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PAYDAY Workforce Solutions Blog

FLSA Changes: Updating Your Policies and Practices

On Nov 1, 2019

Have you reviewed your policies and practices in light of the upcoming overtime changes?

Reclassified employees may have to follow procedures and
policies that didn’t apply to them before—or that you didn’t have. Changing
habits can be a challenge, but changing those of your formerly exempt employees
with respect to hours worked and tracked is critical to preventing wage and
hour violations.

Newly non-exempt employees are likely used to “running the
clock” after hours. They may be in the habit of responding to work email,
finishing up projects, taking client calls, or engaging in other work tasks
during non-work hours. It’s therefore advisable that your policies are clear
about expectations and the organization’s commitment to recording all time
worked by nonexempt employees.

Timekeeping

Consider that your previously exempt employees may not be
familiar with your timekeeping procedures, such as tracking time to check
emails and turning in recorded work time for each pay period. Review these
procedures with them, keeping in mind that non-exempt employees must be paid
for all time they are “suffered or permitted” to work. This doesn’t just mean
time in the office, but all time, whether it’s approved by the employer or not.

Off-the-Clock Work

As mentioned above, all hours worked by a non-exempt
employee must be recorded and compensated, even those performed outside of the
employee’s standard shift. Therefore, it’s critical to have a policy in place
that informs employees that all time worked must be tracked, that off-the-clock
work is prohibited, and that employees may be disciplined for not following
their scheduled shift. Please note that refusing to pay for unauthorized time
worked—whether it’s regular or overtime—is not permissible.

Employees Using Their Personal Electronic Devices

Time a non-exempt employee spends doing work from their
smartphone, tablet, or personal computer is considered time worked, and
employees may find this hard to resist if their phone is chirping at them from
their pocket every time a new work email comes in. For this reason, you may
want to prohibit a non-exempt employee from using their personal devices for
work purposes at all, or only allow such use upon authorization from the
company. For instance, if you’d like a particular employees to check and
respond to work email over the weekend, build that time into their weekly
schedule so it doesn’t lead to unexpected overtime.

Meal and Rest Period

Many states require meal and/or break periods for non-exempt
employees. It’s important to inform employees of these breaks, explain the
procedures for clocking in and out, and remind them that no work should be
performed during this time.

This is an area where it will be particularly important for
your managers to be willing to manage. Employees who previously worked through
lunch at their desk and could put in their eight hours between 9 and 5 might
not want to take an unpaid lunch period or break, thus extending their workday.
State law, however, may be indifferent to their feelings. If employees ask to
waive their meal or rest periods, you’ll want to check the Break and Rest
Period pages under State Laws in the HR Support Center. Sometimes these breaks
can be waived, but sometimes they cannot. And waiving them sometimes requires
special circumstances and agreements between employers and employees.

Again, if work is performed, it must be compensated (and
penalties may apply), so the policy should include instructions for notifying a
manager or supervisor if a working meal period occurs.

Overtime

Now is the time to ensure that you’re familiar with your
state and local overtime laws. Although most employers will only be subject to
the federal requirement to pay time and one-half for hours worked over 40 in
one workweek, Alaska, California, Colorado, and Nevada each have daily overtime
provisions, and Massachusetts and Rhode Island require some employers to pay a
premium for work on Sundays and certain holidays. Employees and managers need
to be aware of the rules for compliance. And you should make sure that your own
expectations for overtime work are written in your policy and communicated to
your employees.

Travel Time

Since non-exempt employees must be paid for all time worked,
you may need to consider travel time for those customarily engaged in work
travel. There are a few narrow exceptions when travel time isn’t payable (e.g.
when the employee is a passenger in a vehicle outside of regular work hours or
during a standard morning/evening commute), but it’s good to assess your
non-exempt employees’ travel schedules to ensure proper pay.

Payroll Changes

Incentive pay: Per FLSA requirements, overtime must be
calculated weekly based on the employee’s “regular rate of pay.” Incentive pay
(non-discretionary bonuses, commissions, or any other non-hourly pay) is
included in the regular rate of pay calculation. For weeks in which a
non-exempt employee earns both overtime and incentive pay—whether provided at
the time or retroactively—you must calculate (or recalculate) the employee’s
regular rate of pay so that it includes both their base pay and incentive pay
for the week. The new amount should then be used for overtime calculations.

Workweek: Every company must have an established workweek
that is not adjusted or altered to avoid overtime. This is the 168-hour period
during which you will track each employee’s hours to determine their pay and if
they are owed overtime, e.g. Sunday at 12:00 am through Saturday at midnight.
Each workweek is assessed individually for overtime calculations, and overtime
must be paid for each workweek in which it is earned. Payroll, managers, and
employees should know what the set workweek is.

Next Steps

If these policies and practices aren’t currently covered in
your employee handbook, we recommend adding them now, or distributing them
separately as handbook amendments. Once distributed, employees should sign-off
to acknowledge their acceptance and understanding of these important policies.
If your policies and practices are already covered in your handbook,
reemphasize them with the newly reclassified employees.

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