MINIMUM WAGE AND OVERTIME FOR NON-EXEMPT EMPLOYEES
December 3, 2019
In September 2019, Strang, Patteson, Renning, Lewis & Lacy, s.c., published an article about the US Department of Labor’s Final Rule, which updates the standard salary levels necessary to qualify for the executive, administrative and professional exemptions under the minimum wage and overtime pay requirements in the Fair Labor Standards Act (FLSA). As the January 1, 2020, effective date nears, it is advisable for employers to evaluate exempt employees’ salaries and job descriptions and to review the minimum wage and overtime obligations under the FLSA for non-exempt employees.
Minimum Wage. The federal minimum wage is $7.25 per hour for employees covered by the FLSA. Wisconsin’s minimum wage is also $7.25 per hour.
Overtime Pay. The FLSA (and Wisconsin’s Wage and Hour Laws) require employers to pay non-exempt employees working in excess of forty (40) hours in a workweek at least one and one-half (1.5) times the employee’s regular hourly rate for any overtime hours worked. All hours that the employer suffers or permits an employee to work is time counted as hours worked for compensation and overtime pay. For example, an employee may voluntarily continue to work at the end of his/her shift to finish an assigned task or to correct errors. The reason is immaterial. The hours are work time and are compensable.
The FLSA does not require payment for time not worked, such as vacations, sick leave or holidays.
Similarly, the FLSA does not require that an employer count paid leave, e.g., holidays, vacation, sick leave, bereavement leave, personal leave, etc., toward the employee’s hours worked for purposes of overtime pay. However, an employer’s policies or Employee Handbook may state otherwise.
An employer’s policies or Employee Handbook may provide for an overtime rate to be paid for all hours worked in excess of eight (8) in a day or may require the employer to pay double time for work on weekends or holidays. Such policies and Employee Handbook provisions are permissible, since the FLSA is simply the minimum of what is required.
Monitoring “Off the Clock” Work. When an employee works beyond his or her normal shift, this counts as hours worked and employers will be liable for this time if they know or have reason to believe that this work is being performed. This may include:
a. Employees accessing/responding to e-mail outside of normal work hours.
b. Employees working immediately prior to or after a scheduled shift.
c. Employees working over an employee’s lunch period.
It is important to remember that non-exempt employees cannot agree to “opt out” of overtime pay for any overtime work; even if the employee intends to work “extra” on a voluntary basis, this time must be counted.
Break Time. The FLSA does not require that an employer offer break time or a lunch period to employees. Wisconsin’s wage and hour laws also do not require that an employer offer break time or a lunch period to employees (unless the employee is under the age of 18). However, the Wisconsin Department of Workforce Development recommends that employers offer lunch and break periods.
The employer is not required to pay an employee for time spent on a break/lunch provided that the employee is given at least thirty (30) minutes for the break/lunch and that the break/lunch period is completely duty free. However, the employee must be completely relieved from duty for the purpose of the break/lunch. The employee is not relieved if he/she is required to perform any duties, whether active or inactive, while on break/lunch.
Lectures, meetings, and training programs. If an employee attends a lecture, meeting, training programs or other similar activity, the employer must pay the employee for such time spent at the lecture, meeting, training or other activity unless all four (4) of the following criteria are met:
a. It is outside normal hours,
b. It is voluntary,
c. It is not job related, and
d. No other work is performed concurrently.
Compensatory Time. The FLSA allows government employers at the federal, state, or local level to compensate non-exempt employees for hours worked in excess of forty (40) in a week with compensatory time (comp time) in lieu of cash overtime under the following rules:
a. The employer must have a comp time policy in place.
b. The employer must credit employees with comp time at the same rate as cash overtime: no less than one and one-half (1.5) hours of comp time for each one (1) hour of overtime work.
c. The employer may restrict comp time to only certain non-exempt employees/employee classifications.
d. The employer may not require that an employee accept comp time instead of overtime pay; the employee must agree to it.
e. The employer and the employee must agree ahead of time and not at the time in which comp time or overtime pay will be used/pay.
f. The employer may not permit employees to accrue more than two hundred forty (240) hours of comp time.
g. The employer may not have a use it or lose it policy with regard to comp time.
h. The employer must pay the employee at a rate of one and one-half (1-1/2) times his/her hourly rate for all accrued but unused comp time if he/she is terminated/resigns from employment.
i. With regard to scheduling, the employer must allow employees to use their accrued comp time “within a reasonable period after making the request if the use of the compensatory time does not unduly disrupt the operations of the public agency.”
Flex time is different than comp time. Flex time is an arrangement that allows an employee to alter the start and end times of her/his work day around the normal schedule. Flex time does not reduce or increase the total number of hours worked in a given workweek. As a result, flex time may be offered on an hour for hour basis, i.e., not provided at a rate of one and one-half (1.5) hours for each one (1) hour. However, flex time cannot be banked; it must be used within the same workweek in order to avoid overtime compensation.
As we recommended in September 2019, employers should take the remainder of the year to review exempt employees’ salaries and job descriptions to determine whether such employees remain exempt under the Final Rule. If the Final Rule affects an employee’s exempt status, employers must decide whether to adopt a strategy for adjustment, such as increasing an employee’s salary to ensure they remain exempt or establishing rules about working hours for those employees who will no longer be classified as exempt. Employers should also take this opportunity to review the employer’s policies and Employee Handbook provisions to confirm that they are consistent with the FLSA and Wisconsin’s Wage and Hour Law.
For questions regarding this article, please contact the author, Attorney Shana R. Lewis (email: firstname.lastname@example.org; telephone: 844-826-0902), or your Strang, Patteson, Renning, Lewis & Lacy, s.c., attorney.
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