Regulatory Environments for Compensation Programs Flashcards
Wage & Hour Laws
General Coverage
- National Labor Relations Act (NLRA)
- Fair Labor Standards Act (FLSA)
Wage & Hour Laws
Narrow Focused
- Davis-Bacon Act
- McNamara-O’Hara Service Contract Act
- Sherman Antitrust Act
- State Labor Law
Discrimination Laws
General Coverage
- Equal Pay Act (EPA)
- Title VII
- Americans with Disability (ADA / ADAAA)
- Age Discrim. in Employment Act (ADEA)
- Family and Medical Leave ACT (FMLA)
- Lilly Ledbetter Fair Pay Act
- Genetic Information Nondiscrimination Act (GINA)
- Uniformed Service Employment and Reemployment Rights Act (USERRA)
Discrimination Laws
Narrow Focused
- Vocational Rehabilitation Act
- State discrimination statutes
Significant Regulation Dates
State
1917 - Work hours and OT
1937 - minimum wage
1938 - Only states establishing labor laws
1941 - constitutionality upheld
What law protects unionized government contractors from competition by nonunionized gonverment contractors paying lower wages? (pay at least the prevailing wage)
Davis-Bacon Act
1931
Purpose - protect unionized contractors
Coverage - Gov’t construction contractors
Provisions - pay based on “prevailing wages”
Enforcement Agency - DOL
Davis-Bacon Act
The Davis-Bacon Act is enforced by what agency?
DOL
1965
Purpose - improve working conditions and pay
Coverage - gov’t services contractors
Provisions - pay based on “prevailing wages”
Enforcement Agency - DOL
McNamara - O’Hara Service Contract Act
What law has the purpose of improving working conditions and pay (prevailing wages) for employees of government services contractors?
McNamara - O’Hara Service Contract Act
The McNamara - O’Hara Service Contract Act is enforced by what agency?
DOL
Which law establishes the minimum wage rate for federal contractors, which may be different from the minimum wage under FLSA?
Executive Order 13658
February 12, 2014
Purpose - Establish minimum wage rate
Coverage - federal contractors
Provisions - Minimum wage updated annually; applies to employees performing work on or in connection with covered federal contracts; must notify employees
Enforcement Agency - Wage and Hour Division of DOL
Executive Order 13658
The Executive Order 13658 is enforced by what agency?
Wage and Hour Divison of DOL
intention of creating better environment for collective bargaining
1935
Purpose - more equitable labor / management environment
Coverage - Employers involved in interstate commerce, with some exceptions
Provisions - Process for representation; rules for bargaining in good faith; controls against unfair labor practices
Enforcement Agency - NLRB
National Labor Relations Act
What law had the intention of creating better environment for collective bargaining, creating a more equitable labor / management environment?
National Labor Relations Act
anti-monopoly
1890
Purpose - preserve competitive environment
Coverage - all employers involved in interstate commerce
Provisions - ensure competitive wage levels
Enforcement Agency - DOL (only workforce issues)
Sherman Antitrust Act
Which law preserves a competitive business environment - removing monopolies?
Sherman Antitrust Act
Workforce issues that arise by the Sherman Antitrust Act are enforced by what agency?
DOL
Related to compensation
This act has a primary focus of “anticompetitive price fixing”
Sherman Antitrust Act
Sherman Antitrust - relation to comp
Antitrust safety zone “safe harbor” statements
- survey is managed by third party.
- data provided is more than three months old.
- there are at least five providers reporting data and no individual’s data represents more than 25% of any statistic.
Independent Contractors vs Employees
Economic Realities Factors Guide
Is worker economically dependent on the ER or in business for themself?
- Integration
- Opportunities for profit/loss
- Relative investment
- Special business skills and initiative
- Permanency of relationship
- Nature/degree of control
What is the primary objective of the FLSA?
WORKERS’ RIGHTS
*it is the principal federal statute that influences the design of direct compensation programs.
What are (3) purposes of the FLSA?
- Establish a minimum wage rate.
- Eliminate detrimental working conditions.
- Protect the educational opportunities of youth.
Who does the FLSA primarily cover?
Employers who engage in interestate or foreign commerce and have $500,000 in sales.
(3) Amendents expanded coverage to include 90% of the American Labor Force
Inclusion of health care, retail, education, construction, laundry, federal, state, and local goverment and congress.
Who is the enforcing agency for FLSA?
DOL
What are the specific provisions of FLSA?
- minimum wage
- employment categories - EX/NE
- hours of work
- rate of pay (OT and banked time)
- Worker Economic Opportunity Act
- record-keeping requirements
- violations and penalities
What agency enforces FLSA?
DOL, administered by Wage and Hour Division
What are the two categories of employees as determined by FLSA?
Non-exempt and Exempt
Types of Exemption Tests
- Salary Basis Test
- Salary Level Test
- Executive Standard Test
- Administrative Standard Test
- Learned Professional Standard Test
- Creative Professional Standard Test
- Computer Employees
- Outside Sales Test
- Type of EXEMPTION TEST
- employee regularly receives a **predetermined amount of compensation **each pay period
- not subject to any reductions based on quality or quantity of work
- must recevie the full salary for any woeek wihtout regard to number days or hours worked.
Salary Basis Test
Exceptions for Salary Basis (exemption) Test
Computer professionals making $27.36 per hour or more - can be classified as exempt
outside sales, licensed or certified docs
lawyers
teachers
employee on FMLA miss part of day for medical reasons - can dock pay wihtout jeopardizing salaary basis test
Salary Basis Test (exempt employees)
Proper Deductions from Salary
- absence from work for one or more full days for personal reasons other than sickness or disability
- absence from work for one or more full days for personal reasons other than sickness or disability - if deductions are made under a bona fide plan, policy or practice
- to offset any amounts recevied as payment for jury fees, witness fees or military pay
- penalties if in good faith for violating safety rules of major significance
- unpaid disciplinary suspension of one or more full days - imposed in good faith for violations of workplace conduct rules
- proportionate part of EE’s full salary may be paid for time actually worked in the first and last weeks of employment
- Type of EXEMPTION TEST
- DOL establihsed salary level of $684 per week ($35,568 annual)
- anything below the salary would be required to be non-exempt
Salary Level Test
Exceptions for Salary Level (exemption) Test
- Outside sales
- licensed or certified docs
- lawyers
- teachers
Exemption Categories
* exempt from minimum wage, OT, and certain recod-keeping requriemetns
* DOL established standard test for each exemption to dtermine fi employee fits into one of the groups
* exempt from iminimum wage and OT only if EE meets all requirements of the tests.
- Executive
- Administrative
- Professional (Learned and Creative)
- Computer
- Outside Sales
- Highly Compensated
Exemption Categories - CRITIERIA
Primary Duties
Salary requirement (except for outside sales)
Exemption Test Type
* Primary duty: Mgmt of enterprise, recognized department or subdivision
* Regularly direct the work of at least 2 or more F/T EEs
* have authority to hire or fire - or make recommendations to
* Minimum salary - must be paid on a salary basis and at established minimum weekly rate and paid the full salary for workweek regardless of hours worked that week
Executive Standard Test
Exemption Test Type
* Primary duty: perform office or non-manual work directly related to management or general business ops (things that support making $$ for org)
* exercises discretion and independent judgment with respect to matters of significance (financial impact)
* Minimum salary - must be paid on a salary basis and at established minimum weekly rate and paid the full salary for workweek regardless of hours worked that week
Administrative Standard Test
Exemption Test Type
* Primary duty: perform work requiring advanced knowledge, defined as work that is predominantly intellectual in character and includes work requiring the consistent exercise of discretion and independent judgment
* high level / advanced education or training required
* Minimum salary - must be paid on a salary basis and at established minimum weekly rate
Learned Professional Standard Test
Exemption Test Type
* 1991 - pulled out of the “professionals exemption test”
* Qualifying Wage: must exceed 6.5X the federal minimum wage at the time of amendment (1991) = $27.625
* Minimum salary - must be paid on a salary basis and at established minimum weekly rate
* Special considersation: hourly paid computer employees making less than the qualifying wage are automatically non-exempt.
* Qualifying Duties: related to high technical computer tasks and duties
1. applying systems analysis techniques and procedures
2. design, develop, document, analyze, create, test or modify computer systems and programs
Computer Employees
Exemption Test Type
* Minimum salary - at least $107,432 / year and at least ONE exempt primary duty test
* must include at least $684 per week in base salary
Highly-Compensated Exemption Test
Which of the following acts is focused on ERs w/ construction contracts
- Davis-Bacon Act
- Nat’l Labor Relations Act
- McNamara-O’Hara Act
- Sherman Antitrust Act
Davis-Bacon Act
Exemption Test Type
* Primary duty: selling or obtaining orders away from employer’s place of business
* exception - commissioned inside sales employees or service/retail estabs. where over 50% of income is from commission and pay is at least 1.5X minimum wage
* Minimum salary - NONE
Outside Sales Test
Exemption Test Type
* Primary duty: perform work requiring invention, imagination, originality or talent in a recognized field of artistic endeavor
* Minimum salary - must be paid on a salary basis and at established minimum weekly rate
Creative Professional Standard Test
Which EEs are covered by NLRA?
- City, State and Fed’l Gov’t EEs
- Airline and Railroad EEs
- EEs who work for companies that sell goods in various states
EEs who work for companies that sell goods in various states
Which of the following acts is focused on ERs w/ service contracts w/ th
- Davis-Bacon Act
- Sherman Antitrust Act
- McNamara-O’Hara Act
- Nat’l Labor Relations Act
McNamara-O’Hara Act
Which gov’t agency enforces the Sherman Antitrust Act on issues related
- DOL
- NLRB
- OFCCP
- EEOC
DOL
Which of the following scenarios best describes a contract worker?
- A technician who works a scheduled shift and performs tasks as assigned according to specifications
- A computer programmer who telecommutes, uses her own equipment and works for multiple ERs
- An accounts payable specialist who works at the company site utilizing an internal A/P system and pays vendors according to company procedures.
A computer programmer who telecommutes, uses her own equipment and works for multiple ERs
Nonexempt Employees
- do not fit the exemption tests
- hours of work
- rate of pay
- Worker Economic Opportunity Act
- Child Labor
- Record keeping
Non-Exempt
Hours of Work
All time which ER requires, suffers, or premits the EE to be on duty or at a prescribed workplace or on ER’s premises.
* including uniform change time, tool prep, and maintenance time.
* Excludes time waiting to clock in; sleep time if agreed upon
* All hours worked must be paid to NE EEs
Non-Exempt
Rest and Meal Periods
Not required to pay under FLSA rules, but some states may have bigger benefit so would have to follow that.
Rest Periods less than 20 minutes is counted as hours worked and paid
Lunch period of more than 30 minutes are not hours worked and should not be paid.
Non-Exempt
Lectures, Meetings, Trainings
Attendance is work time if: Req’d by ER; nonattendance would adversely affect employment
Attendance is not work time if: outside of workign hours; voluntary; not directly related to job; no productive work during attendance
Non-Exempt
On-Call Time
- engaged to wait
- waiting to be engaged
- consideration for frequency and consequences
- pay rate
Non-Exempt
On-Call Time - Engaged to Wait
all hours the employee is “engaged to work” is considered time worked/paid
* EE is req’d to stay on premises, or close enough is still working = on “stand by” like a firefighter”
* person hired to do nothign or is hired to wait for something to do (or happen) is still working; there are more signfic. consequences if EE has failed responding.
Non-Exempt
On-Call Time - Waiting to be Engaged
- must be able to use the time for own puproses
- can require EE to accessible by phone or other means
- anytime spend responding to calls is hours worked
Non-Exempt
On-Call Time - Consideration - frequency and consequences
if more frequent and has higher consequences for missing call, EEs are more likely to be “engage to wait”
Non-Exempt
On-Call Time - Pay Rate
ERs are allowed to set an on-call pay rate whgich is less than the normal rate of pay when the EE is actually called to work
Non-Exempt
Travel Time
- Home to work = not hours worked
- Operating vehicle for ER = hours worked
- Out of town travel during EEs normal work hours = hours worked (even if it happens on a normal day off)
- Out of town travel outside of EE normal work hours, if overnight stay = not hours worked
- Out of town travel outside of EE normal work hours, NO overnight stay = hours worked
Non-Exempt
Travel Time - Home to work
not hours worked
Non-Exempt
Travel Time - Operating vehicle for ER
hours worked
Non-Exempt
Travel Time - Out of town travel during EEs normal work hours
hours worked (even if it happens on a normal day off)
Non-Exempt
Travel Time - Out of town travel outside of EE normal work hours, if overnight stay
not hours worked
Non-Exempt
Travel Time - Out of town travel outside of EE normal work hours, NO overnight stay
hours worked
Non-Exempt
Remedial Education Exemption
- 1989 amendment
- limited to certain EEs - those lacking HS diploma; reading or skills at level @/below 8th grade level
- req must be met:
1. designed to give the EE basic skills @ 8th grade level; to fulfill HS diploma or GED
2. must be conducted during set time periods and away from EE’s regular work station (not OTJ training)
3. must be paid up to 10 hours at straight time
Types of Rates of Pay
- Base
- shift premium
- piece rate
- other regular “pay” allowances
- Bonus
- Exclusions
A type of rate of pay that includes the hourly amount paid for a job performed
base rate
A type of rate of pay that includes extra pay allowances made to EEs who work on a shift other than the regular day shift
Shift Premium
A type of rate of pay that is a direct performance payment based on production by an individual worker
Piece Rate
Bonus - type of rate of pay
- Nondiscretionary - defined as driven by formula, communicated to EEs in adnace and EEs have right to receive if conditions are met (LUMP SUM in lieu of merit increase); must include reg rate of pay when calculating OT pay
- Discretionary - w/o any prior communication or agreements. Discretionary bonuses do not need to be included when calcuating OT pay (SPOT BONUS)
Exclusions to regular rates of pay for OT calc
- discretionary bonuses (i.e. holiday, gifts)
- vacation, holiday, sick
- expense reimbursement
- contribution to bona-fide profit sharing plan/trust or thrift/savings plan
OT
- FLSA Requirement - pay NE EEs at least 1 1/2x regular rate of pay for all hours worked over 40 hours each workweek
- if hospital setting - can use 80 hours in 2-week period
- workweek can begin on any day and at any hour decided by ER
- period of 168 hours during hte following (7) 24-hours periods
- State may require daily OT (Cali)
- reg rate includes supplementary earnings - commissions, bonuses, or shift premiums
Public Sector and “Banked Hours”
- 1985
- State/Local Gov’t - can substitute compensatory time off, “comp time”, rather than pay for the time in the week worked
- time is at time and 1/2
- Max hours allowed:
1. 480 hrs for public safety, seasonal and emergency workers (320 OT hours times 1.5 hours)
2. 240 hours for all others (160 OT hours times 1.5) - Paid out at EE’s current rate
What act allows ERs to exclude from OT calc the profits or income earned from stock option plans, stock appreciation rights (SARs) and ESOPs?
Worker Economic Opportunity Act
Provisions of Worker Economic Opportunity Act
- EEs given option not o participate
- Stock options and SARs cannot be granted more than 15% discount
- EEs must hold option or right for an least 6 months
- Stock purchase plans only qualify if they are tax-qualified or are substantially similar to tax-qualified plan
Child Labor Rules - Age Restrictions
- 14-15: certain nonhazardous jobs in certain places w/ limited hours
- 16-17: may perform any nonhazardous job no limit on hours
- 18: hazardous limit lifted
Child Labor Rules - Objectives
- protect education, health, well-being
- adult worker priority
What agency enforces the Worker Economic Opportunity Act?
DOL (Wage and Hour division)
Child Labor Rules - Hours of work Restrictions
14-15: limited to..
* (3) on school day, (8) on non-school day
* (18) during school week, (40) during non-school week
16-17: NO hour limit
Specific record-keeping requirements for NE employees
- name, home address, and DOB if EE is under 19 years of age
- gender/occupation
- hour and day when workweek begins
- regular hourly pay rate for any week when OT is worked
- hours worked each workday and total hours worked each workweek
- total daily or weekly straight time earnings
- total OT pay for the workweek
- deductions or additions to wages total wages paid each pay period
- date of payment and pay period covered
Child Labor Rules - types of ERs Restrictions
14-15:
* work in retail and service industries but may not perform hazardous work
* may not work in manufacturing, mining or any hazardous job
Youths under age of 18 may not perform any non-farm work identified as hazardous by Secretary of Labor
Record-keeping requirements
required to keep records on wage, hours, and other items for ALL EEs
no particular form req’d w/ exempt EEs, but there are rules for NE
kept at least (3) years
include basic records of EE info (such as gender, name, address, DOB, occupation, pay and hours worked on a weekly basis)
What FLSA DOES NOT require
- pay for time not worked: VAC, HOL, SEV, SICK, MEAL of 30 min or more, rest periods greater than 20 min.
- time clocks: to record hours worked
- premium pay for Sat, Sun, HOL, 6/7th day worked; hrs worked in excess of 8 unless ER chooses 8/80 rule
- Differentiation b/w EX and NE EEs in any other way than min wage pmts, OT, and records
- Pay raises or fringe benefits
- discharge notices - such as reason or immediate paymetn of final wages to term’d EEs
- Pay stubs or W-2
- a limit on # of hrs in a day or days in a week unless underage EE
Violations of FLSA
- enforced by Wage and Hour Division of DOL
- ERs may not retaliate against EEs if exercise FLSA rights
- EEs cannot voluntarily waive FLSA rights
What Act did Congress instruct DOL and other fed’l agencies to increase their civil monetary penalties by the rate of inflation since 1990 and then annual index them to increases in the CPI?
Bipartisan Budget Act of 2015
Penalties of FLSA
- ER Civil Penalities - all based on if ER knows or unknowingly does something:
1. Civil Suit - collect unpaid minimum wages and OT due plus an equal amount as liquidated damages
2. Civil Suit - enjoin further violations; can request back pay for affected EEs
3. Injuctions against ER - extreme cases; temporarily close down its operation or company
Criminal Penalties - for WILLFUL violations; convictions may include fines and possible imprisonment (2nd offenders)
Statute of Limitations for FLSA Violations
- NONwillful violations - must be commenced w/in 2 years of the cause of the action
- willful violations - must be commenced w/in 3 years of the cause of the action
Good Faith Defense for Violations of FLSA
- ER may escape backpay or liquidated damages liability if it relied in good faith on written interpretation of the FLSA from the Wage and Hour Division
- An employer may reduce its liquidated damages liability by showing that it had a good faith basis based on other sources for its belief that it was not violating the FLSA
- ER’s good faith is not a defense to an action for an injuction
One of two types of FLSA violation where an ER has aprior finding against it by the Labor Dept., court, or another tribunal w/ authority to make such a finding.
Repeated Violation
One of two types of FLSA violation where ER should have known or clearly should have sought out advice from DOL before implementing the plan or program that is not in compliance.
Willful Violations
Willful Violations
- if ER knows its conduct is prohibited under the act or shows reckless disregard for the requirements of the Act
- considered “knowing” if DOL earlier had advised the ER that its actions were unlawful
- if ER should have inquired further into whether its conduct was in compliance w/ the act and failed to do so
What prompts an FLSA Audit?
- Employee complaint to DOL
- Random Audit
- DOL targets certain geographic regions of the country or particular industries
Common FLSA violations
- misclassification of EE as exempt
- improper payment for break time
- on-call time and payment for it issues
- training time and payment for it issues
- travel time and payment for it issues
- compensatory time off
- failure to pay for unauthorized hours worked
- bonus pay exclusion from regular hourly rate
- failure to pay for all recorded hours
- inaccurate records
To qualify for the executive exemption from the minimum wage and OT provisions of FLSA, among other things, what must an EE do?
1. customarily and regularly direct the work of at least two full-time EEs
2. Perform work that is intellectual and varied
3. Devote less than 15% of his /her time to nonexempt work
4. Possess knowledge of an advance type in business admin
Customarily and regularly direct the work of at least two full-time EEs
Which of the following agencies enforces the FLSA?
1. NLRB
2. EEOC
3. OFCCP
4. DOL
DOL
Which of the following is appropriate when an EE is req’d by ER to attend training as a condition of employment?
1. appropriate study time does not count as hours worked regardless of the educatoinal level of the training program
2. no training time is considered hours worked even if it is a condition of employment, since the employee is free to leave the company.
3. only educational programs focused on remedial education (up to 8th grade) can be excluded from the 40-hour criteria for time and one-half.
4. even when the training is req’d, as long as the classes are outside working time and not on company property, they are not hours worked.
Only educational programs focused on remedial education (up to 8th grade) can be excluded from the 40-hour criteria for time and one-half.
How does the FLSA req. ERs to pay NE EEs?
1. double time for time worked on Sunday
2. time and 1/2 for all hours worked over 40 in the workweek
3. time and 1/2 for all hours worked over eight in the workday
4. double time for work on Saturday
time and 1/2 for all hours worked over 40 in the workweek
Which of the following stmts regarding the Worker Economic Opportunity Act is most accurate?
1. ERs must include stock profits in OT calcs
2. EEs must hold options for at least 3 months
3. EEs are not req’d to participate
4. Stock options may be granted at a 20% discount.
EEs are not req’d to participate
Until what age does the FLSA limit the number of hours of nonhazardous work?
1. 14 years of age or over as long as OT pay provisions are met
2. 15 years of age or over as long as OT pay provisions are met
3. 16 years of age or over as long as OT pay provisions are met
4. 18 of years of age or over as long as OT pay provisions are met
16 years of age or over as long as OT pay provisions are met
Which of the following documents is a requirement of FLSA for all NE EEs?
1. W-2s
2. discharge notices stating reasons for discharge
3. copies of pay stubs
4. records on hours worked and wages paid
records on hours worked and wages paid
Which of the following would most likely be considered a “repeated” violation fo the FLSA?
1. ER who should have inquired further into whether its conduct was in compliance w/ the act and failed to do so
2. ER that had a prior finding by the DOL, court or another tribunal w/ the authority to make such a finding
3. ER knowing its conduct was prohibited under the act or showing reckless disregared for the requirements of the act.
4. When the Labor Dept has advised an ER that its actions were unlawful
ER that had a prior finding by the DOL, court or another tribunal w/ the authority to make such a finding
What act prohibited the practice of different pay rates for men and women performing the same job - equal pay for equal work?
Equal Pay Act (EPA)
Equal Pay Act Covers…
- ERs subjected to FLSA are also subject to the provisions of the EPA
- Applies to EX and NE EEs
What agency enforces the EPA?
- before 1979, Wage and Hour Division of DOL
*since 1979, EEOC
