FLSA employee travel compliance seem overwhelming. We can help. Please call Total HR Management at (800) 975-5128 to schedule an HR audit for your company.



No Legal Advice Intended: This blog includes information about legal issues and legal questions.  Such materials are for informational purposes only and may not reflect the most current legal developments.  These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. You must not rely on the information on this website as an alternative to legal advice from your attorney or other professional legal services provider.


How A PEO Can Help Your Company With Employee Safety And Health Compliance

employment safety and health compliance , esh, peo

Employee Safety And Health Compliance (ESH) has evolved into one of the most complex compliance issues for businesses. A professional employer organization (PEO) can help your company ensure that safety awareness does not become a problem. Safety awareness compliance is also directly connected to workers compensation claims. Such compliance is linked to a number of regulatory issues and requirements, including:

  1. Americans with Disabilities Act (ADA)
  2. Fair Labor Standards Act (FLSA)
  3. Affordable Care Act (ACA)
  4. Occupational Safety and Health Administration (OSHA)

As a PEO, Total HR Management understands if the above list is intimidating, particularly in light of all of the posting requirements. Such posting requirements of the above federal acts do not even include the required postings and regulations of individual states. California is particularly challenging in this regard. The HR managers at Total HR Management can help ensure this does not become a problem for your company.

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How A PEO Helps With The Fair Labor Standards Act And FLSA Compliance

flsa compliance

FLSA Compliance

In the second part of our ongoing series, the crucial role of FLSA compliance for your company and the challenges of the Fair Labor Standards Act will be examined. The Fair Labor Standards Act is an important piece of federal legislation employers need to be familiar with. Passed by Congress in 1938, the FLSA is the governing legislation regarding minimum wage and overtime standards, child labor regulations, and record keeping requirements. Total HR management has the experience you need to meet the challenges of the Fair Labor Standards Act and keep your company in FLSA compliance.

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The Fair Labor Standards Act And Why You Need To Know The Difference Between Exempt & Non-Exempt Workers

Given the evolution of federal standards under the Fair Labor Standards Act (FLSA) in relation to job classification, it has become even more important for employers to know the difference between exempt and non-exempt workers. The Fair Labor Standards Act requires that employers classify jobs as either exempt or non-exempt. Non-exempt employees are covered by FLSA rules and regulations, and exempt employees are not.

The chart below outlines the major differences between the two types of exemptions:

Exempt   Non-exempt
Must be paid overtime? No   Yes
Must take meal    and rest breaks? No   Yes (depending on the State)
How are they paid? Salaried  Hourly or Salaried 

Salaried under exempt means paid for the work thy do, not the hours they work.

Hourly or Salaried means paid for the hours they work regardless of “Salaried” status. When hourly or  salaried, they are paid extra for any hours over 40 in a week (and other overtime according to the  State law)

An Important Note: When state laws differ from the federal FLSA, an employer must comply with the standard most protective and beneficial to employees. It is never wise to side with the easier, softer option in such cases. If you have questions regarding such compliance, please consult with Total HR Management.

Exempt Employees Under FLSA

Generally, employees must meet two requirements to be classified as exempt:

  • They must be paid on a “salary basis” that must meet certain minimum requirements above minimum wage.
  • They must hold a position with “duties” designated by the Labor Department as appropriate for exempt status.
fair labor standards act

Classifying Employees Undre FLSA

Exempt employees are excluded from minimum wage, overtime regulations, and other rights and protections afforded non-exempt workers. Exempt employees are paid for completing the job, not for the number of hours they work. As a direct result, whether an exempt employee works 35 hours per week or 55 hours per week, he or she is paid the same salary. If staying late or coming in early is required to do the job, exempt employees are frequently expected to do just that.

Exempt employees must receive their full salary on a weekly or less frequent basis without regards to the quality (job performance) or quantity (number of hours) of work performed. There are limited circumstances under which a deduction may be made from their salary. You should always consult with the human resources specialists at Total HR before deducting from an exempt employees salary and/or before suspending an exempt employee without pay to ensure legal compliance.

Exempt positions generally fall into five categories:

  1. Executive,
  2. Administrative,
  3. Professional (both Learned and Creative Professionals)
  4. Computer Professional
  5. Outside Sales

Non-exempt Employees Under FLSA

Non-exempt employees are not exempt from FLSA requirements. Employees who fall within this category must be paid at least the federal minimum wage for each hour worked and given overtime pay of not less than one-and-a-half times their hourly rate for any hours worked beyond 40 each week. Some states, like California and Nevada, also have daily overtime.

Non-exempt employees typically work only the prescribed number of hours. Their time tends to be more closely monitored and designated breaks are allowed at certain times during the workday. In many states, such as California and New York, non-exempt employees must comply with meal and rest period laws. Once again, if you have questions, Total HR Management can help.

Best FLSA Option For Your Company

Some workers would rather be employed in non-exempt positions to ensure they’re paid for every hour they work. Others prefer the flexibility that comes with salaried positions. It is important to have a job description for any exempt employees to help document that they pass the “duties test” in the event of an audit or lawsuit. Overall, the formula to determine whether an employee is exempt or non-exempt is somewhat complicated. This why you need the support of a human resources specialist.

Job titles do not determine exempt status, and clearly establishing such status is not the role of an employee. The burden of supporting the actual application of an exemption rests on the employer. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the FLSA’s regulations. Precise compliance is essential. Please be sure to consult a Total HR Manager before categorizing any employee as Exempt.

Fair Labor Standards Act (FLSA) Help

If the Department of Labor (DOL) conducts an audit and finds the misclassification of an employee’s status, the company could be significantly penalized (class action suits, lump sum pay back of monies to employees, penalties and legal fees). As a result, it is essential to make sure your company is correctly classifying your employees. You want to ensure your company’s compliance with the Fair Labor Standards Act (FLSA).

Please contact Total HR if you have questions or feel you may have a misclassification situation in your company.

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