Overtime (29 U.S.C. s. 207) (29 CFR Part 541) (29 CFR Part 778)

• Under the Fair Labor Standards Act ("FLSA") overtime at the rate of time and one-half times the employee's regular rate is required for all hours worked over 40 in a workweek for nonexempt employees. (29 U.S.C. s. 207(a)(1))


• "Hours worked" is broadly defined. It generally includes all time when an employee is required to be on duty or to be on the employer's premises even if no work is performed. Overtime applies only after 40 hours "worked," not to paid time off such as holidays and vacations. However, paid time off can affect the "regular rate." (29 CFR Part 785)


• Time spent by an employee in travel as part of his principal activity, such as travel from job site to job site during the workday, must be counted as hours worked. (29 CFR 785.38)


• The time drivers spend in the sleeper berth that exceeds eight hours per day is compensable work under the FLSA. Montoya v. CRST Expidited, Inc., 88 F.4th 309 (1st Cir. 2023)


• An employee is considered off duty and time spent in an on-call status is not considered hours of work if:
• The employee is allowed to leave a telephone number or to carry an electronic device for the purpose of being contacted, even though the employee is required to remain within a reasonable call-back radius; or
• The employee is allowed to make arrangements such that any work which may arise during the on-call period will be performed by another person. (5 CFR s. 551.431)

• The "regular rate" is the hourly rate actually paid the employee for the nonovertime workweek. It includes all remuneration paid to the employee, including commissions, regular bonuses and paid time off. (29 U.S.C. s. 207(e))


• Where an employee in a single workweek works at two or more different types of work for the same employer for which different nonovertime rates of pay have been established, his regular rate for that week is the weighted average of such rates. That is, his total earnings (except statutory exclusions) are computed to include his compensation during the workweek from all such rates and are then divided by the total number of hours worked at all jobs. (29 CFR s. 778.115)


• For a tipped employee the regular rate of pay includes the amount of tip credit taken by the employer (not in excess of the minimum wage requred by Fair Labor Standards Act (29 U.S.C. s. 206) minus the cash wage paid by the employer (at least $2.13). Any tips received by the employee in excess of the tip credit need not be included in the regular rate. (29 CFR s. 531.60)


• Exempt employees typically fall into one of four classifications, all defined by regulations and must be compensated on a salary basis at a rate of not less than $844 per week, exclusive of board, lodging or other facilities, (equivalent to $43,888 per year for a full-time worker).
  
  • Executive
  • Administrative
  • Professional
  • Outside salesperson (29 U.S.C. s. 213(a)(1)) (29 CFR Part 541) (29 CFR s. 541.600(a))

• On November 15, 2024, the U.S. District Court for the Eastern District of Texas granted summary judgment to the State of Texas and vacated and set aside the Department of Labor's recently-promulgated regulation raising the salary level threshold from $684 per week ($35,568 per year) to $844 per week ($43,888 per year) for the "white collar" exemptions (including the highly-compensated employee exemption) under the FLSA. State of Texas v. U.S. Dep't of Labor, Civil Action No. 4:2024cv00499 (E.D. Tex. 2024)


• On January 15, 2025, the U.S. Supreme Court held that the preponderance-of-the-evidence standard applies when an employer seeks to demonstrate that an employee is exempt from the minimum wage and overtime pay provisions of the FLSA. E.M.D. Sales, Inc. v. Carrera, 604 U.S. 45, 134 S.Ct. 34 (2025)


• These exemptions do not apply to manual laborers or "blue collar" workers who perform work involving repetitive operations with their hands, physical skill and energy. (29 CFR s. 541.3)


• Drivers who deliver products and also sell such products may qualify as exempt outside sales employees if their primary duty is making sales. (29 CFR s. 541.504)


• An employee with total annual compensation of at least $151,164 is deemed highly compensated and is considered exempt if the employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee. (29 CFR s. 541.601)


• The U.S. Supreme Court on February 22, 2023, ruled that an oil rig worker earning more than $200,000 a year was misclassified as exempt by his employer in violation of the FLSA and was entitled to overtime pay because he was paid on a day rate rather than paid by the week (or longer) and was not therefore considered salaried. Helix Energy Solutions Group, Inc. v. Hewitt., 598 U.S. 39, 143 S.Ct. 677 (2023)


• The U.S. Court of Appeals for the First Circuit recently clarified the test to evaluate the application of the administrative exemption from the FLSA's overtime requirements. In Walsh v. Unitil Service Corp., 57 F.4th 353 (1st Cir. 2023), the Court held that the analysis is a "relational" one and that the touchstone of the inquiry should focus on the interplay between the business purpose of the employer or its customers and the employee's primary duty. Further, the Court highlighted that employers, to ensure proper classifications, should confirm that an administrative exempt employee's job duties are not merely day-to-day routine operational work, but rather focus on "general," i.e., higher level or major, aspects of the business. The Court expressly stated that "[j]ust because an employee is on the operational side of the business [that] does not mean that his job duties fall on the administrative side of the line."


• Docking salaried exempt employees for partial day absences may result in the employee being deemed to not being paid on a salaried basis and therefore to be nonexempt. (29 CFR s. 541.602) (FLSA Overtime Security Advisor) However, if the employer requires salaried exempt employees to use vacation time for partial day absences, that only shows that the employees' vacation time, not their salary, was subject to deduction. Litz v. Saint Consulting Group, Inc., 772 F.3d 1, 8-9 (1st Cir. 2014)


• On January 10, 2024, the DOL issued a Final Rule regarding the six factor test for determining whether workers are independent contractors. This rule took effect on March 11, 2024. Under the FLSA, an independent contractor is not considered an "employee," meaning the minimum wage and overtime provisions of the FLSA do not apply. These six factors are: (1) the opportunity for profit or loss depending on managerial skill; (2) investments by the worker and potential employer; (3) the degree of permanence of the work relationship; (4) the nature and degree of control over performance of the work and working relationship; (5) the extent to which the work performed is an integral part of the potential employer's business; and (6) the skill and initiative of the worker. The 2024 rule now allows for the consideration of additional factors relevant to the overall question of economic dependence.


• No employer is deemed to have violated the overtime requirements by employing an employee of a retail or service establishment in excess of 40 hours if (1) the regular rate of pay is in excess of one and one-half times the applicable minimum hourly rate and (2) more than half of his compensation for a representative period (not less than 1 month) represents commissions on goods and services. (29 U.S.C. s. 207(i)) (29 CFR s. 779.410)


• Under the Fluctuating Workweek ("FWW") rule an overtime eligible employee whose hours fluctuate from week to week and who agrees to receive a fixed salary covering all hours of work is entitled to a "halftime premium" for hours worked in excess of 40 hours per week - not a "time and one half" premium. Under a recent regulation the DOL clarified that employers may pay bonuses or other incentive-based pay without violating the FWW rule as long as an overtime premium is paid on such additional compensation. (29 CFR s. 778.114)


• Employees who are covered by the Motor Carrier Act of 1935 (49 U.S.C. s. 13102) are exempt from the FLSA and therefore are not entitled to overtime, unless they fall under the small vehicle exception. (29 U.S.C. s. 213(b)(1)) The test for determing whether there is an exemption under this section is whether any of the employee's duties had a substantial effect on motor safety. An employee's interstate activity as a driver directly affects the saftey of operations however frequently or infrequently. Crooker v. Sexton Motors, Inc., 469 F.2d 206 (1st Cir. 1972) The Wage and Hour Division of the Department of Labor has issued a Fact Sheet summary of this exemption. (Fact Sheet)


• It is unlawful for an employer to discriminate or retaliate against an employee for filing a FLSA complaint. (29 U.S.C. s. 215(a)(3))


• Employees mounting an unlawful retaliation claim must prove that they engaged in statutorily protected activity and that their employers afterward took adverse employment action against them as reprisal for having engaged in the protected activity. Temporal proximity alone can suffice to meet the relatively light burden of establishing a prima facie case of retaliation. However, a gap of several months cannot alone ground an inference of a causal connection between a complaint and an allegedly retaliatory action. Marcus v. American Contract Bridge League, 80 F.4th 33 (1st Cir. 2023)


• An employer who violates the FLSA is liable to the employee for the unpaid wages, an additional equal amount as liquidated damages and reasonable attorney's fees. (29 U.S.C. s. 216(b))


• If the employer shows to the satisfaction of the court that the act or omission giving rise to the action was in good faith and that it had reasonable grounds for believing the the act or ommision was not a violation of the FLSA, the court may in its descretion award no liquidated damages or award any amount not to exceed those damages. (29 U.S.C. s. 260)


• An action under the FLSA may be commenced within two years after the cause of action accrued except that a cause of action arising out of a willful violation may be commenced within three years. (29 U.S.C. s. 255(a))
  

   

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